Air Liquide: 2022: Strong performance and acceleration of investment decisions to prepare the future

Regulatory News:

Air Liquide (Paris:AI):

(a) Change excluding the currency, energy (natural gas and electricity) and significant scope impacts, see reconciliation in the appendices. (b) See reconciliation in the appendices. (c) Excluding exceptional and significant transactions that have no impact on the operating income recurring, see reconciliation in the appendices. (d) Based on the recurring net profit, see reconciliation in the appendices.

Commenting on 2022 sales, François Jackow, Chief Executive Officer of the Air Liquide Group, stated:

“In 2022, the Group delivered a strong performance despite a complex and changing geopolitical, economic and sanitary context. The quality of these published results illustrates the proven resilience of the Group’s business model, characterized by a very broad diversity of geographies and markets, as well as the remarkable mobilization and responsiveness of our teams to adapt to this volatile environment.

For the Group, 2022 was also marked by the launch of ADVANCE, its strategic plan for 2025, which closely combines financial and extra-financial performance. This is already reflected in an acceleration of our investment momentum, which will feed our future growth, particularly in low-carbon hydrogen and the transition to a low-carbon society. On the extra-financial level, the Group’s CO₂⁽¹⁾ emissions remained stable for the second consecutive year. This supports our objective of achieving carbon neutrality by 2050.

Air Liquide has delivered another year of profitable growth: Sales reached 29.9 billion euros, up +7% on a comparable basis, the operating margin increased by +70 basis points excluding the energy impact, and recurring net profit⁽²⁾ rose +17% at constant exchange rates. At 10.3%, recurring ROCE⁽³⁾ is higher than 10%, one year ahead of the target communicated as part of ADVANCE.

All activities are growing significantly: the Gas & Services business, which represents 95% of the Group’s revenue, is up +6.1%, on a comparable basis, the Engineering & Construction business by +20.6% and Global Markets & Technologies by +25.8%. Within Gas & Services, all our geographies posted growth, in particular the Americas and Asia Pacific. By business line, the increase in sales was notably driven by Industrial Merchant and Electronics.

The Group further improved its operating margin by +70 basis points excluding the energy impact. It generated significant efficiencies amounting to 378 million euros and continued its dynamic management of its business portfolio. In a context of a sharp and lasting rise in energy prices, it demonstrated the strength of its business model, in which Large Industries contracts are indexed to energy prices, and where its ability to create value allows it to adjust prices for its Industrial Merchant customers.

The investment decisions reached a record level of nearly 4 billion euros. 12-month investment opportunities remain plentiful and total 3.3 billion euros, out of which more than 40% are linked to the energy transition.

Cash flow on sales excluding the energy impact improved by +110 basis points, allowing the Group to finance its investments and pay a dividend, while at the same time reducing its debt. Reflecting our confidence in the future, and following the allocation in 2022 of one free share for every 10 held, the dividend that will be submitted to the shareholders’ vote in May amounts to 2.95 euros per share, i.e. an increase of +12.2%.

In 2023, Air Liquide will continue to roll out its ADVANCE strategic plan. The year is expected to be marked by the signing of several major projects in the field of decarbonization and energy transition in Europe and by an acceleration of these opportunities in the United States. Air Liquide is confident in its ability to further increase its operating margin and to deliver recurring net profit growth, at constant exchange rates.⁽⁴⁾”

(1) In metric tonnes of scopes 1 and 2 CO₂-equivalent, “market based”, restated to take into account over a full year from 2020 and each subsequent year, the emissions of the assets which correspond to changes in scope (upwards and downwards) and which have a significant impact on CO₂ emissions.
(2) Excluding exceptional and significant transactions that have no impact on the operating income recurring.
(3) Recurring ROCE based on Recurring Net Profit.
(4) Operating margin excluding energy passthrough impact. Recurring net profit excluding exceptional and significant transactions that have no impact on the operating income recurring.

Financial performance

Group revenue for 2022 totaled 29,934 million euros, a strong comparable growth of +7.0% over 2021. The Group’s revenue as published posted a significant increase of +28.3% in 2022, with a record high energy impact of +15.3% as well as a favorable currency impact of +5.8%, while the significant scope impact was limited (+0.2%).

This performance was delivered in a challenging context of exceptionally high energy prices, strong inflation, strain on supply chains and the conflict in Ukraine. The Group benefited from a solid business model and diversity of business reach in terms of geographies, businesses, end-markets and customers which ensured a resilient performance and allowed the Group to take advantage of all growth opportunities. The ADVANCE strategic plan reinforces these attributes which position the Group in growth markets of the future (in particular the energy transition, Semiconductors and Healthcare).

Gas & Services revenue in 2022 totaled 28,573 million euros, a strong comparable increase of +6.1%. The growth stood at +28.3% as published: the energy impact (+16.1%) reached a record level over the year, with a peak in the 3^rd quarter, the currency impact (+5.8%) also made a positive contribution, while the significant scope effect (+0.3%) remained limited. The latter corresponds to the additional contribution in 2022 of the 16 Sasol units acquired in June 2021, less the effect of the deconsolidation of the activities in Russia from September 1, 2022.

• Gas & Services revenue in the Americas totaled 10,680 million euros in 2022, up sharply by +10.2% on a comparable basis. The Large Industries business (+3.7%) benefited from the start-up of several production units and solid demand. In the Industrial Merchant business, sales increased by +13.5%, supported by the strong increase in prices. Despite a high basis of comparison due to the covid-19 pandemic in 2021, Healthcare revenue was up +3.9% thanks to the development of the proximity care business in the United States and the Home Healthcare business in Latin America. Finally, Electronics posted sales up +5.8% over the year, driven by strong growth in Carrier Gases and Specialty Materials.
• Revenue in Europe was up +2.0% on a comparable basis in 2022 and totaled 11,390 million euros. Sales evolution was contrasted depending on business lines. In a context of very high energy prices, Large Industries sales were down by -16.6% over the year, strongly impacted by volumes down -8% and a combined effect⁽¹⁾ in the 3^rd quarter. The Industrial Merchant business line saw an exceptionally high level of sales growth of +24.1%, benefitting from a record price effect of +23.6%. Healthcare revenue posted an increase of +4.4%, supported by the dynamism of Home Healthcare and despite a high basis of comparison due to the covid-19 pandemic in 2021.
• Revenue for the Asia-Pacific region in 2022 rose sharply by +7.0% on a comparable basis, to total 5,608 million euros. It benefited from particularly dynamic growth in the Electronics business (+17.8%). Sales in Large Industries were stable (+0.3%), with the covid-19 pandemic disrupting business growth in China, while sales in the rest of Asia remained low throughout the year. In Industrial Merchant, sales benefited from a sharp rise in prices and increased by +4.2%.
• Revenue for 2022 in the Middle East and Africa was up +0.8% to 895 million euros. Volumes in Large Industries increased sharply in South Africa with the integration of the 16 Sasol Air Separation Units, whose acquisition was finalized at the end of the 1^st half of 2021; thus sales of 126 million euros over the year were accounted for in the significant scope impact and hence excluded from comparable growth. In Industrial Merchant, sales were down over the year, with the +6.4% increase in prices not fully offsetting the divestiture of small businesses in the Middle East.

The two growth drivers for 2022 were the Industrial Merchant business, with sales up +14.2%, supported by a record price effect of +14.7% and resilient volumes, and the Electronics business, with revenue up +16.4%. Despite a high basis of comparison in 2021 related to covid-19, sales in Healthcare increased by +3.6%, supported by the strong development of Home Healthcare, particularly in Europe, and proximity care in the United States. Sales in Large Industries were down -6.6%, marked by mixed activity depending on the geography: in Europe, the decline in volumes was part of a context of an exceptionally strong increase in energy prices, while sales increased in America and remained stable in Asia.

Consolidated revenue from Engineering & Construction totaled 474 million euros in 2022, up strongly by +20.6%. Order intake for Group projects and third-party customers exceeded 1 billion euros for the second consecutive year.

Global Markets & Technologies revenue for 2022 reached 887 million euros, representing a very high growth of +25.8% compared to 2021. Biogas maintained strong momentum and sales of Turbo-Brayton LNG reliquefaction units contributed to the growth. Order intake for Group projects and third-party customers totaled 875 million euros, representing a dynamic increase of +25% compared to 2021.

Efficiencies⁽²⁾ amounted to 378 million euros over the year. They represent a saving of 2.2% of the cost base. In a context of high inflation unfavorable to procurement efficiencies, the priority for the teams is to limit cost increases and transfer them to sales prices.

The Group's operating income recurring (OIR) reached 4,862 million euros. It was up sharply by +16.9% as published and +10.5% on a comparable basis, which is significantly higher than comparable sales growth of +7.0%. The operating margin (OIR to revenue ratio) stood at 16.2% as published, representing a -160 basis point decline compared with 2021, due to the sharp increase in energy costs which are contractually passed through to Large Industries customers. This therefore has a mechanical dilutive impact on the published margin. Excluding the energy impact, the operating margin improved very significantly by +70 basis points. This performance integrates the dilutive impact of strong inflation on costs other than energy costs, in Industrial Merchant in particular, and which is transferred to sales prices. This +70 basis point improvement therefore particularly reflected the Group’s ability to rapidly transfer to sales prices the exceptionally strong and brutal increase in energy costs and inflation in general.

Net profit (Group share) stood at 2,759 million euros in 2022, showing strong growth of +7.3% as published and an increase of +1.0% excluding the currency impact. The recurring net income⁽³⁾ (Group share) stood at 3,162 million euros, up sharply by +22.9%, and +17.3% excluding the currency impact, compared to 2021 recurring net income (Group share). Recurring net income (Group share) thus exceeded 3 billion euros for the first time.

Net earnings per share, at 5.28 euros, were up +7.0%⁽⁴⁾ compared with 2021, in line with the increase in net profit (Group share).

Cash flows from operating activities before changes in working capital amounted to 6,255 million euros, a marked increase of +18.2% and of +12.0% excluding the currency impact. The cash flow over sales ratio reached a high level of 20.9%, a significant improvement of +110 basis points compared with 2021, excluding the energy impact.

Net debt at December 31, 2022, amounted to 10,261 million euros, a decrease of 187 million euros compared with December 31, 2021. The increase in the Group’s cash flows from operating activities before changes in working capital makes it possible to reduce net debt after the payment of more than 3.2 billion euros in investments and nearly 1.5 billion euros in dividends.

In 2022, industrial and financial investment decisions reached a record level of nearly 4.0 billion euros. The 12-month portfolio of investment opportunities remained high at 3.3 billion euros at the end of 2022 and the projects related to energy transition represented more than 40% of the investment opportunities. The portfolio of opportunities beyond 12 months also includes the first significant projects related to the Inflation Reduction Act in the United States, particularly along the Gulf Coast.

The additional contribution to sales of unit start-ups and ramp-ups totaled 421 million euros in 2022, including a 128 million euro contribution by the Sasol units in South Africa, with 126 million euros being accounted for in the significant scope.

The return on capital employed after tax (ROCE) was 9.1% in 2022. The recurring ROCE⁽⁵⁾ stood at 10.3%, a significant improvement compared to 9.3% in 2021 and reached the ADVANCE strategic plan's ROCE target (of over 10%) one year early.

At the Annual General Meeting on May 3, 2023, the payment of a dividend of 2.95 euros per share will be proposed to shareholders for the fiscal year 2022. Following the free share attribution of 1 for 10 in June 2022, the proposed dividend shows a strong growth of +12.2% compared with the previous year. The ex-dividend date is scheduled for May 15, 2023 and the payment is scheduled for May 17, 2023.

Extra-financial performance

The ADVANCE strategic plan combines financial and extra-financial performance. The Group's scopes 1 and 2 CO₂ emissions totaled 39 million metric tonnes of CO₂-equivalent in 2022. Thus, CO₂ emissions⁽⁶⁾ remained stable for the 2^nd consecutive year, in line with the objective of reaching an inflection point in 2025 before initiating a downward trend towards carbon neutrality in 2050. The Group's commitment to sustainable development goes beyond climate objectives: thus in 2022, the number of lost-time accidents among Air Liquide employees decreased by -11%, 42% of the Group's 67,100 employees (+8 pts) benefitted from a common basis of care coverage and 1.8 million people have access to medical oxygen in low- and moderate-income countries thanks to the Access Oxygen program.

Air Liquide’s Board of Directors, which met on February 15, 2023, approved the audited financial statements for the 2022 fiscal year. The Statutory Auditors are in the process of issuing a report with an unqualified opinion.

Governance

On the recommendation of the Appointments and Governance Committee, the Board of Directors also approved the draft resolutions which will be submitted to the General Meeting of May 3, 2023 in order to appoint for a period of four years as Directors:

• Ms Catherine Guillouard, former Chairwoman and Chief Executive Officer of RATP (until September 2022) and previously Chief Financial Officer of Rexel, Eutelsat and Air France. She will bring to the Board her extensive financial skills as well as her experience as an executive in a major public transport group, where she led the transformation and decarbonization plan.
• Ms Christina Law, a Chinese national (Hong Kong) and based in Singapore. She will bring to the Board her in-depth knowledge of Asian markets, and her managerial experience in large international groups specializing in the fields of healthcare and treatment.
• Mr Alexis Perakis-Valat, President of the Consumer Products Division of the L'Oréal group, the group’s main division. He will bring to the Board his knowledge of consumer product markets and his managerial experience within a leading international group, where he has been one of the driving forces behind major transformations carried out in recent years.
• Mr Michael H. Thaman, an American national. He has extensive knowledge of North American industrial markets as well as a strong international profile. He will bring nearly 30 years of experience, including 13 years as Chief Executive Officer and then Executive Chairman, at Owens Corning, a world leader in construction materials and one of the highest-rated American groups on environmental and societal criteria, and his experience as a Director in other major global listed US groups, particularly in the field of renewable energies.

The Board stated that it considered Ms Catherine Guillouard, Ms Christina Law as well as Mr Alexis Perakis-Valat and Mr Michael H. Thaman to be independent.

In addition, the Board of Directors took note of the resignation, with effect on January 3, 2023, of Ms Anette Bronder, due to her decision to take an executive position with an audit firm, which is incompatible with the maintenance of her office as a Director of L'Air Liquide S.A. On the recommendation of the Appointments and Governance Committee, the Board of February 15, 2023, decided to co-opt for the remaining term of office of Ms Anette Bronder, i.e. until the close of the 2024 General Meeting, Ms Monica de Virgiliis as a Director of the Company. Of dual Italian and French nationality and former Director of Strategy at the CEA in Paris after a career of more than 15 years in the field of electronics (at ST Microelectronics and Infineon), she will bring to the Board strong experience in the field of technology and energy. Very committed to energy transition, she is the founder and President of Chapter Zero France, a non-profit association aiming to raise awareness of climate issues to Directors. The ratification of such cooptation will be submitted to the General Meeting of May 3, 2023. The Board stated that it considered Ms Monica de Virgiliis to be independent.

Concerning Ms Siân Herbert Jones, whose term of office as Director will expire at the close of the General Meeting of May 2023, the Board took note of her wish not to seek renewal of her office. The Board warmly thanked her for her contribution, during her 12 years in office, to the work of the Board of Directors and for her very active involvement in the Audit and Accounts Committee, of which she was a member since 2013 and chaired since May 2015.

Concerning Ms Geneviève Berger whose term of office as Director will expire at the close of the General Meeting of May 2023, also indicated that she does not wish to seek renewal of her office as Director. The Board took due note and warmly thanked her for her contribution to the work of the Board of Directors since 2015, as well as her participation in the Environment and Society Committee, of which she was a member since its creation in 2017.

At the end of the General Meeting to be held on May 3, 2023, the Board of Directors would therefore comprise 14 members: 12 members appointed by the General Meeting, most of whom are independent (i.e. 83% independent Directors), including 5 women (i.e. 42%), 5 foreign nationals and 2 Directors representing the employees.

Finally, the Board of Directors will submit to the vote of the General Meeting the elements of remuneration of Mr Benoît Potier, Chairman and Chief Executive Officer (from January 1 to May 31, 2022), Mr François Jackow, Chief Executive Officer (from June 1 to December 31, 2022), Mr Benoît Potier, Chairman of the Board of Directors (from June 1 to December 31, 2022), together with the information relating to the remuneration of all the corporate officers for 2022. The General Meeting will also be invited to decide upon the remuneration policy for the corporate officers which will apply to Mr. François Jackow, Chief Executive Officer, to Mr Benoît Potier, Chairman of the Board of Directors and to the Directors.

PERFORMANCE

Unless otherwise stated, all variations in revenue outlined below are on a comparable basis, excluding currency, energy (natural gas and electricity) and significant scope impacts.

Key Figures

(a) Change excluding the currency, energy (natural gas and electricity) and significant scope impacts, see reconciliation in the appendices
(b) See reconciliation in the appendices.
(c) Excluding exceptional and significant transactions that have no impact on the operating income recurring, see reconciliation in the appendices.
(d) Restated to take into account the June 2022 free share attribution.
(e) Dividend proposed to shareholders for the fiscal year 2022.
(f) Including transactions with minority shareholders and dividends received from equity affiliates.
(g) Based on the recurring net profit, see reconciliation in the appendices.

Income Statement

REVENUE

Group

Group revenue for 2022 totaled 29,934 million euros, up sharply by +7.0% compared to 2021.

This performance was delivered in a challenging context of exceptionally high energy prices, strong inflation, strain on supply chains and the conflict in Ukraine. The Group benefited from a solid business model and diversity of business reach in terms of geographies, businesses, end-markets and customers which ensured a resilient performance and allowed the Group to take advantage of all growth opportunities. The ADVANCE strategic plan reinforces these attributes which position the Group in growth markets of the future (in particular the energy transition, Semiconductors and Healthcare).

Consolidated sales of the Engineering & Construction business grew by +20.6%, reflecting the increase in order intake in recent quarters. Global Markets & Technologies continued its growth momentum with sales up by +25.8% in 2022, driven in particular by the Biogas business development.

The Group’s revenue as published posted a significant increase of +28.3% in 2022, with a record high energy impact of +15.3% as well as a favorable currency impact of +5.8%, while the significant scope impact was limited (+0.2%).

Gas & Services

Gas & Services revenue in 2022 totaled 28,573 million euros, a strong increase of +6.1%. The two growth drivers for 2022 were the Industrial Merchant business, with sales up +14.2%, supported by a record price effect and resilient volumes, and the Electronics business, with revenue up +16.4%. Despite a high basis of comparison in 2021 linked to covid-19, sales in Healthcare increased by +3.6%, supported by the strong development of Home Healthcare, particularly in Europe, and proximity care in the United States. Sales in Large Industries were down -6.6%, marked by mixed activity depending on the geography: in Europe, the decline in volumes was part of a context of an exceptionally strong increase in energy prices, while sales increased in America and remained stable in Asia. Sales in Gas & Services in 2022 rose sharply by +28.3% as published: the energy impact (+16.1%) reached a record level over the year, with a peak in the 3^rd quarter, the currency impact (+5.8%) also made a positive contribution, while the significant scope effect (+0.3%) remained limited. The latter corresponds to the additional contribution in 2022 of the 16 Sasol units acquired in June 2021, less the effect of the deconsolidation of the activities in Russia from September 1, 2022.

Americas

Gas & Services revenue in the Americas totaled 10,680 million euros in 2022, up sharply by +10.2%. The Large Industries business (+3.7%) benefited from the start-up of several production units and solid demand. In the Industrial Merchant business, sales increased by +13.5%, supported by the strong increase in prices. Despite a high basis of comparison due to the covid-19 pandemic in 2021, Healthcare revenue was up +3.9% thanks to the development of the proximity care business in the United States and the Home Healthcare business in Latin America. Finally, Electronics posted sales up +5.8% over the year, driven by strong growth in Carrier Gases and Specialty Materials.

• Large Industries revenue in 2022 was up +3.7%. Air gases volumes were up sharply until the end of the 3^rd quarter, supported by solid demand from Chemicals customers and the contribution of new production units. The 4^th quarter was marked by weaker demand in Chemicals, particularly from ethylene oxide producers, and in the Steel industry. Hydrogen sales also increased in 2022, supported by the ramp-up of new units in Latin America offsetting several customer maintenance turnarounds.
• In Industrial Merchant, the significant increase in sales of +13.5% in 2022 was supported by a very strong price effect of +13.4%, offsetting the increase in costs in an inflationary context. Volumes were stable across the year and up +1% excluding helium, in particular for bulk and hardgoods, while the volume growth of cylinder gas was more moderate. Sales grew across all sectors in 2022, particularly in the Automotive, Fabrication, Materials and Energy sectors.
• Healthcare revenue was up +3.9% in 2022, despite a sharp decline in volumes of medical oxygen for treating covid-19 compared to 2021. Sales of medical gases rose in the United States as a result of dynamic activity and higher prices in proximity care. In Latin America, Home Healthcare sales were up sharply over the year and medical gases contributed to growth in the 2^nd half-year.
• The Electronics business posted a revenue increase of +5.8% over the year. The strong growth in Carrier Gases was supported by the ramp-up of several production units and high helium prices. Specialty Materials sales were considerably higher, benefiting notably from the increase in the price of rare gases. Lastly, high sales in Equipment & Installation contributed to the development of the business in the United States.

Europe

Revenue in Europe was up +2.0% in 2022 and totaled 11,390 million euros. Sales evolution was contrasted depending on business lines. In a context of very high energy prices, Large Industries sales were down by -16.6% over the year, strongly impacted by volumes down -8% and a combined effect⁽⁷⁾ in the 3^rd quarter. The Industrial Merchant business line saw an exceptionally high level of sales growth of +24.1%, benefitting from a record price effect of +23.6%. Healthcare revenue posted an increase of +4.4%, supported by the dynamism of Home Healthcare and despite a high basis of comparison due to the covid-19 pandemic in 2021.

• In a context of conflict in Ukraine and exceptionally high energy prices, peaking in the 3^rd quarter, sales in Large Industries decreased by -16.6% in 2022. The beginning of the slowdown seen toward the end of the 1^st quarter, notably in Steel, was confirmed from the 2^nd quarter across all sectors. As a result, volumes were down -8% over the year and -16% in the 4^th quarter, due to the slowdown in demand from customers in the Steel and Chemicals sectors, particularly in Germany and Benelux. Moreover, certain refineries used lighter crude oils, which need less hydrogen. Finally, in the 3^rd quarter and, to a lesser extent, in the 4^th quarter, the comparable growth was also heavily impacted by an unfavorable combined effect⁽⁷⁾ linked to very high energy prices.
• The Industrial Merchant business line saw an exceptionally high level of sales growth of +24.1% in 2022, driven by a record price effect of +23.6%. Amid an inflationary environment, contractual indexation and proactive price rise campaigns clearly proved their effectiveness. In the 4^th quarter, the price effect remained strong despite the high basis of comparison, as prices had begun to increase significantly in the 4^th quarter of 2021. Volumes remained very resilient, slightly up in 2022, despite a shortage of liquefied CO₂ which worsened in the 4^th quarter. Sales increased across all sectors, particularly Food, Fabrication and Materials.
• Sales in Healthcare posted solid growth of +4.4%, despite a high basis of comparison in 2021, particularly in the 1^st half-year, due to the covid-19 pandemic. They benefited in particular from a dynamic Home Healthcare business, in particular for the treatment of diabetes, and from the contribution of an acquisition in Poland in the 4^th quarter of 2021. In Medical Gases, the unfavorable basis of comparison resulting from the high oxygen consumption during the covid-19 pandemic in 2021 was reduced in the 2^nd half-year and the price increases that were gradually achieved over the year partially offset inflation-related rises in costs. Specialty Ingredients sales saw a pronounced increase, driven by higher volumes and price increases to offset higher costs.

Asia-Pacific

Revenue for the Asia-Pacific region in 2022 rose sharply by +7.0%, to total 5,608 million euros. It benefited from particularly dynamic growth in the Electronics business (+17.8%). Sales in Large Industries were stable (+0.3%), with the covid-19 pandemic disrupting business growth in China, while sales in the rest of Asia remained low throughout the year. In Industrial Merchant, sales benefited from a sharp rise in prices and increased by +4.2%.

• Large Industries revenue was stable (+0.3%) in 2022. In China, growth slowed in the 1^st half-year, in particular due to residual energy control measures during the 1^st quarter, and covid-19-related lockdowns during the 2^nd quarter. Sales grew strongly in the 3^rd quarter and, to a lesser extent, in the 4^th quarter, disrupted by the covid-19 pandemic in December. In the rest of Asia, sales were weak in 2022, and more markedly in Singapore, particularly in the 4^th quarter.
• Industrial Merchant revenue was up +4.2% in 2022. The price effect stood at a very high level of +6.8% over the year. In China, solid sales growth benefited from the increase in prices and the integration of small acquisitions, but was affected by the covid-19 pandemic in the 2^nd quarter and at year-end. The situation was contrasted in the rest of Asia in 2022, with business down in Japan but up in Singapore and Australia. In the region, revenue growth was particularly marked in the Food, Energy and Technology sectors.
• 2022 revenue from Electronics posted very strong growth of +17.8%, supported by all business segments. Carrier Gases benefited from several unit start-ups in China during the year and the ramp-up of several units in the region. Sales in Specialty Materials also grew strongly, partly due to the increase in the price of rare gases. The Advanced Materials business was dynamic, particularly in Singapore and China. Lastly, Equipment & Installation sales in 2022 were very high.

Middle East and Africa

Revenue for 2022 in the Middle East and Africa region was up +0.8% to 895 million euros. The sales growth in air gases in India and Egypt explained the strong performance of Large Industries. Volumes also increased sharply in South Africa with the integration of the 16 Sasol Air Separation Units, whose acquisition was finalized at the end of the 1^st half of 2021; sales of 126 million euros over the year were accounted for in the significant scope impact and hence excluded from comparable growth. In Industrial Merchant, sales were down over the year, with the +6.4% increase in prices not fully offsetting the divestiture of small businesses in the Middle East; in the 4^th quarter, sales growth excluding the impact of divestitures was above +10%. Sales in the Healthcare business were down compared to the high level in 2021 as a result of the covid-19 pandemic. However, activity returned to growth in the 4^th quarter due to a more favorable basis of comparison, dynamic activity in Home Healthcare and an acquisition in South Africa.

Engineering & Construction

Consolidated revenue from Engineering & Construction totaled 474 million euros in 2022, up strongly by +20.6%.

Order intake (1,041 million euros) for Group projects and third-party customers exceeded 1 billion euros for the second consecutive year. For the Group, this includes a large Steam Methane Reformer (SMR) and several large Air Separation Units (ASU) for Electronics and Large Industries. Sales to third-party customers include a major helium liquefaction unit.

Global Markets & Technologies

Global Markets & Technologies revenue for 2022 reached 887 million euros, representing a very high growth of +25.8% compared to 2021. Biogas maintained strong momentum and benefited from sales price increase linked to the spike in energy price. Higher sales of Turbo-Brayton LNG reliquefaction units contributed to the growth. The 4^th quarter was also marked by sales of equipment for the space industry and special equipment for cooling helium.

Order intake for Group projects and third-party customers totaled 875 million euros, representing a dynamic increase of +25% compared to 2021. These include more than 50 Turbo-Brayton LNG reliquefaction units to be delivered over the next two to three years, a large helium liquefaction unit and numerous pieces of equipment for the Electronics, Hydrogen and Biogas markets.

OPERATING INCOME RECURRING

Operating income recurring before depreciation and amortization totaled 7,328 million euros, a sharp increase of +15.7% as published and +9.4% excluding the currency impact compared with 2021.

Purchases were up markedly by +41.0% excluding currency impact, mainly due to the exceptionally strong and rapid increase in energy costs (+65% excluding the currency impact), which are contractually passed through to Large Industries customers. In a context of high inflation, personnel costs were up +7.7% excluding the currency impact. Other operating income and expenses increased by +14.7% excluding the currency impact and notably included a marked increase in transport and, to a lesser extent, maintenance costs.

Depreciation and amortization amounted to 2,466 million euros, an increase of +6.9% excluding the currency impact. This increase is mainly related to the start-up of new production units, the integration of Sasol’s 16 Air Separation Units (ASU) acquired in June 2021 and Air Liquide taking control of a joint venture in Asia-Pacific. It was very partially offset by the deconsolidation of businesses in Russia.

The Group's operating income recurring (OIR) reached 4,862 million euros. It was up sharply by +16.9% as published and +10.5% on a comparable basis, which is significantly higher than comparable sales growth of +7.0%. The operating margin (OIR to revenue ratio) stood at 16.2% as published, representing a -160 basis point decline compared with 2021, due to the sharp increase in energy costs which are contractually passed through to Large Industries customers. This therefore has a mechanical dilutive impact on the published margin. Excluding the energy impact, the operating margin improved very significantly by +70 basis points. This performance integrates the dilutive impact of strong inflation of costs other than energy costs, in Industrial Merchant in particular, and which is transferred to sales prices. This +70 basis point improvement therefore particularly reflected the Group’s ability to rapidly transfer the exceptionally strong and brutal increase in energy costs and inflation in general to sales prices.

This improvement in the operating margin is also supported by efficiencies⁽⁸⁾ which amounted to 378 million euros over the year. These efficiencies represent a saving of 2.2% of the cost base. In a context of high inflation unfavorable to procurement efficiencies, the priority for the teams is to limit cost increases and transfer them to sales prices. Industrial efficiencies contributed more than 50% of total efficiencies and included energy efficiency and production optimization projects in Large Industries and supply chain improvements in Industrial Merchant. The Group's digital transformation continued: in Large Industries with the connection of new units to remote operation centers (Smart Innovative Operations, SIO), in Industrial Merchant with the acceleration of the tools implementation to optimize delivery routes (Integrated Bulk Operations, IBO) and in Healthcare with the deployment of remote patient support platforms. The continued implementation of shared service centers and the global continuous improvement program also contributed to efficiencies.

Portfolio and pricing management also supported margin improvement.

Gas & Services

The Gas & Services business operating income recurring totaled 5,062 million euros, representing a sharp increase of +16.0% compared with 2021 and of +10.2% on a comparable basis. The operating margin stood at 17.7% as published, up +70 basis points excluding the energy impact. The operating margin, as published, was down compared with 2021 due to the very strong increase in energy costs, which are contractually passed through to customers and thus have a dilutive impact.

Prices in the Industrial Merchant business experienced a record increase of +14.7% in 2022, with a peak at +18.0% in the 3^rd quarter, demonstrating the Group's ability to rapidly transfer the rise in costs. Prices were also up in Large Industries, Electronics and Healthcare, across all regions.

(a) Operating income recurring / revenue as published.

Operating income recurring in the Americas reached 2,084 million euros in 2022, an increase of +23.0% as published. Excluding the energy impact, the operating margin increased by +10 basis points compared with 2021. In Large Industries, solid efficiencies and spot sales of electricity produced by cogeneration units participated in the margin improvement. Efficiencies in Industrial Merchant, combined with strong cost control, also made a positive contribution.

Operating income recurring for Europe totaled 1,577 million euros, an increase of +9.2% as published. Excluding the energy impact, the operating margin saw a sharp increase of +140 basis points compared with 2021. In Large Industries, the structure of contracts ensured the resilience of the operating margin in a context of declining volumes; solid efficiencies also contributed to margin improvements, as well as cogeneration unit activity and the combined effect⁽⁹⁾ in an environment of sharply rising energy prices. In Industrial Merchant, the increase in prices and efficiencies contributed to the increase of the operating margin, while in Healthcare, the increase in costs was not fully offset by price effects.

Operating income recurring in Asia-Pacific stood at 1,190 million euros, an increase as published of +11.6%. The operating margin excluding the energy impact remained stable compared with 2021.

Operating income recurring for the Middle East and Africa reached 211 million euros, an increase of +33.3% as published. Excluding the energy impact, the operating margin saw a very strong increase of +200 basis points compared with 2021. The integration of the 16 Sasol units, carried out without re-invoicing energy costs to the customer until the end of the 3^rd quarter, is the main contributor to this increase. The divestments in Industrial Merchant in the Middle East and the efficiencies generated in all business lines also had an accretive impact on the operating margin.

Engineering & Construction

Operating income recurring for Engineering & Construction was 44 million euros in 2022. The operating margin stood at 9.3%, compared to 11.0% in 2021, and remains in line with the business unit's medium-term objectives.

Global Markets & Technologies

Operating income recurring from the Global Markets & Technologies business stood at 112 million euros with an operating margin of 12.6%.

Corporate Costs and Research & Development

Corporate and Research & Development expenses stood at 356 million euros, up +4.4% compared with 2021.

NET PROFIT

Other operating income and expenses showed a net balance of -571 million euros.

Other operating expenses amounted to -833 million euros and included an exceptional provision of -586 million euros, with no impact on cash⁽¹⁰⁾, which covers the impairment of all of the Group’s assets in Russia. As a reminder, the Group signed a letter of intent with the local executive management team in September 2022, to transfer⁽¹¹⁾ its businesses in Russia in the form of an MBO (Management Buy Out). Due to the changing geopolitical context, the Group’s businesses in Russia are no longer consolidated from September 1, 2022. Other operating expenses also included, for -48 million euros, a provision for risks in the Engineering & Construction business, as well as restructuring costs.

Other operating income stood at 262 million euros and corresponded mainly to Air Liquide taking control of a joint venture in Asia during the 1^st half-year, revalued at fair value.

Financial income and expenses amounted to -386 million euros, compared with -408 million euros in 2021. They included net finance costs of -288 million euros, a very slight increase of +0.5% excluding the currency impact. The average net finance cost, at 3.0%, was up slightly from 2.8% in 2021, mainly due to the increase in factoring costs, which are directly related to the rise in interest rates. Other financial income and expenses stood at -98 million euros compared with -128 million euros in 2021. This difference stems from a provision reversal related to interest on arrears.

The income tax expense totaled -1,002 million euros in 2022, i.e. an effective tax rate of 25.7%, up slightly from 25.4% in 2021, mainly due to significant non-taxable non-recurring items⁽¹²⁾.

The share of profit of associates amounted to 1 million euros. The share of minority interests in net profit totaled 145 million euros, up +21.2%, mainly due to Air Liquide taking control in January 2022 of a joint venture in Asia.

Net profit (Group share) stood at 2,759 million euros in 2022, showing strong growth of +7.3% as published and an increase of +1.0% excluding the currency impact. Excluding the exceptional provision on the Group’s assets in Russia, the provision for risks in the Engineering & Construction business and the exceptional income related to Air Liquide taking control of a joint venture in Asia, all these items having no impact on cash, recurring net income⁽¹³⁾ (Group share) stood at 3,162 million euros, up sharply by +22.9%, and +17.3% excluding the currency impact, compared to 2021 recurring net income (Group share). Recurring net income (Group share) thus exceeded 3 billion euros for the first time.

Net earnings per share, at 5.28 euros, were up +7.0%⁽¹⁴⁾ compared with 2021, in line with the increase in net profit (Group share). The average number of outstanding shares used for the calculation of 2022 net earnings per share was 522,069,020.

Change in the number of shares

(a) Adjusted following the free share attribution in June 2022.

DIVIDEND

At the Annual General Meeting on May 3, 2023, the payment of a dividend of 2.95 euros per share will be proposed to shareholders for the fiscal year 2022. Following the free share attribution of 1 for 10 in June 2022, the proposed dividend shows a strong growth of +12.2% compared with the previous year. The total estimated pay-out taking into account stock-options, share buybacks and cancellations would amount to 1,587 million euros, representing a pay-out ratio of 58% of the published net profit. The ex-dividend date is scheduled for May 15, 2023 and the payment is scheduled for May 17, 2023.

2022 Cash Flow and Balance Sheet

(a) Including transactions with minority shareholders.

NET CASH FLOW FROM OPERATING ACTIVITIES AND CHANGES IN WORKING CAPITAL REQUIREMENT

Cash flows from operating activities before changes in working capital amounted to 6,255 million euros, a marked increase of +18.2% and of +12.0% excluding the currency impact. The cash flow over sales ratio reached a high level of 20.9%, an improvement of +110 basis points compared with 2021, excluding the energy impact.

Working Capital Requirement (WCR) rose by 397 million euros compared with 2021. This was mainly due to the increase in inventories, which reflects inflation and the anticipation of supply difficulties for certain products. Thus, WCR excluding tax to revenue ratio stood at 1.6%, a slight increase compared to an exceptionally low level of 0.9% in 2021 (and 2.3% in 2020).

Net cash flow from operating activities after changes in working capital requirement amounted to 5,810 million euros, an increase of +4.3% compared with 2021.

CAPITAL EXPENDITURE

(a) Including transactions with minority shareholders.

Capital expenditure was very high in 2022 at 3,413 million euros, including transactions with minority shareholders.

Industrial capital expenditure amounted to 3,273 million euros, compared with 2,917 million euros in 2021, an increase of +12.2% and +7.5% excluding the currency impact, reflecting very dynamic project development activity. For the Gas & Services business, this expenditure totaled 2,967 million euros with the corresponding geographical breakdown presented in the table below.

Financial investments amounted to 140 million euros in 2022, including 4 million euros of transactions with minority shareholders. They mainly included the acquisition of small entities in the Industrial Merchant and Healthcare business lines, as well as an additional participation in a joint Large Industries business in Asia, resulting in Air Liquide taking its control. This compares with 660 million euros in 2021, including the acquisition of 16 Air Separation Units from Sasol in South Africa for approximately 480 million euros.

Proceeds from the sale of assets, which reached 153 million euros in 2022, underline the Group’s efforts to maintain an active portfolio management strategy. They include the disposal of Industrial Merchant businesses in Latin America and in the Global Markets and Technology business line in Europe.

Net capital expenditure⁽¹⁵⁾ totaled 3,246 million euros.

NET DEBT

Net debt at December 31, 2022, amounted to 10,261 million euros, a decrease of 187 million euros compared with December 31, 2021. The increase in the Group’s cash flows from operating activities before changes in working capital makes it possible to reduce net debt after the payment of more than 3.2 billion euros in investments and nearly 1.5 billion euros in dividends. The net debt-to-equity ratio stood at 41.8%.

ROCE

The return on capital employed after tax (ROCE) was 9.1% in 2022. The recurring ROCE⁽¹⁶⁾ stood at 10.3 %, a significant improvement compared to 9.3% in 2021 and reached the ADVANCE strategic plan's ROCE target (of over 10%) one year early.

Environment and Society

ADVANCE, the Group's new strategic plan through 2025, announced in March 2022, places sustainable development at the heart of the Group’s strategy and combines financial and extra-financial performance.

The Group's scopes 1 and 2 CO₂ emissions in 2022 totaled 39 million metric tonnes of CO₂-equivalent. CO₂ emissions⁽¹⁷⁾ in 2022 changed by -0.3% compared to the 2020 baseline⁽¹⁷⁾. CO₂ emissions ⁽¹⁷⁾ thus remained stable for the second consecutive year, in line with the ADVANCE plan's target of reaching an inflection point in 2025 before initiating a downward trend towards carbon neutrality in 2050. In 2022, the Group continued to deploy the levers defined in the ADVANCE plan in order to align with the CO₂ trajectory. Thus, several contracts (PPAs) to supply 350 MW of renewable electricity capacity were signed in 2022 in the Netherlands, Italy, Germany and South Africa. In addition, a number of energy efficiency projects were decided, as well as the electrification of two ASUs in China ultimately reducing the Group’s emissions by approximately -1%. Lastly, the Group is developing CO₂ capture projects (selected for subsidies) on existing hydrogen production units. Deployed in early 2022 in all subsidiaries, a new governance ensures the monitoring and management of CO₂ emissions (reporting, budget, integration into reviews of investment projects, etc.).

The Group's carbon intensity remains stable at 5.5 kg of CO₂-equivalent per euro of EBITDA⁽¹⁸⁾.

The Group’s sustainable development commitment goes beyond climate objectives.

Safety is a priority. The number of lost time accidents for Air Liquide employees decreased by -11% in 2022. Awareness and prevention actions are implemented over the long term with a “zero accidents” objective.

The share of the 67,100 Group employees with a common basis of care coverage reached 42% and increased by +8 points compared to 2021. In 2022, each region drew up a roadmap for achieving the target which is set at 100% coverage by 2025.

1.8 million people now have access to medical oxygen in low- and middle-income countries thanks to the Access Oxygen program. This is an increase of +70% compared to the end of 2021, supported by the development of an initiative in South Africa and a first pilot project in Kenya.

Committed to its shareholders, Air Liquide set up a new governance in 2022, which separates the functions of Chairman of the Board of Directors and Chief Executive Officer.

INVESTMENT CYCLE AND FINANCING

Investments

INVESTMENT DECISIONS AND INVESTMENT BACKLOG

In 2022, industrial and financial investment decisions reached a record level of nearly 4.0 billion euros.

Industrial investment decisions amounted to 3,861 million euros, up +30% compared with 2,969 million euros in 2021.

• In Large Industries, decisions concerned notably projects related to the energy transition. Thus, a new unit in France will in particular supply hydrogen to a biorefinery producing renewable fuels for aviation, hydrogen for mobility and biogenic CO₂ for the Industrial Merchant business line (by recovering the residual biogas from the biorefinery and using the Cryocap^TM CO₂ capture process). Decisions also include initial investments to improve the efficiency of the production units acquired in South Africa in 2021, the installation of a CO₂ recycling system on an existing carbon monoxide production unit in Europe, as well as the electrification of several Air Separation Units in China (impact on Group's CO₂ emissions by approximately -1%).
• Development was robust in the Electronics business, notably in Asia with projects for new production units for carrier gases and advanced materials. Investment decisions also include production units in the United States and Europe.
• In Industrial Merchant, investment decisions in 2022 included more than 50 small gas generators on customer sites, including several for use in conversion to oxy-combustion furnaces for the glass or aluminum industries, thus reducing natural gas consumption by customers and consequently their CO₂ emissions.
• Investments in the Healthcare business concerned in particular a new specialty ingredients production unit in France.
• Several investment projects were approved in 2022 in the Global Markets & Technologies business, notably for the production of biogas in Italy and the United States. Furthermore, a new krypton and xenon purification unit will be built in Korea.

Financial investment decisions reached 112 million euros in 2022, compared with 662 million euros in 2021, which included the acquisition of the units from Sasol for approximately 480 million euros. In Industrial Merchant, they included several small acquisitions in the United States, China and the Netherlands, and in Healthcare, the acquisition of a South African company specializing in the treatment of diabetes.

The investment backlog hit a record high of 3.5 billion euros. Projects in Asia represented a little more than half of investments, primarily in the Electronics business, with several projects in Large Industries. The Europe and America regions have similar levels of ongoing investment: in Europe, these are mainly projects related to the energy transition and in America, mostly projects for Large Industries and Electronics. These projects should lead to a future contribution to annual sales of approximately 1.3 billion euros per year when fully ramped up, an increase from 1.1 billion euros at the end of 2021.

START-UPS

The main start-ups in 2022 concerned the Large Industries and Electronics businesses. In Large Industries, several high-capacity Air Separation Units started up along the Gulf Coast in the United States and in China. In Electronics, start-ups mainly involved several carrier gas and advanced materials production units in Asia, in particular a large ASU and an electrolyzer in Taiwan in the 4^th quarter. In the Global Markets & Technologies business, they also included several biogas production units and a major hydrogen production and liquefaction unit for the hydrogen mobility market in California.

The additional contribution to sales of unit start-ups and ramp-ups totaled 421 million euros in 2022, including a 128 million euro contribution by the Sasol units in South Africa, with 126 million euros being accounted for in the significant scope. Electronics is the main contributor in Asia, while in Europe and Americas it is Large Industries.

The additional contribution to 2023 sales of unit start-ups and ramp-ups should be between 300 million and 330 million euros, which is higher than the corresponding amount in 2022, excluding the contribution from the Sasol units.

INVESTMENT OPPORTUNITIES

The 12-month portfolio of investment opportunities remains high at 3.3 billion euros at the end of 2022, up from 3.0 billion euros in the 3^rd quarter of 2022. The projects related to energy transition represent more than 40% of the investment opportunities. In Europe, these mainly included projects for renewable hydrogen production by water electrolysis, capture of CO₂ emitted by the Group’s or its customers’ production units, as well as hydrogen mobility development. Investment opportunities in Asia concerned Large Industries, Electronics and hydrogen mobility. In the Americas, the portfolio of investment opportunities at 12 months included a majority of large projects in Electronics, supported by the Chips Act, as well as projects in the Large Industries business. The portfolio of opportunities beyond 12 months also includes the first significant projects related to the Inflation Reduction Act in the United States, particularly along the Gulf Coast.

Financing

“A” CATEGORY FINANCIAL RATING CONFIRMED

Air Liquide is rated by two main rating agencies, Standard & Poor’s and Moody’s. The long-term rating from Standard & Poor’s is “A” and from Moody’s is “A2”, an improvement compared with “A3” in 2021. These are in line with the Group’s strategy. Moreover, the short-term ratings are “A1” for Standard & Poor’s and “P1” for Moody’s, an improvement compared to “P2” in 2021. Standard & Poor's confirmed its ratings on March 29, 2022 and gave them a stable outlook. Moody’s announced long-term and short-term rating upgrades on September 6, 2022 and gave them a stable outlook.

DIVERSIFYING AND SECURING FINANCIAL SOURCES

As of December 31, 2022, Group financing through capital markets accounted for 88% of the Group’s total debt, for a total amount of outstanding bonds of 10.5 billion euros including all types of bonds, and 0.1 billion euros of commercial paper.

The total amount of credit facilities was stable at 3.6 billion euros. The syndicated credit facility covers an unchanged amount of 2.5 billion euros and matures in December 2025. Since 2019, this facility includes an indexation mechanism of financial costs on three of the Group’s CSR targets in the areas of carbon intensity, gender diversity, and safety.

The amount of total debt maturing in the next 12 months is 2.0 billion euros, stable compared with December 31, 2021.

2022 ISSUES

In September 2022, under the EMTN program, the Group issued a public bond for an amount of 600 million euros, maturing in 10 years.

At the end of 2022, outstanding bonds issued under the EMTN program amounted to 7.0 billion euros (nominal amount).

Net Debt by currency as of December 31, 2022

Investments are generally funded in the currency in which the cash flows are generated, creating a natural currency hedge. In 2022, net debt decreased in US dollar and increased in euro, Japanese Yen, Chinese renminbi and in Taiwanese dollar. The share of dollar in total net debt decreased in favor of these currencies.

CENTRALIZATION OF CASH AND FUNDING

In 2022, Air Liquide Finance continued to pool the cash balances of Group entities.

At December 31, 2022, Air Liquide Finance had granted to Group subsidiaries, directly or indirectly, the equivalent of 12.6 billion euros in loans and received 3.1 billion euros in excess cash as deposits from them. These transactions were denominated in 24 currencies (mainly the euro, US dollar, Japanese yen, Singapore dollar, Chinese renminbi, British pound, Canadian dollar, Australian dollar). Approximately 400 subsidiaries are included in the Group cash pooling, directly or indirectly (including subsidiaries where cash pooling is carried out locally before being centralized at Air Liquide Finance).

DEBT MATURITY AND SCHEDULE

The average of the Group’s debt maturity was 5.9 years at December 31, 2022, a slight decrease compared to December 31, 2021 (6.0 years). Due to the generation of net cash flow in 2022, bond issues reached maturity without the need for refinancing and the new 2022 bond was issued with a long 10 year maturity.

OUTLOOK

In 2022, the Group delivered a strong performance despite a complex and changing geopolitical, economic and sanitary context. The quality of these published results illustrates the proven resilience of the Group’s business model, characterized by a very broad diversity of geographies and markets, as well as the remarkable mobilization and responsiveness of its teams to adapt to this volatile environment.

For the Group, 2022 was also marked by the launch of ADVANCE, its strategic plan for 2025, which closely combines financial and extra-financial performance. This is already reflected in an acceleration of the investment momentum, which will feed the future growth, particularly in low-carbon hydrogen and the transition to a low-carbon society. On the extra-financial level, the Group’s CO₂⁽¹⁹⁾ emissions remained stable for the second consecutive year. This supports the Group’s objective of achieving carbon neutrality by 2050.

Air Liquide has delivered another year of profitable growth: Sales reached 29.9 billion euros, up +7% on a comparable basis, the operating margin increased by +70 basis points excluding the energy impact, and recurring net profit⁽²⁰⁾ rose +17% at constant exchange rates. At 10.3%, recurring ROCE⁽²¹⁾ is higher than 10%, one year ahead of the target communicated as part of ADVANCE.

All activities are growing significantly: the Gas & Services business, which represents 95% of the Group’s revenue, is up +6.1%, on a comparable basis, the Engineering & Construction business by +20.6% and Global Markets & Technologies by +25.8%. Within Gas & Services, all the geographies posted growth, in particular the Americas and Asia Pacific. By business line, the increase in sales was notably driven by Industrial Merchant and Electronics.

The Group further improved its operating margin by 70 basis points excluding the energy impact. It generated significant efficiencies amounting to 378 million euros and continued its dynamic management of its business portfolio. In a context of a sharp and lasting rise in energy prices, it demonstrated the strength of its business model, in which Large Industries contracts are indexed to energy prices, and where its ability to create value allows it to adjust prices for its Industrial Merchant customers.

The investment decisions reached a record level of nearly 4 billion euros. 12-month investment opportunities remain plentiful and total 3.3 billion euros, out of which more than 40% are linked to the energy transition.

Cash flow on sales excluding the energy impact improved by +110 basis points, allowing the Group to finance its investments and pay a dividend, while at the same time reducing its debt. Reflecting the Group’s confidence in the future, and following the allocation in 2022 of one free share for every 10 held, the dividend that will be submitted to the shareholders’ vote in May amounts to 2.95 euros per share, i.e. an increase of +12.2%.

In 2023, Air Liquide will continue to roll out its ADVANCE strategic plan. The year is expected to be marked by the signing of several major projects in the field of decarbonization and energy transition in Europe and by an acceleration of these opportunities in the United States. Air Liquide is confident in its ability to further increase its operating margin and to deliver recurring net profit growth, at constant exchange rates.⁽²²⁾

APPENDICES

Performance indicators

Performance indicators used by the Group that are not directly defined in the financial statements have been prepared in accordance with the AMF position 2015-12 about alternative performance measures.

The performance indicators are the following:

• Currency, energy and significant scope impacts
• Comparable sales change and comparable operating income recurring change
• Operating margin and operating margin excluding energy
• Operating income recurring before depreciation and amortization excluding IFRS16 at 2015 exchange rate to calculate the carbon intensity
• Reported and restated CO₂ emissions
• Recurring net profit Group share
• Recurring net profit excluding currency effect
• Net Profit Excluding IFRS16
• Net Profit Recurring Excluding IFRS16
• Efficiencies
• Return on Capital Employed (ROCE)
• Recurring ROCE

Definition of currency, energy and significant scope impacts

Since industrial and medical gases are rarely exported, the impact of currency fluctuations on activity levels and results is limited to euro translation impacts with respect to the financial statements of subsidiaries located outside the euro zone. The currency effect is calculated based on the aggregates for the period converted at the exchange rate for the previous period.

In addition, the Group passes on variations in the cost of energy (electricity and natural gas) to its customers via indexed invoicing integrated into their medium and long-term contracts. This indexing can lead to significant variations in sales (mainly in the Large Industries Business Line) from one period to another depending on fluctuations in prices on the energy market.

An energy impact is calculated based on the sales of each of the main subsidiaries in Large Industries. Their consolidation allows the determination of the energy impact for the Group as a whole. The foreign exchange rate used is the average annual exchange rate for the year N-1. Thus, at the subsidiary level, the following formula provides the energy impact, calculated for natural gas and electricity respectively:

Energy impact =

Share of sales indexed to energy year (N-1) x (Average energy price in year (N) - Average energy price in year (N-1))

This indexation effect of electricity and natural gas does not impact the operating income recurring.

The significant scope effect corresponds to the impact on sales of all acquisitions or disposals of a significant size for the Group. These changes in scope of consolidation are determined:

• for acquisitions during the period, by deducting from the aggregates for the period the contribution of the acquisition,
• for acquisitions during the previous period, by deducting from the aggregates for the period the contribution of the acquisition between January 1 of the current period and the anniversary date of the acquisition,
• for disposals during the period, by deducting from the aggregates for the previous period the contribution of the disposed entity as of the anniversary date of the disposal,
• for disposals during the previous period, by deducting from the aggregates for the previous period the contribution of the disposed entity.

Note: exceptionally, the acquisition of Sasol production units in 2021 had an impact in 2 steps on Group sales. After the acquisition of the assets in June 2021 (1^st step), devices were installed on the units in 2022 in order to measure the energy consumed which, from October 2022 (2^nd step), could be re-invoiced to the customer according to the standard Large Industries contractual frame. For the sake of transparency in financial communication, sales related to energy consumed and contractually re-invoiced to the customer are identified within the significant scope and are therefore excluded from the comparable growth. This element will thus be accounted for in the significant scope during 12 months from October 2022.

Calculation of performance indicators (Year)

COMPARABLE SALES CHANGE AND COMPARABLE OPERATING INCOME RECURRING CHANGE

Comparable changes for sales and operating income recurring exclude the currency, energy and significant scope impacts described above.

For 2022, the calculations are the following:

OPERATING MARGIN AND OPERATING MARGIN EXCLUDING ENERGY

The operating margin is the ratio of the operating income recurring divided by revenue. The operating margin excluding the energy impact corresponds to operating income recurring (which is not impacted in absolute value by the energy costs contractually re-invoiced to Large Industries customers) divided by revenue restated for the energy impact to which the corresponding currency impact is attached. The ratio of operating income recurring divided by revenue (whether restated or not for the energy impact) is calculated with a one decimal place rounded number. The variation between 2 periods is calculated as the difference between these rounded ratios, which can result in positive or negative differences compared to a more precise calculation, due to rounding.

⁽¹⁾ Including the currency impact linked to the considered energy impact.

OPERATING INCOME RECURRING BEFORE DEPRECIATION AND AMORTIZATION EXCLUDING IFRS 16 AT 2015 EXCHANGE RATE TO CALCULATE THE CARBON INTENSITY

⁽¹⁾ At 2015 exchange rate excluding Argentina and Turkey due to the hyperinflationary context in Argentina (EBITDA of Argentina and Turkey conserved at 2022 rate).

⁽²⁾ The IFRS 16 impact on operating income recurring before depreciation and amortization includes the neutralization of rental expenses, which are then reintegrated into depreciation and amortization and other financial expenses booked in relation to IFRS 16.

⁽³⁾ Scope 2 emissions calculated from the specific supplies (market-based): the Group hence adopted the methodology recommended by the GHG Protocol.

REPORTED AND RESTATED CO₂ EMISSIONS

⁽¹⁾ « Market based », actual Group emissions including changes in scope (upwards and downwards) having an impact on CO₂ emissions during the year from the effective date.

⁽²⁾ « Market based », restated to take into account over a full year from 2020 and each subsequent year, the emissions of the assets which correspond to changes in scope (upwards and downwards) and which have a significant impact on CO₂ emissions.

RECURRING NET PROFIT GROUP SHARE AND RECURRING NET PROFIT GROUP SHARE EXCLUDING CURRENCY IMPACT

The recurring net profit Group share corresponds to the net profit Group share excluding exceptional and significant transactions that have no impact on the operating income recurring.

⁽¹⁾ The majority of which is non-taxable.

NET PROFIT EXCLUDING IFRS 16 AND NET PROFIT RECURRING EXCLUDING IFRS 16

Net profit excluding IFRS 16:

⁽¹⁾ The IFRS 16 impact includes the reintegration of leasing expenses less depreciation and other financial expenses booked in relation to IFRS 16

Net profit recurring excluding IFRS 16:

⁽¹⁾ The IFRS 16 impact includes the reintegration of leasing expenses less depreciation and other financial expenses booked in relation to IFRS 16

EFFICIENCIES

Efficiencies represent a sustainable cost reduction resulting from an action plan on a specific project. Efficiencies are identified and managed on a per project basis. Each project is followed by a team composed in alignment with the nature of the project (purchasing, operations, human resources...).

RETURN ON CAPITAL EMPLOYED - ROCE

Return on capital employed after tax is calculated based on the Group’s consolidated financial statements, by applying the following ratio for the period in question.

For the numerator: net profit excluding IFRS 16 - net finance costs after taxes for the period in question.

For the denominator: the average of (total shareholders' equity excluding IFRS 16 + net debt) at the end of the past three half-years.

⁽¹⁾ excluding non-recurring tax impact

RECURRING ROCE

The recurring ROCE is calculated in the same manner as the ROCE using the recurring net profit for the numerator.

⁽¹⁾ excluding non-recurring tax impact

Calculation of performance indicators (Quarter)

4^th quarter 2022 revenue

BY GEOGRAPHY

BY WORLD BUSINESS LINE

Geographic and segment information

Consolidated income statement

(a) The 2021 earnings per share has been restated to take into account the June 2022 free share attribution.

Consolidated balance sheet

Consolidated cash flow statement