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Air Liquide Sees Profit Growth as China Offsets Currency Costs

Air Liquide Factory
An employee transports a gas cylinder at the Air Liquide SA factory in Moissy Cramayel, France. Photographer: Fabrice Dimier/Bloomberg

Air Liquide SA, the world’s second-largest industrial gas company, predicted improved profit in 2014 as growth in China helps counter costs tied to the stronger euro currency.

There are “good signs” currently coming from China, where Air Liquide generated almost 900 million euros ($1.2 billion) of revenue last year, Chief Executive Officer Benoit Potier. Brazil, where sales grew “close to” 10 percent last year, “is raising some questions about its ability to carry out large projects,” he said.

Potier is cutting jobs in France, Germany and Italy to adapt to Europe’s economic woes. The company is budgeting for annual revenue increases averaging 5 percent to 7 percent in 2011 to 2015, adjusted for currency effects, as it taps demand for industrial gases in health care, energy and electronics. Air Liquide competes with No. 1 supplier Germany’s Linde AG.

“With significant FX headwinds likely to persist in the first half of 2014 and uncertainty over emerging market growth, we believe management is rightly being cautious,” Patrick Lambert, an analyst at Nomura in London, said in a research note today. He has a neutral rating on the stock.

The company will propose a dividend of 2.55 euros per share, up 2 percent from last year. It will also award one free share for 10 existing shares as of June 2, subject to shareholders approval. Air Liquide declined 1.1 percent in Paris to 98.19 euros as of 1:27 p.m.


Pricing power in Europe remains very weak, at 0.5 percent for the industrial-merchant segment, compared with as much as 4 percent in the U.S., the CEO said.

Sales last year fell 0.7 percent to 15.2 billion euros, hurt by the stronger euro against other currencies. Sales of gas and services, which provide the bulk of Air Liquide’s revenue, rose 4.4 percent in the fourth quarter, excluding items including currency and natural gas impacts.

“If the euro was closer to its inception level, Europe’s economy would fare better,” Potier said at a press conference today.

Signs of Growth

The number of plant startups, a gauge for future growth, climbed to 23 last year from 17 in 2012, and will climb to around 27 in 2014, Potier said. Investment may fall “slightly” again this year and next as the company focuses on commissioning large projects that have been delayed by customers, Potier said.

Net income climbed 3.1 percent last year to 1.64 billion euros, also boosted by the sale of a stake in hygiene-product maker Anios. Analysts, on average, estimated 1.6 billion euros in a Bloomberg survey of 11 analysts.

“Barring a deterioration in the environment, Air Liquide is confident in its ability to deliver another year of net profit growth in 2014,” said Potier.

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