Air Liquide Plans New Plants in Turkey in Bid to Outpace Economy

Air Liquide SA (AI), which is vying for the top spot in the industrial-gas market with Linde (LIN) AG, plans to add more plants in Turkey as it seeks to outpace the country’s expected economic growth.

The company, which sells gases such as oxygen and nitrogen to clients in food to the steel industry, may consider building another plant in Iskenderun, on the eastern Mediterranean coast of Turkey, said Jerome Christin, general manager for Turkey, in an interview in Istanbul. Such a project would take place after a 190 million-lira ($93 million) expansion at Air Liquide’s Aliaga plant, on the Aegean coast in western Turkey, is completed in 2015.

The company, operating in about 80 countries, is cutting jobs in France, Germany and Italy, and Chief Executive Officer Benoit Potier is poised to announce a strategy this month to deal with Europe’s economic woes, growing industrial capacity in emerging markets, cheaper U.S. gas, and rising demand for health-care services and electronic goods such as tablets. Turkey is budgeting for gross domestic product growth of 4 percent for 2014 and 5 percent for 2015 and 2016.

“Turkey is such a strategic country in the world because of its size and growth potential,” Christin said. “Therefore there is a big room for growth as the trend in Turkish industrial companies is to outsource industrial gases.”

Air Liquide aims growth at around 10 percent in Turkey, he said.

Services

Linde, based in Munich, Germany, expanded in the Turkish market in 2007 by buying Birlesic Oksijen Sanayi AS for 92 million euros ($125 million) from Koc Holding AS (KCHOL), Turkey’s biggest business group. Air Liquide’s Aliaga expansion project follows its purchase of an air separation unit at the same site from Petkim Petrokimya Holding AS (PETKM), Turkey’s biggest petrochemicals producer, for $39 million in 2011.

Air Liquide, which opened a plant in Polatli, near the capital Ankara, in November as part of a 110 million-lira investment, is also considering a plant in the Marmara region, Christin said.

Air Liquide is betting its offering of custom-made equipment for delivery of gas in processes used by its customers will give it an edge in a crowded market.

“The Turkish market is in over-capacity, therefore companies offering value-added services can grow in the market,” Christin said. “Our added-value services are measurable and our customers can save about as much as 20 percent with our value-added services.”

To contact the reporter on this story: Ercan Ersoy in Istanbul at eersoy@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net

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