Air Liquide: H1 2013 Performance

  Air Liquide: H1 2013 Performance

Management report

  *Consistent performance
  *Capturing growth opportunities

Business Wire

PARIS -- July 30, 2013

Regulatory News:

Air Liquide (Paris:AI):

The H1 2013 performance is consistent with the Group’s record of regular
delivery of growth in revenue and solid profitability.

The Q1 2013 Gas and Services underlying revenue growth trend is confirmed in
Q2, at +5.6% excluding currency and natural gas impacts. Operating margin is
stable and cash flow is strong.

Current macro economic forecasts are showing improvement towards the end of
the year. Nevertheless, the Group remains cautious and has engaged realignment
programs to adapt capacity and resources with market dynamics where needed.
Investment programs are also being actively pursued with a strong focus on
growing markets.

H1 2013 key figures

                                                     
                                                                     2013/2012
                                                                     change
(in millions of        H1 2012                       2013/2012       excl.
euros)              Restated    H1 2013     change       currency
                       ^(a)                                          and
                                                                     natural
                                                                     gas ^(b)
Total revenue       7,533       7,561       +0.4%        +3.0%
Of which Gas and    6,837       6,885       +0.7%        +3.5%
Services
Operating income    1,245       1,256       +0.9%        
recurring
Operating income
recurring as %      16.5%       16.6%       +10bps       
of revenue
Net
non-recurring       10          (41)^(c)                
items
Net profit –        784         752         -4.0%        
Group share
Net earnings per    2.52        2.43        -3.6%        
share (in euros)
Cash flow from
operating
activities          1,413       1,501       +6.2%        
before change in
working capital
requirement
Net capital         991         1,081       +9.0%        
expenditure^(d)
Net debt (as of     6,011       6,837       +13.7%       
June 30)
Debt-to-equity      55%         60%                     
ratio^(e)
ROCE after          11.9%       11.0%                   
tax^(f) (g)

(a)  2012 restated for the effects of the IAS 19 “Employee benefits”
      revision.
      Natural gas is an essential raw material for the production of hydrogen
      and the operation of cogeneration units. All Large Industries hydrogen
      and cogeneration contracts have clauses indexing sales to the price of
(b)   natural gas. Hence, when the price of natural gas varies, the price of
      hydrogen or steam for the customer is automatically adjusted
      proportionately, according to the index. Explanation of the natural gas
      impact on revenues and operating margin is in the appendix.
(c)   Including 49.8 million euros of realignment costs.
(d)   Including transactions with minority shareholders.
(e)   Adjusted to spread the dividend payment in H1 out over the full year.
      Gearing as at 30/06/2013 was 67%.
      Return On Capital Employed after tax: (net profit after tax before
(f)   deduction of minority interests - net cost of debt after taxes)/ average
      of (shareholders’ equity + minority interests + net indebtedness) for
      the periods June 30, 2012 to June 30, 2013.
(g)   Pro forma, including annualized profit impact of the acquisition of LVL
      Médical and Gasmedi.
      

Excluding the currency translation and natural gas pass-through headwinds, H1
2013 revenue was up +3%, supported by :

  *+9% growth in Gas and Services activities for industries in developing
    economies and the contribution from bolt-on acquisitions in advanced
    economies;
  *+14% growth in Healthcare.

The operating margin was maintained, helped by cost control in all regions and
a focus on achieving a high level of efficiencies. Net income was down
slightly due to around 50million euros of non-recurring realignment costs in
advanced markets, and stable excluding these costs.

H1 2013 Income statement

REVENUE

                                                  
                                                       H1 2013        H1 2013 /
Revenue                                                / 2012         2012
                                          H1           change         change
(in            H1       H1       2013 /    excl.       comparable
millions of       2012        2013        2012         currency       ^(a)
euros)                                    change       and
                                                       natural        
                                                       gas
Gas and        6,837    6,885    +0.7%     +3.5%       +2.0%
Services
Engineering
and            365      372      +1.8%     +2.6%       +2.6%
Technology
Other          331      304      -7.8%     -7.1%       -7.1%
Activities
TOTAL          7,533    7,561    +0.4%     +3.0%       +1.6%
REVENUE
(a) excluding currency, natural gas and significant scope impacts

                                        
Revenue                                             2013 / 2012 change
(in millions of      Q1 2013    Q2 2013    excl. currency and natural
euros)                                              gas
                                           Q1              Q2
Gas and Services     3,406      3,479      +1.4%           +5.6%
Engineering and      147        225        -16.8%          +21.0%
Technology
Other Activities     145        159        -7.5%           -6.7%
TOTAL REVENUE        3,698      3,863      +0.2%           +5.8%
                                                                  

Group

H1 2013 Group revenue totaled 7,561 million euros, up +0.4 % as published
compared to H1 2012. Currencies and natural gas prices weighed on revenues by
-2.2% and -0.4% respectively. Excluding this effect, revenue was up +3.0%.

Q2 2013 performance, at +5.8%, was in line with the +4.9% underlying growth
rate outlined for Q1, which had been impacted by the number of working days
and a high comparable base in Q1 2012.

Gas and Services

Unless otherwise stated, all the changes in revenue outlined below are based
on comparable data (excluding currency, natural gas and significant scope
impacts).

Gas and Services H1 2013 revenue totaled 6,885million euros, up +0.7% as
published. Excluding a -2.4% currency impact and a –0.4% natural gas price
pass-through impact, revenues were up +3.5%.

Q2 growth, excluding currency and natural gas impact is up +5.6%.

Industrial activity trends remain correlated to industrial production in each
of the geographies, strengthened, in the developing economies, by increased
outsourcing and enhanced sophistication of local industrial production. While
advanced economy activity remained stable, growth in developing economies was
up by nearly +9%, sustained by start-ups, ramp-ups, bolt-on acquisitions and
growth in demand.

The share of developing economies in the revenue of Gas and Services for
Industries (GSI) has continued to increase to 27% in H1 2013, against 25% in
H1 2012.

Healthcare has grown by +14% during the period, excluding the currency impact,
resulting from strong growth in the number of Home Healthcare patients and the
two significant acquisitions of LVL Médical in France and Gasmedi in Spain.

The contribution from start-ups, ramp-ups, site takeovers and bolt-on
acquisitions to Gas and Services sales was +3.2%, and +4.7% including the
significant scope impact.

                                                    
Revenue                                             H1 2013 /       H1 2013 /
                     H1 2012    H1 2013    2012         2012
(in millions of                                     published       comparable
euros)                                              change          change^(a)
Europe               3,471      3,547      +2.2%        +1.2%
Americas             1,518      1,590      +4.8%        +3.9%
Asia-Pacific         1,675      1,562      -6.7%        +0.2%
Middle East and      173        186        +7.6%        +16.5%
Africa
GAS AND SERVICES     6,837      6,885      +0.7%        +2.0%
Large Industries     2,466      2,461      -0.2%        +2.0%
Industrial           2,564      2,538      -1.0%        +2.2%
Merchant
Healthcare           1,197      1,344      +12.3%       +5.1%
Electronics          610        542        -11.1%       -5.2%
(a) Excluding currency, natural gas and significant scope impacts.


Europe

Revenue in Europe totaled 3,547million euros, up +1.2% on a comparable basis,
and notably with an increase of +2.2% in Q2. H1 growth was +4.3% including the
significant Home Healthcare acquisitions. While industrial demand for oxygen
remained weak in advanced economies, particularly in the south, demand for
hydrogen remained solid. The region continued to benefit, in Home Healthcare,
from regular growth in demand and sustained number of acquisitions and, in
developing economies, strong momentum generating growth of +26% due to
ramp-ups, site takeovers and minor acquisitions in Russia, Poland and Turkey.

  *Large Industries revenue increased by +0.9% marked by stabilized demand
    in metals. Demand for refining remained strong. A ramp-up in Russia and
    the new contribution from site takeovers in Ukraine and Turkey has
    continued to boost growth in Eastern Europe.
  *Industrial Merchant sales were up slightly by +0.5%. Double-digit growth
    continued throughout H1 in developing economies due to strong demand, new
    facilities and acquisitions of local distributors. However, business in
    advanced economies suffered from a lack of growth in industrial production
    generally, with further declines in activity in Southern Europe. Q2 was
    slightly better, showing signs of stabilization. Pricing remained positive
    during H1 at +0.5%.
  *Healthcare grew by +3.9% in H1, or +15.2% including the contribution from
    the LVL Médical and Gasmedi acquisitions. Underlying growth picked up
    significantly in Q2 relative to Q1, helped by the difference in the number
    of working days from one quarter to the other. Home healthcare was
    particularly strong during the quarter, boosted by the integration of
    small bolt-on acquisitions in Poland, Germany and Scandinavia, providing
    synergies to offset pricing pressure. Medical gases sales were hampered by
    decreasing prices in a context of solid volumes. The Hygiene activity
    maintained a steady rate of growth at +8.2% in H1 2013.
  *Electronics revenue decreased by –13.1% compared to the previous year. As
    a result of the progressive transfer of this industry to Asia, the
    Electronics business now only represents 2.2% of European G&S revenues.
    Equipment sales were very limited due to an absence of any investment
    projects in the region. Gases sales were up as a result of the new client
    PV facilities in Italy.

Americas

Americas Gas and Services revenue totaled 1,590million euros, up +3.9% in H1
2013, or +5.8% adjusted for Q1 2012 customer settlements. Industrial gases
demand remained sustained in the North and continued to grow strongly in the
South. However, equipment sales to the Electronics industry were down
significantly.

  *In H1, Large Industries posted solid +5.8% sales growth, or +11.8%
    excluding the impact of customer settlements in 2012. While Gulf coast
    customer outages were significant in Q1, demand bounced back strongly from
    the end of March, particularly on the hydrogen pipeline. Canadian
    cogeneration also had a particularly strong Q2 benefitting from higher
    electricity prices. Developing economies demand continued to remain strong
    including in Mexico where the first unit is now ramping-up.
  *Industrial Merchant sales rose by +5.6%, helped by the contribution of
    several bolt-on acquisitions. Activity benefited from the seasonal pick-up
    in activity in the oil and gas sectors, in particular in Canada. Activity
    remained strong in Latin America and particularly in Argentina. Average
    pricing was +3.5% across the region.
  *Healthcare revenue rose by +8.9% driven by strong growth in the number of
    Home Healthcare patients in Latin America, particularly in Argentina and
    Brazil as well as in Canada. Conversely, activity and pricing have been
    soft in medical gases in the United States.
  *Electronics H1 sales were down by -19.1%. Excluding equipment and
    installation sales, the decline was limited to -9.9%.  Specialty gas sales
    from the Aloha range remained buoyant and will benefit in H2 from the
    integration of the Voltaix acquisition, currently in progress.

Asia-Pacific

Asia-Pacific revenue at 1,562million euros was up +0.2% in H1 2013, or +1.6%
adjusted for the customer settlements received in Q1 2012.  Performance
remained very contrasted: a further decline in activity of nearly -5% in
Japan due to continued weakness in Electronics and industrial demand more
generally, while sales in China were up a further +10%. Activity in the rest
of South East Asia continues to be impacted by the weakness of the electronics
sector, where the recovery will probably be slower than expected.

  *Large Industries sales increased by +0.8%, or +4.9%  excluding the
    customer settlement in Q1 2012. Growth was impacted by the delay in
    start-ups in the region during H1 2013 and rather slow demand in South
    East Asia, more generally. Nevertheless, growth in China remained at
    double digit resulting from strong demand, a start-up and other ramp-ups.
  *Industrial Merchant posted a decline of -1.8% in H1 reflecting further
    reduction in revenues in Japan. Activity in China continues to grow
    steadily as capacity continues to ramp-up. Elsewhere, sales growth was
    positive across the region.
  *Electronics grew by + 1.1% resulting from a strong pick-up in Equipment
    and Installation sales, providing an indicator of recovery in the cycle.
    On the other hand, to date, electronics specialty gas sales continued at
    low levels throughout the region. A recovery in demand is still expected
    in H2.

Middle-East and Africa

Middle East and Africa revenue totaled 186million euros in H1 2013, up
+16.5%. Strong underlying industrial demand throughout the region, a ramp-up
in South Africa and ongoing bolt-on acquisitions all contributed. Healthcare
is also growing rapidly in South Africa, in Tunisia and in the Middle East.
The more recent political issues in Egypt have not had any impact on H1
activity.

The construction of the major hydrogen unit in Yanbu, in Saudi Arabia,
continued on schedule.

Engineering and Technology

H1 2013 Engineering and Technology revenue totaled 372million euros, up
+1.8% as published compared to H1 2012.

Total order-intake remains strong at 964 million euros, of which more than two
thirds is Group investment projects, including the gasification project for
Shenyuan in the Fujian region and numerous other projects, particularly in
China.

Orders in hand totaled 4.9billion euros at the end of June 2013, up
significantly from the 4billion euros at year end. Most of the increase comes
from the rise in Group investment decisions during the period.

Other Activities

                                                   
Revenue                                            H1 2013 /       H1 2013 /
                    H1 2012    H1 2013    2012         2012
(in millions of                                    change          comparable
euros)                                                             change ^(a)
Welding             232        208        -10.6%       -10.5%
Diving and other    98         97         -1.3%        +1.0%
TOTAL               331        304        -7.8%        -7.1%
(a) Comparable: excluding currency impact.

Demand for Welding equipment and consumables continued to suffer from the
generally difficult industrial environment, particularly in the metals,
automobile and construction sectors in Europe, with sales declining during the
period.

Diving (Aqua Lung) posted modest growth on a comparable basis at +1.0%,
supported in particular by strong sporting goods sales.

OPERATING INCOME RECURRING

As a result of strict cost containment and significant efficiency
achievements, operating margins were maintained in H1 compared to H1 2012.

Operating income recurring before depreciation and amortization totaled 1,876
million euros, up +1.7%. Depreciation and amortization amounted to 620 million
euros, up +3.3%, reflecting particularly the impact of unit start-ups and
acquisitions.

Group operating income recurring (OIR) totaled 1,256 million euros in H1 2013,
up +0.9% compared to H1 2012. Operating Income recurring margin was 16.6%, up
10 basis points, or stable excluding the effect of natural gas pass-through.
This was due to the increase in the level of efficiencies, amounting to
138million euros, or 2.4% of costs, positive pricing and more generally,
strict cost control.

Gas and Services

Gas and Services H1 Operating Income Recurring totaled 1,291 million euros, up
+1.1%. The published operating income recurring margin amounted to 18.7%,
stable compared to H1 2012. The natural gas pass-through impact was negligible
during the period.

Cost inflation, excluding the impact of energy indexation, of +1.5% is lower
while overall prices were up by +0.3% due to persistent efforts in Industrial
Merchant (+1.8%) and despite structural pricing pressure in Electronics and
Healthcare. In addition, efficiencies totaled 133million euros. A portion of
this efficiency was absorbed by the pricing lag relative to cost inflation.
Retained efficiencies, at 61% of the total, contributed strongly to sustain
the margin.

Gas and Services H1 2013 Operating Income Recurring by geography

                                                               
Gas and Services Operating income recurring margin    H1 2012    H1 2013
Europe                                                17.9%      18.9%
Americas                                              23.4%      21.6%
Asia-Pacific                                          15.8%      15.6%
Middle-East and Africa                                20.5%      18.4%
TOTAL                                                 18.7%      18.7%
                                                                

Operating income recurring in Europe totaled 669 million euros, up +7.8%. It
includes in particular the positive impact of the acquisitions. The operating
margin, excluding the natural gas impact, was up +60 basis points, reflecting
the beginning of the effects of the cost alignment program as well as strict
cost containment over and above the traditional structural efficiency
projects.

Operating income recurring in the Americas amounted to 343 million euros, down
-3.3 %. Excluding the natural gas impact, the operating margin declined by -90
basis points from a high H1 2012 level which included customer settlements.

In Asia-Pacific, operating income recurring amounted to 244 million euros,
down -7.9%. Excluding the natural gas impact, the operating margin declined by
-40 basis points, due in particular to  low activity levels in Japan.

Operating income recurring for the Middle East and Africa amounted to 34
million euros, down -3.1%. The operating margin fell by - 210 basis points,
mainly due to pursued development efforts in the region.

Engineering and Technology

Operating income recurring for Engineering and Technology was 33million
euros. The operating margin reached 8.9%, -20 basis points relative to H1 2012
but at the top end of the defined range of 5-10%.

Other Activities

The Group’s Other Activities reported operating income recurring of 17 million
euros, down - 24.3%, while the operating margin totaled 5.7%, a decrease of –
130 basis points. This decline reflects the difficult context for the Welding
activity. Conversely operating margin for the Diving activity is progressing.

Research and Development and corporate costs

Research and Development and corporate costs include internal consolidation
adjustments and amounted to 85 million euros, down –3.7%. This decline
reflected the Group’s efforts to control corporate holding costs whilst
maintaining its research and innovation initiatives and investments.

NET PROFIT

Other operating income and expenses amounted to -41million euros in H1 2013
compared to a positive balance of 10million euros in H1 2012. They include
close to 50 million euros of realignment costs in advanced economies where
capacities are no longer aligned with the current level of activity.

Net finance costs at 114million euros fell by -7.9% compared to H1 2012,
reflecting a reduced average cost of debt down from 4.95% in H1 2012 to 4.26%
in H1 2013 compensating for an increase in average net debt during the period.
Other financial expenses and income have been restated for the integration of
the revised IAS19 pension accounting rules. On a restated basis, Other
Financial Income and Expenses were up slightly due to the currency impact.

H1 2013 effective tax rate was at 26.9% compared to 26.4% in H1 2012, mainly
due to non-recurring items.

Profit from associates was 9 million euros, compared to 14million euros in H1
2012. Minority interests amounted to 31million euros down 2 million euros in
the previous period, primarily linked to currency effects.

Overall, H1 2013 net profit (Group share) amounted to 752 million euros, down
-4.0%. Excluding realignment costs, H1 2013 net profit was stable (+0.2%). Net
earnings per share for the same period was 2.43euros, down -3.6%, due to the
purchase of 1.2million treasury shares during the semester. The average
number of outstanding shares used for the net earnings per share calculation
as of June 30, 2013 was 309,868,400. The number of shares at the end of the
period amounted to 311,746,596.

Change in the number of shares

                                                          
                                            H1 2012        H1 2013
Average number of outstanding shares ^(a)    311,254,031    309,868,400
(a) Used to calculate net earnings per share

Change in net indebtedness

Cash flow from operating activities before changes in the working capital
requirement amounted to 1,501million euros, up +6.2% compared to H1 2012.
This performance reflects the quality of the operating results.

The change in working capital requirement, at + 266 million euros in H1 2013,
was in line with revenue growth. The working capital to sales ratio, excluding
taxes, was 8.7% compared to 8.2% in H1 2012. A decline in Engineering advances
from a particularly high level in June 2012 was partially compensated by an
improvement in the performance of Gas & Services.

Despite the significant level of industrial investment decisions in the last
three years, the increase in industrial capital expenditures, at 981million
euros, was limited to +2.5%. Including 109 million euros of acquisitions,
total net capex reached 1.1billion euros, up +9% year-on-year.

Net indebtedness as of June 30, 2013 totaled 6,837 million euros, up 734
million euros compared to December 31, 2012, reflecting the usual seasonal
effect of the full payment of the 2012 dividend in H1. The debt-to-equity
ratio reached 67%. Adjusted for dividend seasonality, gearing was of 60%,
compared to 58% at year end 2012. The Group’s financial structure remains
solid, providing the flexibility to continue to seize investment
opportunities.

The return on capital employed after tax was 11.0% including the pro forma
annualized profit impact of the acquisition of LVLMédical and Gasmedi,
compared to 11.9% published at the end of H1 2012. This decrease reflects the
substantial ongoing industrial investment, which will contribute to
medium-term growth.

INVESTMENT CYCLE

INVESTMENT DECISIONS

Investment decisions continued at a strong pace throughout the semester, at
1.5billion euros. Industrial decisions reached a record level of 1.4billion
euros. The amount is split evenly between Developing and Advanced economies
and includes one large project in China, several projects on the Northern
European and Gulf Coast pipelines, carrier gas contracts in Electronics in
China and Singapore, new telemonitoring applications for sleep apnea treatment
compliance in Home Healthcare and more hydrogen filling stations. Financial
investments include bolt-on acquisitions in Home Healthcare and two Industrial
Merchant acquisitions in developing economies.

PORTFOLIO OF OPPORTUNITIES

The 12-month portfolio of opportunities stands at 3.8billion euros at the end
of June 2013. The rate of entry of new projects is at a new high but not quite
covering the rate of exit resulting from an exceptionally high level of
industrial projects awarded in H1. Consequently, the portfolio is slightly
down from year end. The new entries continue to be dominated by very large
projects, mostly in China. The number of takeovers has also increased with
projects in all developing regions. Developing economies account for 65% of
the portfolio, evenly split between China, the Middle-East and Eastern Europe.

CAPITAL EXPENDITURE

Gross capital expenditure in H1 2013 totaled 1,091 million euros, including
minority interest transactions increased by +6.6%, and represented 14.4% of
sales. This amount included 981 million euros of industrial investment, of
which two site takeovers in Ukraine and Mexico, and 109 million euros of
financial investment, comprising bolt-on acquisitions in Home Healthcare and
Industrial Merchant. Total capex were split 49% in Developing economies and
51% in Advanced economies.

Asset disposals amounted to 9.6million euros.

Net capital expenditure therefore totaled 1,081million euros.

START-UPS

After six projects came on stream in Q1 2013, the Group successfully started
up three additional production units in Q2 2013. These nine start-ups include
two air separation takeovers in Ukraine and Mexico, one Hydrogen plant in the
US Gulf Coast and three merchant units. Seven out of nine are located in
Developing countries and demonstrate the efforts undertaken by the Group to
strengthen its position in fast growing markets.

The Group maintains its target of 50 start-ups for the two-year period
2013-2014.

2013 H1 highlights

Major investment decisions continued

Investment decisions remained high during H1 2013.

  *In May, Air Liquide won a long-term contract in South East China with
    Fujian Shenyuan to supply industrial gases for its new caprolactam
    production plant, which will in turn supply a nylon production facility
    for textiles. The Group will invest in an industrial gases complex of
    eight units including an air separation unit, a gasification unit, a
    syngas purification unit and an ammonia plant. Six of these units use
    proprietary technologies of the Group. This project offers the Group the
    opportunity to operate a complete gasification chain from coal and oxygen
    to pure hydrogen.
  *In Texas, Air Liquide strengthened its existing relations with
    LyondellBasell and renews a long term contract to provide steam, power,
    air gases and water. The Group will re-invest in a state of the art
    cogeneration unit, and also in AirSeparation Unit upgrading, capacity
    expansion and additional infrastructure at the facility.. The overall
    investment for this facility will be approximately 180million euros.
  *In February, Air Liquide signed a long-term supply contract with Huntsman
    of carbon monoxide for its two MDI factories in the port of Rotterdam. The
    65 million euro investment will double the Group’s carbon monoxide
    production capacity in the bassin and supply new customer requirements on
    its Northern European pipeline network. The commissioning of the plant is
    scheduled for mid-2015.
  *In California, the Group contracted with Calgren Renewable Fuels to build
    a unit for carbon dioxide recovery, purification and liquefying. The
    carbon dioxide will be distributed to the food-and-beverage and
    manufacturing industries in the region.
  *Two important long-term contracts were signed to supply carrier gases to
    two new cutting-edge plants of BOE Technology, the largest manufacturer of
    advanced-technology flat panel displays in China. This long-term
    partnership is the largest investment made by Air Liquide to date for a
    client in this sector in China.

Group expansion through acquisitions

As a result of a focus on seeking out bolt-on opportunities, a significant
number have been done over the last 18 months which in H1 alone, added nearly
2.7% to the top-line growth. During H1, the signatures have continued:

  *The acquisition of NordicInfu Care has enabled the Group to expand its
    Home Healthcare presence into the Nordic countries with 4,600new patients
    in Sweden, Norway, Denmark and Finland and widen its expertise in home
    infusion treatments for chronic diseases, such as Parkinson and diabetes.
  *In the Southern hemisphere, Air Liquide acquired 73.3% of the Australian
    company Healthy Sleep Solution, a leading player in the field of sleep
    disorder, with 10,000 patients in 2012.
  *In the Electronics World Business Line, Air Liquide has signed an
    agreement to acquire Voltaix INC., operating in the U.S. and in South
    Korea. Voltaix produces advanced molecules used for semiconductors and
    high tech solar cells. Voltaix will double the Group’s capacity in the
    ALOHA^TM product line, bringing scale and synergies in molecule R&D.
  *At the beginning of the year, Air Liquide acquired Progressive Resources
    Inc., a supplier of liquid nitrogen and cryogenic storage for oil and gas
    customers based in four central states of the United States.

Early-market progression in Hydrogen energy

Air Liquide continues to invest for the long term in the H[2] Energy field, in
which early market development is progressing each quarter:

  *Air Liquide and its joint-venture subsidiary HyPulsion signed a contract
    to provide IKEA with a hydrogen filling station that will supply around 20
    forklift trucks powered by hydrogen fuel cells at its logistics platform
    in France. Replacing electric batteries with hydrogen-powered fuel cells
    provides greater flexibility and productivity thanks to an extended run
    time and shorter refilling down-time.
  *In April, Air Liquide announced an equity investment in Hydrexia, a
    spin-off from the University of Queensland. Founded in 2006, this company
    has developed an effective and reliable hydrogen storage technology using
    hydride. This breakthrough should enable Air Liquide to deliver hydrogen
    stored in the form of hydride to its customers rather than in cylinder or
    bulk, combining competitive pricing and higher storage density.
  *As part of a European project to develop the use of vehicles running on
    hydrogen, Air Liquide will design and install three new high-capacity
    filling stations in Europe by 2014. Over a three-year period,
    90hydrogen-fuelled vehicles will be made available to drivers in order to
    collect concrete data on how the vehicles are used.

Refinancing at attractive rates

To fund its development while benefiting from very favorable market
conditions, Air Liquide issued bonds for a total amount of 1 billion euros.

The notes were issued in four series:

                                         
Issued date      Amount         Tenor       Coupon
March 6, 2013    300 million    10 ^1/2     Fixed Rate, coupon of
                    euros             years          2.375% p.a.
June 6, 2013     250 million    2 years     Floating Rate, Euribor 3
                    euros                            months + 0.15%
June 6, 2013     200 million    3 years     Floating Rate, Euribor 3
                    euros                            months + 0.20%
June 6, 2013     250 million    6 years     Fixed Rate, coupon of
                    euros                            1.50% p.a.
                                           

Outlook

The H1 2013 operating performance is positive and in line with expectations.
It is the result of the improvement in activity observed in Q2, boosted in
particular by growth in Large Industries, Healthcare and the developing
economies, as well as by the Group’s ability to control costs and generate
substantial efficiencies.

The Group’s industrial investments and acquisitions in the first six months of
2013 reached more than one billion euros: focused on growth markets, they
allow Air Liquide to take leading positions.

The Group continues to adapt and to make the necessary adjustments to
strengthen its competitiveness and pursue profitable growth over the
long-term. Barring a degradation of the environment, Air Liquide is confident
in its ability to deliver another year of net profit growth in 2013.

Appendices

2^nd quarter 2013 revenue

By geography

                                                   
Revenues                                           Published       Comparable
In millions of      Q2 2012    Q2 2013    Change       change ^(a)
euros
Europe              1,724      1,778      +3.1%        +2.2%
Americas            746        824        +10.5%       +8.4%
Asia-Pacific        835        782        -6.3%        +2.2%
Middle-East and     89         95         +6.4%        +16.3%
Africa
Gas and Services    3,394      3,479      +2.5%        +4.0%
Revenues
Engineering &       188        225        +19.9%       +21.0%
Technology
Other Activities    172        159        -7.6%        -6.7%
Group revenue       3,754      3,863      +2.9%        +4.3%
                                                      

By World business line

                                                   
Revenues                                           Published       Comparable
In millions of      Q2 2012    Q2 2013    Change       change ^(a)
euros
Large Industries    1,204      1,236      +2.7%        +4.8%
Industrial          1,283      1,284      +0.1%        +3.8%
Merchant
Electronics         308        274        -11.0%       -4.0%
Healthcare          599        685        +14.4%       +6.8%
Gas and Services    3,394      3,479      +2.5%        +4.0%
Revenue
(a) Excluding currency, natural gas and significant scope impacts.
                                                      

Currency, natural gas and significant scope impacts

In addition to the comparison of published figures, financial information is
given excluding currency, the impact of natural gas price fluctuations and
significant scope effect.

Since industrial and medical gases are rarely exported, the impact of currency
fluctuations on activity levels and results is limited to euro translation
impacts with respect to the financial statements of subsidiaries located
outside the Euro-zone. Fluctuations in natural gas prices are generally passed
on to our customers through indexed pricing clauses.

Impacts for 2^nd quarter 2013

                                                       
(in millions of euros)                          Group    Gas et Services
Revenue Q2 2013                                 3,864    3,479
Change Q2 2013/ Q2 2012 published (%)           +2.9%    +2.5%
Currency impact                                 -2.7%    -2.9%
Natural gas impact                              -0.2%    -0.2%
Significant scope impact                        +1.5%    +1.6%
Change Q2 2013/ Q2 2012 comparable ^ (a) (%)    +4.3%    +4.0%
(a) Excluding currency, natural gas and significant scope impacts


For the Group, the currency impact was -101 million euros, the natural gas
impact was -8 million euros and significant scope impact was + 57 million
euros.

For Gas and Services, the currency impact was -97 million euros, the natural
gas impact was -8 million euros and significant scope impact was + 57 million
euros.

Explanation of the natural gas impact

Natural gas is an essential raw material for the production of hydrogen and
the operation of cogeneration units. All Large Industries hydrogen and
cogeneration contracts have clauses indexing sales to the price of natural
gas. Hence, when the price of natural gas varies, the price of hydrogen or
steam for the customer is automatically adjusted proportionately, according to
the index.

When the price of natural gas increases, revenue and costs rise by the same
euro amount, without significantly impacting Operating income recurring. This
mechanism has a negative effect on the operating margin.

Conversely, when the price of natural gas decreases, revenue and costs
decrease and operating income recurring is maintained, which has a positive
effect on the operating margin.

In both cases, natural gas price fluctuations do not change the intrinsic
profitability of the activity.

In H1 2013, the small reduction in the average price of natural gas impacted
Gas and Services operating margins positively by 10 basis points. At the
regional level, the increase in prices in North America led to an increase in
revenue and automatically decreased the operating margin. Conversely, in
Europe, the reduction in natural gas prices reduced revenue, helping to
increase operating margins.

Consolidated income statement

In millions of euros          H1 2012      H1 2012          H1 2013
                                 published       restated ^(a)
Revenue                       7,532.5      7,532.5          7,561.5
Other income                  59.6         59.6             55.0
Purchases                        (3,010.3)       (3,010.3)           (2,960.1)
Personnel expenses               (1,341.0)       (1,340.1)           (1,373.8)
Other expenses                   (1,396.0)       (1,396.0)           (1,406.2)
Operating income recurring
before depreciation and       1,844.8      1,845.7          1,876.4
amortization
Depreciation and                 (600.6)         (600.6)             (620.2)
amortization expenses
Operating income recurring    1,244.2      1,245.1          1,256,2
Other non-recurring              12.5            12.5                12.2
operating income
Other non-recurring              (2.8)           (2.8)               (52.9)
operating expenses
Operating income              1,253.9      1,254.8          1,215.5
Net finance costs                (123.4)         (123.4)             (113.6)
Other financial income           34.5            5.2                 3.5
Other financial expenses         (64.0)          (44.3)              (46.5)
Income taxes                     (291.6)         (288.6)             (284.2)
Share of profit of               13.6            13.6                8.7
associates
Profit for the period         823.0        817.3            783.4
• Minority interests             33.3            33.3                31.0
• Net profit (Group share)    789.7        784.0            752.4
                                                         
Basic earnings per share      2.54         2.52             2.43
(in euros)
(a) 2012 restated for the effects of changes to IAS 19 «Employee benefits ».


Consolidated balance sheet

                              As at Dec 31       As at Dec 31       As at June
In millions of euros       2012            2012            30
                              published          restated^(a)       2013
ASSETS                                                   
Goodwill                   5,132.7         5,132.7         5,126.8
Other intangible assets       726.5              726.5              706.1
Property, plant and           12,784.7           12,784.7           13,009.0
equipment
Non-current assets         18,643.9        18,643.9        18,841.9
Non-current financial         435.8              435.8              430.9
assets
Investments in                221.7              221.7              200.4
associates
Deferred tax assets           365.5              372.8              358.9
Fair value of
non-current derivatives       53.8               53.8               59.5
(assets)
Other non-current          1,076.8         1,084.1         1,049.7
assets
TOTAL NON-CURRENT          19,720.7        19,728.0        19,891.6
ASSETS
Inventories and               775.8              775.8              812.4
work-in-progress
Trade receivables             2,826.5            2,826.5            2,908.1
Other current assets          422.3              422.3              507.2
Current tax assets            71.3               71.3               68.2
Fair value of current         33.2               33.2               37.9
derivatives (assets)
Cash and cash                 1,154.2            1,154.2            1,024.7
equivalents
TOTAL CURRENT ASSETS       5,283.3         5,283.3         5,358.5
TOTAL ASSETS               25,004.0        25,011.3        25,250.1
                                                                    
EQUITY AND LIABILITIES                                   
Shareholders’ equity       10,211.7        10,190.4        9,998.0
Minority interests         232.6           232.6           233.9
TOTAL EQUITY               10,444.3        10,423.0        10,231.9
Provisions, pensions
and other employee            2,216.1            2,246.9            2,060.1
benefits
Deferred tax                  1,134.8            1,132.6            1,229.4
liabilities
Non-current borrowings        5,789.0            5,789.0            6,533.8
Other non-current             195.6              195.6              189.9
liabilities
Fair value of
non-current derivatives       85.1               85.1               52.5
(liabilities)
TOTAL NON-CURRENT          9,420.6         9,449.2         10,065.7
LIABILITIES
Provisions, pensions
and other employee            243.2              243.2              223.6
benefits
Trade payables                1,896.1            1,896.1            1,887.1
Other current                 1,325.6            1,325.6            1,337.7
liabilities
Current tax payables          176.6              176.6              156.2
Current borrowings            1,484.7            1,484.7            1,336.1
Fair value of current
derivatives                   12.9               12.9               11.8
(liabilities)
TOTAL CURRENT              5,139.1         5,139.1         4,952.5
LIABILITIES
TOTAL EQUITY AND           25,004.0        25,011.3        25,250.1
LIABILITIES
(a) 2012 restated for the effects of changes to IAS 19 « Employee benefits ».


Consolidated cash flows statement

In millions of euros             H1 2012    H1 2012          H1 2013
                                                  restated ^(a)
Operating activities                                       
Net profit (Group share)         789.7      784.0            752.4
Minority interests                  33.3          33.3                31.0
Adjustments :
• Depreciation and                  600.6         600.6               620.2
amortization
• Change in deferred taxes          34.1          31.1                57.5
• Increase (decrease) in            (34.3)        (34.3)              39.0
provisions
• Share of profit of
associates (less dividends          4.0           4.0                 14.6
received)
• Profit/loss on disposal of        (5.6)         (5.6)               (13.7)
assets
Cash flow from operating
activities before changes in     1,421.8    1,413.1          1,501.0
working capital
Changes in working capital          (270.1)       (270.1)             (266.4)
Other                            (13.6)     (4.9)            (40.8)
Net cash flows from operating    1,138.1    1,138.1          1,193.8
activities
                                                          
Investing activities                                       
Purchase of property, plant
and equipment and intangible        (957.4)       (957.4)             (981.5)
assets
Acquisition of subsidiaries         (59.4)        (59.4)              (109.1)
and financial assets
Proceeds from sale of
property, plant and equipment       30.9          30.9                8.9
and intangible assets
Proceeds from sale of            0.6        0.6              0.7
financial assets
Net cash flow used in            (985.3)    (985.3)          (1081.0)
investing activities
                                                          
Financing activities                                       
Dividends paid
• L'Air Liquide S.A.                (722.6)       (722.6)             (819.4)
• Minority interests                (37.3)        (37.3)              (35.3)
Proceeds from issues of share       17.4          17.4                39.0
capital
Purchase of treasury shares         (112.5)       (112.5)             (116.8)
Increase (decrease) in              37.4          37.4                668.9
borrowings
Transactions with minority       (6.2)      (6.2)            (0.1)
shareholders
Net cash flows from (used in)    (823.8)    (823.8)          (263.7)
financing activities
                                                                      
Effect of exchange rate
changes and change in scope      (25.0)     (25.0)           10.0
of consolidation
Net increase (decrease) in       (696.0)    (696.0)          (140.9)
net cash and cash equivalent
NET CASH AND CASH EQUIVALENTS    1,712.4    1,712.4          1,086.5
AT BEGINNING OF PERIOD
NET CASH AND CASH EQUIVALENTS    1,016.4    1,016.4          945.6
AT END OF PERIOD
(a) 2012 restated for the effects of changes to IAS 19 «Employee benefits ».


The analysis of net cash and cash equivalents at the end of period was as
follows:

In millions of euros            H1 2012      H1 2012          H1 2013
                                   published       restated ^(a)
Cash and cash equivalents       1,121.5      1,121.5          1,024.7
Bank overdraft (included in     (105.1)      (105.1)          (79.1)
current borrowings)
Net cash and cash               1,016.4      1,016.4          945.6
equivalents
                                                                       

Net indebtedness calculation

In millions of euros          H1 2012      H1 2012          H1 2013
                                 published       restated ^(a)
Non-current borrowings        (5,352.5)    (5,352.5)        (6,533.8)
(long-term debt)
Current borrowing                (1,803.5)       (1,803.5)           (1,336.1)
(short-term debt)
TOTAL GROSS INDEBTEDNESS      (7,156.0)    (7,156.0)        (7,869.9)
Cash and cash equivalents        1,121.5         1,121.5             1,024.7
Derivative instruments
(assets) – fair value            23.3            23.3                8.2
hedge of borrowings
Derivative instruments
(liabilities) – fair value       0               0                   0
hedge of borrowings
TOTAL NET INDEBTEDNESS AT     (6,011.2)    (6,011.2)        (6,837.0)
THE END OF THE PERIOD
                                                                     

Statement of changes in net indebtedness

In millions of euros          H1 2012      H1 2012          H1 2013
                                 published       restated ^(a)
Net indebtedness at the       (5,248.1)    (5,248.1)        (6,102.5)
beginning of the period
Net cash flows from              1,138.1         1,138.1             1,193.8
operating activities
Net cash flows used in           (985.3)         (985.3)             (1,081.0)
investing activities
Net cash flows used in
financing activities             (861.2)         (861.2)             (932.6)
excluding increase
(decrease) in borrowings
Total net cash flow           (708.4)      (708.4)          (819.8)
Effect of exchange rate
changes, opening net
indebtedness of newly            (54.7)          (54.7)              85.3
acquired companies and
others
Change in net indebtedness    (763.1)      (763.1)          (734.5)
NET INDEBTEDNESS AT THE       (6,011.2)    (6,011.2)        (6,837.0)
END OF THE PERIOD
(a) 2012 restated for the effects of changes to IAS 19 «Employee benefits ».

Contact:

Air Liquide
 
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