MOSCOW (MRC) -- Air Liquide reports an 8.7% decline year on year (YOY) in group sales for the third quarter to EUR4.98 billion (USD5.90 billion), beating analysts’ consensus estimate by 180 basis points, with the company reconfirming its existing full-year 2020 guidance of delivering net profit close to last year’s result of EUR2.2 billion, said Chemweek.
The company has not published third-quarter net profit figures. The quarter produced “a marked recovery in sales” compared with the second quarter of this year, with improvements across all business lines and in all regions, according to Benoit Potier, Air Liquide’s chairman and CEO. Within the context of limited local lockdowns and a progressive recovery until the end of the year, the company is “confident in its ability to further increase its operating margin and to deliver net profit close to [the] preceding year’s level,” he says. Cash flow from operating activities reached nearly 24% of sales in the quarter, with industrial investment decisions for the nine months to end September totaling EUR2.1 billion and EUR685 million for the quarter, according to the company. It has also achieved EUR311 million in cost efficiencies so far this year, with a total of over EUR400 million targeted for the full financial year 2020, it adds.
Air Liquide says that China has seen the most dynamic level of recovery in the third quarter, with sales “up markedly” YOY, while the situation was “more contrasted” in the rest of the Asia Pacific region. Activity is also picking up in Europe, with slight growth in sales seen compared with the equivalent quarter last year. Signs of a more gradual recovery can be seen in North America, with business remaining strong in South America, it says.
Air Liquide’s gas and services business, which represents 96% of group sales, reported a decline in revenue of 8.9% YOY to EUR4.77 billion, beating consensus by 150 basis points according to Bernstein Research. Sales in Air Liquide's global markets and technologies segment totaled €143 million in the quarter, a rise of 11.4% YOY mainly due to production capacity no longer being constrained by the pandemic. Consolidated engineering and construction revenue was EUR60 million, with sales to third-party customers remaining sluggish due to the pandemic, it says.
The contribution to the company’s annual sales from the start-up of new production units and the ramp-up of existing units this year is expected to contribute EUR180 million in additional revenue for 2020, at the high end of its previous estimated range, it says. The estimated additional contribution to sales from these units has also been revised upward to a range of EUR320–350 million, which also factors in the expected contribution to revenue from 16 air separation units that Air Liquide is acquiring from Sasol in South Africa, it adds.
Air Liquide’s better-than-expected sales were helped by stable growth in the company’s large industries segment, driven by air gases and hydrogen volumes in North America and the ramp-up of new hydrogen units in Latin America, Bernstein says. Although demand in Europe for air gases from the steel sector remained weak, volumes improved for chemicals, while in Asia Pacific there was strong demand for oxygen volumes for both the chemicals and steel sectors, mainly in China, it says.
As MRC informed earlier, Air Liquide finalised an agreement with Sasol to acquire the biggest oxygen production site in the world with a plan to reduce its carbon dioxide (CO2) emissions by 30%. After the announcement on July 29, the international major industry gas company has now entered into a business purchase agreement with Sasol to acquire the oxygen production site in Secunda, South Africa.
Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).
According to MRC's DataScope report, PE imports to Russia dropped in January-June 2020 by 7% year on year to 328,000 tonnes. High density polyethylene (HDPE) accounted for the main decrease in imports. At the same time, PP imports into Russia rose in the first six months of 2020 by 21% year on year to 105,300 tonnes. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.
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