L'Air Liquide Ord

Hello and welcome to the Air Liquide first half 2021 results. My name is Josh and I will be your coordinator for today's event. Please note that this conference is being recorded. All participants are currently in listen-only mode until we conduct a Q&A session and instructions will be given at that time. I'll now hand you over to your host, Odu Rodriguez, Head of Investor Relations, to begin today's conference. Thank you.

Good morning, everyone. This is Audrey Rodriguez, Head of Investor Relations. Thank you very much for joining our conference call today. Benoit Pottier and Jérôme Pelleton will present the first half 2021 performance. As usual, François Jacob, Executive VP, supervising Europe, Africa, Middle East, and healthcare hubs. And on the phone from Houston, Mike Raff, Executive VP, supervising Americas and Asian hubs and the electronics business lines. They will both participate in the Q&A session. In the agenda, our next announcement is on October 22nd for our third quarter revenue. Let me now hand you over to Benoit.

Thank you, Aude, and good morning, everyone. Thank you very much for attending this call. The first half of 2021 has been a special semester by many aspects. After first quarter marked by sales growth recovery in all our activities, we saw an acceleration in the second quarter with Q2 sales not only growing double digit compared to a low Q2 2020, but also showing growth above 2019 in all regions and all business lines. Overall, we've been able to deliver an outstanding financial performance thanks to a higher demand with a strong margin improvement, as well as a high cash flow, which allowed us to invest in growth, to close the SASOL takeover, to pay the dividend, of course, while significantly reducing the gearing ratio compared to the first half of 2020. Our performance must combine our financial and sustainable components. And while this first semester was still impacted by the COVID-19 pandemic in some countries, Our teams have been fully mobilized to put in place alternative supply chains to deliver medical oxygen, sometimes in remote areas or in regions where the group is not or almost not present. We'll come back on that. And despite this unusual environment, we've been able to reinforce our backlog, and we will provide you with more granularity as well as some update on the key achievements regarding the energy transition project. On slide four, to start with, I wanted to highlight the closing at the end of June of the SASOL 16 ASUs acquisition, which, as you know, is the largest air gases production site in the world in Secunda, South Africa. It is also the first time we sign an agreement with a customer to jointly commit to the reduction of CO2 emissions, which is fully aligned with the objective we disclosed during our last Sustainability Day in March. This is truly a first of its kind deal in the energy transition era. So a major contract for the group that started to contribute on the 1st of July. On slide five, a few key figures to illustrate the financial performance in the first half. Start with comparable sales growth is plus 9% in the first half, showing an acceleration in Q2 at plus 15%. Obviously, this is compared to a low basis last year. If you now compare to the first half of 2019, Sales are growing by 5%, which clearly shows the good recovery of our markets and activities. Our margin also increased by a significant plus 100 basis points, excluding the energy pass-through impact, and we'll see later that energy impact was pretty high. It reflects the long-lasting efforts we've made on pricing, on efficiencies, be it operational efficiency, or structural efficiencies on portfolio management and cost containment plan that we put in place last year, and which is progressively aligned with its recovery. The recurring net profit is up plus 19%, excluding foreign exchange, and the cash flow is still very high at 23% of the sales. On slide six, the graph shows the acceleration of the growth since the beginning of 2020, up plus 15% for the second quarter of this year, whereas last year it was only down by 7%. We also provided you with growth figures by business line, the right part of the slide, compared to 2020. And as you can see, we enjoyed a double-digit growth for LI and IM. That were the activities the most impacted by the pandemic last year. But healthcare and electronics also posted close to double-digit growth this year, while these activities were both growing in Q2 2020, slightly for electronics and at a higher pace for healthcare. On slide seven, you can better evaluate the strength of the recovery when referring to 2019. In Q2, all business lines and geographies are posting growth compared to 2019. America is plus 4%, the main drivers being LI and healthcare. Europe plus 7% with a strong healthcare and solid industrial merchant and large industry. And Asia plus 6% driven by China and all activities. Middle East and Africa is plus 8% above Q2 2019 sales. By business line on the right, figures show an outstanding healthcare, of course. high electronics, and large industry, and IM sales are now 1% above 2019. All in all, group sales are plus 6% above Q2 2019, which demonstrates the strong resilience of our business, together with its ability to pick up quickly when the economy recovers. In addition to our strong financial performance, you know that Sustainable growth is also at the heart of our strategy, as previously explained during the Sustainability Day in last March. As a matter of fact, we all know the pandemic is not fully over yet. So we brought a continued support to several countries severely affected by COVID-19. On slide eight, you can see an overview of this major healthcare societal contribution to fight against the pandemic. Not to mention them all, we highlighted here a few examples of countries or sometimes regions where the group has a limited oxygen capacity and where we put in place dedicated crisis supply chains, either by air, by sea, and sometimes with the support of the French or the local army in order to supply medical oxygen to COVID patients. Thanks to this tremendous effort, 37 patients per day received oxygen in India, 10,000 in Russia. We also supplied thousands of oxygen concentrators in Brazil and South Africa. And we have been also very active, and it is still the case now, in Tunisia or previously in Egypt. And I take this opportunity to warmly thank all the teams that were deeply involved in the management of these critical situations. I would also like to highlight the solidarity of our industrial customers who accepted to reduce or stop their oxygen consumptions so that we could medicalize the oxygen and redirect the volumes to hospitals. Also in terms of sustainability, the first semester was also very active in the field of energy transition, as I said earlier. On slide nine, in the continuity of our sustainability day last March, we want to share with you our key achievements in energy transition projects in the first half. In Europe, first, more than 50 projects are currently under development, be it for carbon capture, electrolysis, hydrogen mobility. For these projects to succeed, you need to develop local ecosystems by combining several key factors such as technology, customer relationships, but also availability of renewable energy or fundings to help in the first stage of the competitiveness of new technologies and partnerships. As detailed in March during our Sustainability Day, to develop hydrogen mobility. In the first half of 21, we signed more than 10 MOUs or partnerships. We were awarded six national or European fundings and were pre-selected for more than 10. And we signed two PPAs and we are currently working more than 10. In Asia, hydrogen mobility is developing quickly, especially in Korea and Japan. and we signed four MOUs or partnerships this first half. Air Liquide Technology is recognized by customers and has been chosen as an example in China recently for the world's largest hydrogen station. In America, the legislation is being introduced to promote new technologies and solutions for energy transition, like the Hydrogen Shot program, or the Clean Hydrogen Production Act, which are not fully validated yet. But no doubt, projects will develop quickly as well in the US as soon as these new regulations are implemented. But we already started in North America. Just to remind you, we are operating the largest PEM electrolyzer in Canada since the end of 2020. And we plan to start a major hydrogen liquid firing in the fourth quarter of this year to supply the hydrogen mobility market in California. So energy transition really is taking place in Americas as well. To conclude, a very active semester in the fall of energy transition. These energy transition projects will soon be added to the backlog on slide 10. We provide you with some granularity in our backlog at the end of June. It stands right now at 3.1 billion euros, and these projects under construction will deliver growth in the next few years. It is of very good quality, the portfolio, and well-balanced, be it by end markets, geographies, or investment size. Indeed, large industry represents close to 60% of the total, mostly, as you can see, chemicals, with only 8% of projects in refining. If you add electronics, you reach more than 80% of total backlog that are under long-term contracts. By geographies on the right part of the slide, America has come first with 41%, projects being mainly in chemicals. Asia with 34% increases most of the electronics projects. And the backlog is made of around 70 projects, having an average size of 45 million. Therefore, our growth doesn't rely on a few large projects. Such a diversified and well-balanced backlog considerably reduce the level of risk for our future growth. So the financial performance combined with this strong backlog make the first semester a very good start of the year. And I will now let Jérôme to comment the financial performance. Jérôme?