EuroBusiness Media (EBM): Air Liquide, the world leader in gases for industry, health and the environment, reports 2008 full-year earnings. Benoît Potier, welcome. You are the Chairman and CEO of Air Liquide. What were the key figures and main achievements of the Group in 2008?
Benoît Potier (BP): In 2008 we managed to achieve a sustained momentum throughout the year. Our revenue for 2008 increased to 13.1 billion euros, which is up 11 % over the previous year, while the Earning per Share rose by 10.3 %.
All geographies and activities contributed to this growth: 19 new production units were successfully started up, of which 10 are situated in emerging economies, in particular in the Middle East and China. Other highlights included our continued growth in hydrogen markets, new contracts for oxygen and a significant rise in photovoltaic activity where Air Liquide is the industry leader. In addition, we progressed in the technological fields of oxy-combustion, biofuels, and medical gases.
Also I would like to note that the Group recruited more than 6000 new people throughout the world last year.
And finally we continued our industrial investment strategy, making commitments worth 1.9 billion euros in 2008. This is 40 % higher than before, and prepares the growth of tomorrow.
On the whole, the 2008 performance truly demonstrates the Company’s growth momentum and also its resilience; especially during the economic slowdown which we all saw in the fourth quarter. Despite that slowdown, sales in Gas & Services still grew by 7.9 % on a comparable basis, held up thanks to volumes and prices.
In the end I want to express my appreciation to our 43,000 employees who made it possible for Air Liquide to achieve these solid results.
EBM: What are the concrete results of the ALMA program which was launched a year ago?
BP: The results of our strategic program ALMA are in line with our 2008 objectives. Firstly, in terms of growth with an 11 % increase in revenue. Next, in efficiency, where we achieved 230 million euros worth of savings, out of the 600 million euros target over a 3 year period. And finally in terms of the Return on Capital Employed, at 12.1%.
Beyond the numbers, there is a tremendous mobilisation of the teams in 75 different countries which, thanks to ALMA, are gathered around our shared objectives.
ALMA is all about accelerating and transforming the entire company.
EBM: Is the Group able to face the current crisis?
BP: I am convinced that Air Liquide has structural advantages and a present positioning which will enable it to deal with this new economic environment.
The Group has built up a diversified and balanced customer portfolio covering many business sectors and geographies, and a mix of products and applications which has broadened considerably over the past 10 years. To give just a few examples, today we have more hydrogen, more healthcare, more services, and we are better placed in sectors with high growth potential.
Today Air Liquide benefits from revenue growth linked to the start up of new production units as well as the positions we recently built up in high-growth countries.
The result is that 80 % of Air Liquide’s revenue today comes either from long-term defensive markets, or from products which are mostly unaffected by cycles.
For these reasons, my view is that the Group is well equipped to deal with the effects of the economic slowdown.
EBM: What is your outlook for 2009, and do you plan to pursue your active investment policy?
BP: In 2009 we are going to give priority to cash management, to increasing our efforts in terms of cost containment, and to greater selectiveness in our investments. Priorities within the ALMA program have already been realigned accordingly, notably by raising our cost-savings target to 250 million euros in 2009.
As far as investments are concerned, we are going to maintain the momentum that we have built over the past two years. Our total envelope for capital expenditure for 2009 is 1.6 billion euros, which will allow us to secure our medium-term growth.
We’re confident that our business model is solid. Even in the current environment of reduced visibility, it will enable us to maintain our course.
By strengthening our fundamentals, we aim to secure and to finance growth in revenue and net profit in 2009.
EBM: When you launched the strategic ALMA program, you stated your ambition of being the recognized leader in your industry. In the current environment, is that still the plan ?
BP: Our ambition remains unchanged. Being the number 1 in our sector means leading the way in opening up new markets, attracting new employees and talents, and driving progress in the industry by creating new solutions for customers. It also means acting in a socially responsible manner.
Over the past three years we have made investment commitments totaling around 7 billion euros, which means that we have set a solid growth foundation for the years ahead. These investments have been directed towards promising and long-term markets, which make up our five growth drivers: Energy, the Environment, Emerging Economies, Health and High-tech. They are all in line with strong underlying trends in society today.
So if I just summarize, our growth momentum today is focused on achieving the ALMA objectives, and our teams are mobilized and responsive. Once the effects of the economic slowdown have been absorbed, our rate of growth will continue as before. Therefore we have no reason to change our ambition of being the recognized leader in our industry.
EBM: What can you tell shareholders about the decline in the share price, and about the dividend?
BP: It’s true that Air Liquide’s share price did not escape the general market trends in 2008.
I’m conscious of the fact that this represents a drop in portfolio value for our shareholders, even if our performance relative to the market index does indeed demonstrate the resilience of our stock.
At this time, I would like to thank our individual as well as our institutional shareholders, who have continued to show their confidence in Air Liquide.
I would also like to extend my welcome to the 30,000 new individual shareholders who joined us recently, increasing our shareholder base to 410,000 individuals, representing 38 % of the capital.
Regarding the dividend, the Board is proposing a dividend payment of €2.25 per share, which is unchanged compared to 2007, even though the number of shares outstanding has increased by 10 % thanks to last year’s bonus share issue.
All in all, we this strive this year, as we have for the past 30 years, to ensure that our shareholders’ investments are properly rewarded.
EBM: Benoît Potier, Chairman & CEO of Air Liquide, thank you very much.
BP: Thank you.
