MOSCOW (MRC) -- Air Liquide has reported an 8.6% rise year on year (YOY) in net profit to EUR2.435 billion (USD2.95 billion) for full-year 2020, on sales down 6.5% to EUR20.48 billion, beating analysts’ consensus estimate and the company's own most recent guidance provided in October 2020, said Chemweek.
Net earnings per share are EUR5.16, in line with the increase in net profit. The company’s sales in the fourth quarter declined 5.1% YOY to EUR5.23 billion but beat the consensus estimate of EUR5.18 billion as compiled by Vara Research on behalf of Air Liquide, and returned to growth sequentially over the third quarter’s sales of EUR4.98 billion. Air Liquide does not provide fourth-quarter net profit figures.
Revenue from the gas and services segment, representing approximately 96% of Air Liquide’s group sales, fell 5.8% in the quarter compared with the prior-year period to EUR4.96 billion, in line with consensus, but was up from EUR4.78 billion in the third quarter. Industrial merchant revenue fell 9.1% YOY to EUR2.23 billion, large industries sales declined slightly to EUR1.33 billion, healthcare sales fell 6.1% to EUR899 million, and electronics sales were almost flat at EUR497 million.
Air Liquide’s performance in 2020 was “outstanding in this environment,” according to chairman and CEO Benoit Potier. “Sales resilience, significant margin improvement, net profit growth, and investment decisions continued at a very high level,” he says. Sales were “back to growth in the fourth quarter” with gas and services revenue holding up well throughout the year, he says. “Geographically, the situation was extremely varied, with Europe faring well, driven by demand in healthcare, and a solid performance from the developing economies, particularly China, and Eastern European and Latin American countries,” Potier notes.
Investment decisions in 2020 totaled EUR3.2 billion, which is indicative of future growth, according to Potier. “In an environment marked by global recovery plans and commitment to energy transition, the group still has numerous investment opportunities, of which 44% are projects related to the fight against climate change, including the development of hydrogen energy,” he says. The company’s 12-month portfolio of investment opportunities stood at EUR3.1 billion at the end of December, with several new entries during the fourth quarter, he adds. Large industries projects for chemical customers represent the highest share of Air Liquide’s investment backlog, according to the company.
The investment opportunity type “has changed significantly,” most notably with low-carbon hydrogen production projects through electrolysis, as well as the capture and storage of carbon dioxide in the large industries segment, Air Liquide says. These energy-transition projects “may be subject to accessing subsidies,” it says. “Europe, where the majority of energy-transition projects are based, has therefore become the leading region in the portfolio, and has reached a record level with close to 40% of opportunities,” it says.
Given limited local lockdowns in the first half of 2021 and assuming a recovery in the second half of the year, Air Liquide is “confident in its ability to further increase its operating margin and to deliver recurring net-profit growth,” Potier says.
Gas and services sales in the Americas totaled €7.80 billion in 2020, down 3.7%, but with North American sales starting to improve sequentially in the third quarter, it says. Sales were “up markedly” in Latin America, driven mainly by a large industries start-up in Argentina and strong demand for medical oxygen. The industrial merchant segment saw a strong sequential recovery over the second half of 2020, it says. Healthcare posted annual sales growth of 7.7% and electronics recorded growth of 5.2%.
Sales in Europe rose 1.3% in 2020 to €6.83 billion, with industrial activities starting to recover from the beginning of May, and “markedly accelerated its recovery” during the second half of the year, according to the company. Large industries sales slipped 1.0% but saw good sequential growth from the third quarter, with chemicals and steel volumes improving toward the end of the year, “driven notably” by recovery in Germany’s automotive sector, Air Liquide says. The industrial merchant sector recovered in the second half of 2020 but saw full-year sales decline 5.6%. Healthcare activities posted sales growth of 9.7%.
Revenue in APAC was stable at €4.47 billion, with all industrial activities posting growth in the fourth quarter. China, with sales growth of 3.4%, “brought a strong contribution thanks to a quick recovery across all activities,” says Air Liquide. The recovery was slower in the rest of the region, it says. Sales in the Middle East and Africa declined 2.6% in 2020 to EUR564 million.
The additional contribution to sales from unit start-ups and ramp-ups totaled EUR191 million in 2020, with the contribution to 2021 sales from start-ups and ramp-ups expected to be about EUR250 million, the company says. A total of 16 units currently being acquired from Sasol in South Africa should bring an additional contribution of about EUR100 million in 2021, with sales expected to exceed EUR400 million/year once they are fully integrated, Air Liquide says.
As MRC wrote earlier, in September 2020, 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.
We remind that Sasol's world-scale US ethane cracker with the capacity of 1.5 mln tonnes per year reached beneficial operation on 27 August 2019. Sasol's new cracker, the heart of LCCP, is the third and most significant of the seven LCCP facilities that came online and will provide feedstock to the company's six new derivative units at Sasol's Lake Charles multi-asset site.
Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 2,220,640 tonnes in 2020, up by 2% year on year. Only shipments of low density polyethylene (LDPE) and high density polyethylene (HDPE) increased. At the same time, polypropylene (PP) shipments to the Russian market reached 1 240,000 tonnes in 2020 (calculated using the formula: production, minus exports, plus imports, excluding producers' inventories as of 1 January, 2020).
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