Analysis and opinion on the Air Liquide share. Photo credit: Adobe Stock
This week, Café de la Bourse put Air Liquide under the microscope. We looked at the group’s mission and ambitions, the details of its activities and its financial performance. We also looked at the technical configuration of the Air Liquide share price on the stock market and we remind you of the advantages of being a shareholder of Air Liquide, a company that is particularly generous with its owners. Find our analysis and opinion on the Air Liquide share.
Air Liquide: an industrial gas giant
Mission and ambitions of the Air Liquide company
Air Liquide is a world leader in gases for industry and health. Oxygen, nitrogen and hydrogen are essential elements for life, matter and energy and have been at the heart of the company’s activities since its creation in 1902.
Air Liquide’s ambition is to be a leader in the industrial gas sector and to deliver long-term performance while contributing to a more sustainable world. The company has several assets to understand the evolution of its markets and offer innovative and sustainable solutions that set it apart. On the one hand, Air Liquide has the reputation of being very close to its customers, all over the world, which allows it to respond well to their expectations. On the other hand, the company has credible expertise in essential molecules (Nitrogen, Oxygen, Hydrogen) as well as a mastery of associated technologies to provide the best solutions to the challenges of a world in energy change.
Thanks to its dominant positions in the key markets of tomorrow, Air Liquide claims to be at the heart of the challenges of energy and environmental transition, the transformation of healthcare and technological progress.
Air Liquide’s 2025 “Advance” strategy
ADVANCE, Air Liquide’s new strategic plan for 2025, is an important milestone in the company’s history. It places sustainable development at the heart of the group’s strategy, resolutely putting Air Liquide on the path to global performance by combining financial performance and extra-financial performance.
Thus, Air Liquide intends to continue its growth trajectory while preparing to reduce its CO2 emissions from around 2025. This is reflected on the one hand by an acceleration in the growth of turnover reaching a rate of +5 to +6% on average per year, but also by a return on capital employed (ROCE) of more than 10% from 2023, as well as the desire to initiate the reduction of CO2 emissions around 2025, reduce them by -33% by 2035 and achieve carbon neutrality by 2050. In addition, ~50% of industrial investments will be devoted to energy transition by 2025. Finally, ~8 billion euros will be invested in the low-carbon hydrogen value chain by 2035 and hydrogen sales will increase from 2 to 6 billion euros. euros by 2035.
Strengths and weaknesses of Air Liquide
Air Liquide’s strengths and weaknesses. Photo credit: Freepik
What are Air Liquide’s activities?
World leader in gases, technologies and services for Industry and Health, Air Liquide is present in 75 countries with approximately 66,400 employees and supplies more than 3.8 million customers and patients. Air Liquide is a specialist in oxygen, hydrogen and nitrogen for industrial and sanitary purposes.
The geographical breakdown of Air Liquide revenue is as follows: France (13.1%), Europe (26%), United States (30.9%), Americas (5.8%), Asia – Pacific (21.1%), Africa and Middle East (3.1%).
The group classifies its activities as follows: Gas & Services, Engineering & Construction, Global Markets & Technologies.
Gas & Services (95.3% of sales)
The majority of Air Liquide’s revenue comes from the production and sale of industrial and medical gases: hydrogen, oxygen, nitrogen, but also syngas. Gas & Services comprises four global business lines: Large Industries, Industrial Merchant, Healthcare and Electronics. Gas supply is based on local production in order to limit transport costs. Thus, Air Liquide’s gas production units are distributed throughout the world.
Large Industries supplies industrial gases by operating large production units. It supplies customers in the metals, chemicals, refining and energy sectors, where gas volumes are significant. Industrial Merchant provides a wide range of different gases, application equipment and associated services. Its customers include industries and professionals who need smaller quantities than large industry customers. The gas can be distributed in bulk, in liquid, or in cylinders or in gaseous form. The Healthcare division provides medical gases, equipment and services to hospitals and also directly to patients in their homes. Finally, the electronics division provides gases, materials (complex molecules) used in manufacturing processes, and services mainly used for the production of semiconductors, but also for flat screens and photovoltaic panels.
Engineering and construction (2.9% of sales)
The engineering and construction activity offers turnkey solutions to customers: the group designs and builds gas production units from the feasibility study to the delivery of the complete installation.
Global markets and technologies (1.7% of sales)
The Global Markets & Technologies (GM&T) division focuses on markets that require a global approach: it offers technological solutions – molecules, equipment and services – to support the development of the energy transition and “deep tech” in the fields of advanced technologies, industrial solutions, biogas solutions or in the navy.
Fundamental analysis of Air Liquide
Air Liquide results for the first quarter of 2022
Commenting on the revenue for the first quarter of 2022, Benoît Potier, Chairman and Chief Executive Officer of the Air Liquide group, was satisfied with strong growth reflecting a good level of activity and demonstrating the group’s resilience in a particularly marked context. by inflation and the war in Ukraine.
In fact, the group’s turnover is up by +8% on a like-for-like basis and by +29% on a reported basis, reflecting in particular the sharp rise in energy prices contractually passed on to Large Industries customers. Turnover reached 6.9 billion euros, including 6.6 billion euros for the Gas & Services activity.
In 2022, in the absence of significant economic disruption, Air Liquide remains confident in its ability to further increase its operating margin and deliver recurring growth in net income at constant exchange rates.
Air Liquide financial results for the year 2021
In 2021, the group achieved an excellent performance, despite the ongoing pandemic and the strong inflationary pressures linked mainly to the sharp increase in energy prices in the second half of the year.
The investment dynamic was maintained, as reflected in the signing of numerous agreements, particularly related to the energy transition.
The group achieved another year of profitable growth: revenue reached €23.3 billion, up +8.2% on a like-for-like basis, operating margin increased by 70 basis points excluding energy impact and recurring increased by 13.3% at constant exchange rates.
The group’s current operating income (COI) reached €4,160 million, marking a strong increase of +9.8% and +12.7% on a comparable basis, which is higher than the growth of comparable sales of +8.2%. The operating margin was 17.8%, an improvement of +70 basis points excluding the impact of energy.
Net income amounted to 2,572 million euros in 2021, up +5.6%. Net earnings per share, at 5.45 euros, are up +5.5% compared to 2020, in line with the increase in net earnings.
Technical analysis of Air Liquide
Graphical analysis of the Air Liquide stock price
Graphical analysis of the Air Liquide stock price. Photo credit: Freepik
Source: Café de la Bourse, graph built on IG, data for information only
Technical analysis of the Air Liquide share price
Over the last 12 months, Air Liquide has followed an upward trend identified by the oblique resistance (in black on the graph) and the support of 138 euros (in yellow on the graph) which has been tested twice. Between mid-June 2021 and June 3, 2022 (before the detachment of the free shares), the Air Liquide share price increased by 10%. The detachment of free shares for shareholders on the account of one share granted for 10 held, automatically adjusts the market price of the Air Liquide share to maintain the enterprise value on the new basis of shares in circulation (adjustment identified by the light blue eclipse on the graph).
In the short term, the trend for Air Liquide shares is down in the wake of the decisions to increase certain central banks (the American Federal Reserve in particular): the MACD is below its signal line, and negative, and the RSI is in the oversold zone. A technical rebound is possible in the next sessions.
Our opinion on the Air Liquide share
Air Liquide is the “good father” type investor stock par excellence. It can pride itself on delivering profitable growth and an excellent return on invested capital for more than a century. It is a financially robust company that is resilient to macroeconomic market cycles. Air Liquide is also very generous with its shareholders: it pays 55% of its net income in dividends and regularly allocates free shares, with a larger number of free shares after several years of ownership via a loyalty bonus (+10 % after two full calendar years). When the number of Air Liquide shares held does not correspond to a multiple of the parity of the allocation operation, you receive on your securities account or PEA a fraction of the Air Liquide share that cannot be distributed, called “broken” .
Also find this article originally published on Stock Exchange Cafe