EuroBusiness Media (EBM): Air Liquide, the world leader in gases for industry, health and the environment, presents its ambition and objectives for 2015. Benoît Potier welcome, you are the Chairman and CEO of Air Liquide. Why have you decided to communicate these objectives today?
Benoît Potier (BP): First of all, we are, in 2010, in an exceptional environment following the worst crisis in half a century in 2009. I would say we are at the dawn of a new economic order after a huge bubble – this crisis in 2009 – a recovery, and we are now seeing a complete change in the balance of power between Developing economies and Advanced economies. I would say that 2010 is really a year of transition. In this context, it is interesting to see what the activity level of Air Liquide is and we are today at a stage where we have gained back all the volumes that we lost during the crisis; so we are back to pre-crisis levels. The momentum is very strong in Developing economies, with 29% growth in the first 9 months of 2010, highly contrasted with 7% growth in advanced economies. Another point which is interesting is the recovery in the investment cycle that we have seen during the course of this year. So this was the right time for reassessing our markets and finding new opportunities, those which were identified before the crisis and the new opportunities in the next five years. This is the reason why we have decided to update our objectives for 2015.
EBM: Can you tell us a bit more about these objectives for 2015?
BP: Well, to start with 2010, we can say that growth is back on the agenda, thanks not only to the recovery but also to all the efforts we made during the recession to sign new contracts and develop our activities. We are convinced of the growth potential of our markets and if we look at what those markets offer us, we think that they will grow by 7 to 8% on average per year. In this context, our 2015 objectives are, first of all, annual sales growth in the range of 8 to 10%, thanks to the geographical mix that we have but also to the innovations and the new products that we can put into the market during that period. The second objective will be a minimum of €200 million of operational efficiencies per year and it will be well in line with what we've done in the past 7 to 10 years. The third objective is to achieve a Return on Capital Employed (ROCE) in the range of 12 to 13% in the period. And those three objectives are financial objectives. But finally we will add a fourth objective, which is very important, which will be to further engage into responsible objectives during the period as part of the strategy in the next five years. So altogether, our ambition is to be the leader of our industry through performance and responsibility over the long-term.
EBM: You've just spoken of setting performance and responsibility objectives for 2015. Could you tell us what you mean exactly by performance and responsibility?
BP: Performance is the result of what we do. Without performance there's no trust from stakeholders over time. Performance is visible and measurable with Key Performance Indicators (KPIs). In terms of performance, we expect to deliver steady growth in net profit so as to pursue our strong dividend policy with high payouts and free share issues. Responsibility, on the other hand, is the way we act. It is definitely more complex to define what responsibility in society is, but it goes hand in hand with the values that Air Liquide has defined in the Principles of Action and in its Sustainable Development policy. Responsibility commitment is not new for Air Liquide. We actually selected 7 key domains related to our commitment to long-term success. As an example, a commitment to shareholders is one, to customers, but also to employees with safety and training, innovation, of course, and, finally, environment is also one domain. So for all of those domains we have defined key metrics which are called Key Responsibility Indicators and they will be defined in the operations in the next five years. So performance and responsibility are part of the DNA of Air Liquide and they will be at the heart of our ALMA 2015 program.
EMB: What resources will you be dedicating to reaching these objectives?
BP: We will invest in all geographies and businesses around €12 billion both in industrial and financial Capex on the one hand. On the other hand, we will have to recruit around 30,000 people over 5 years across 80 countries to make sure that the talents and skills we need to achieve this program are in the company.
EBM: What are the long-term trends that will create new market opportunities for Air Liquide?
BP: The long-term trends we identified before the crisis are confirmed and the same opportunities remain available. As an example, outsourcing is a significant trend in the world today as well as globalisation and sophistication of markets. There is also a sort of hunger for energy and for new technologies in the world and an increasing demand for health but also for well being. And finally, I would say that the need for a cleaner environment is also part of the mega trends that we have identified.
EBM: Could you give us some examples?
BP: Well, in the Developing economies – I would say that they represent about 80% of our investments, at least in the portfolio of investments for the next five years – and in those geographies we will have to build new capacities. In the steel industry, for instance, in China where the consolidation of the steel industry is happening. Or in Russia with the modernisation program. In the Middle East, in the energy field, for instance, we signed this year a significant contract with Saudi Aramco for the supply of hydrogen to a new refinery. But in the energy field we also have new projects in Advanced economies, like the United States, with a new carbon capture project that will be implemented in the next two or three years. The last example I'd like to take is healthcare with two different issues: one is the ageing population that requires more and more services, so the development of homecare is there; and on the other side, a sort of new emerging middle class that will need more and more healthcare services in the future. So altogether the trends are there and they will really support the growth for the next five years.
EBM: What is Air Liquide's potential for the future?
BP: Air Liquide’s potential for the future is based on two things. One is the extensive footprint in growing markets, be it in Developing economies or Advanced economies. And the second point is the constant innovation to capture market share that we have in front of us. It is true that the world economy as recently has not yet stabilised and, as a consequence, there is still some uncertainty in the short-term. But I would say that our 5 growth drivers are intact: they are Energy and the Environment, they are Developing Economies and they are Health and High-Technologies. They are all based on long-term trends, well entrenched in society, and this is why we are confident in those drivers for the future. It will give us the base for a steady and profitable growth in net earnings in the long-term and I think that ALMA 2015 gives us the base we need to reach our objectives and achieve our ambition.
EBM: Benoît Potier, Chairman and CEO Air Liquide, thank you very much.
BP: Thank you.
