General presentation of Air Liquide :
Air Liquide is a French company specialised in the production of industrial and medical gases. It is also one of the leaders in this sector internationally. However, its activity covers various fields, mainly industrial and medical gases such as oxygen, nitrogen, hydrogen and synthesis gas, but also equipment and services for fluid systems control, management of chemical gases and liquids for 95.7% of its turnover, but also welding and cutting equipment, or fine chemicals products for 2.3% of turnover or diving products directly related to its main activity. The remaining 2% of the group's sales, i.e. 2%, relate to engineering and construction of gas production plants and the manufacture of advanced technology products.
Air Liquide's market is mainly European but also affects the rest of the world. Thus, only 12.9% of its turnover is generated in France and 23.6% for the rest of Europe. It also generates 32.9% of its revenue in the United States, 21.7% in Asia-Pacific and 3.1% in Africa and the Middle East.
Know the competition of the Air Liquide share:
The Air Liquide Group is undoubtedly the pioneer in its sector of activity but also the world leader in this field. However, although its direct competition is limited to three major companies, its market shares can at any time drop to the benefit of one of them and it is therefore more than important to know them. Here are the details of Air Liquide's main competitors.
- Linde AG: Linde AG, a German gas and engineering group, is Air Liquide's main competitor. Moreover, it is also based in Europe, which makes it a serious competitor to watch closely.
- Praxair: Praxair is also a serious competitor of Air Liquide. It is indeed the largest industrial gas supply company in North and South America and one of the largest in the world in this sector.
- Air Products and Chemicals: Air Products and Chemicals is an American industrial group of international stature, specialising in industrial and medical gases. It is headquartered in the United States in Allentown, Pennsylvania in the Lehigh Valley region where it is one of the largest employers.
The strategic alliances set up by the Air Liquide Group :
Over the last few years, the Air Liquide Group has also set up well-thought-out partnerships with other major companies, which we invite you to discover here in more detail.
- Toyota: In 2013 in Japan, Air Liquide signed a partnership with Toyota Tsusho for the supply of hydrogen to electric vehicles.
- Carrefour : The partners Air Liquide and Carrefour inaugurated a new clean energy station in Servon in 2017. It will supply the transporters with bioGNV and nitrogen for the refrigeration units.
- ArcelorMittal: Air Liquide and ArcelorMittal, the world's leading steel producer recently signed two long-term renewal contracts for the supply of oxygen, nitrogen and argon to ArcelorMittal's production sites located in the industrial port areas of Fos-sur-Mer and Dunkirk in France.
- PAO Severstal: In 2019, Air Liquide has also set up a partnership with the steel group PAO Severstal for the supply of oxygen, nitrogen and argon in Russia. As part of this agreement, Air Liquide will pay €50 million to build a state-of-the-art Air Separation Unit or ASU to improve the energy efficiency and environmental footprint of Severstal's production process.
- Yankuang: The same year, the group also announced the establishment of a partnership of great importance in China with a memorandum of understanding with the mining and chemical group Yankuang with the aim of developing the hydrogen-energy sector in the country.
The strengths of the Air Liquide share as a stock market asset:
The Air Liquide share is an asset with many qualities as an online investment medium.
- Firstly, the company enjoys an international leading position in the industrial and medical gases sector. Its structure, divided into three major divisions including gas and industrial services, engineering and construction and global markets and technologies/equipment for space, aeronautics and cryogenics, is also a real asset for this company with diversified business lines.
- The Air Liquide Group also benefits from a good distribution of its revenues according to geographical areas, with approximately 36% of its sales in the Americas, 38% in Europe and 23% in Asia-Pacific.
- Its strategy of positioning itself on various buoyant and defensive markets such as health or cogeneration, which gives it an interesting innovative and avant-garde dimension.
- Air Liquide is also a share that attracts many investors thanks to its rather optimistic results for more than 30 years. Growth over the last few decades has been more than 6% per year, with an average increase of 7.2% in earnings per share and 8.2% in dividends.
- Air Liquide also offers a particularly attractive and solid business model, based on multi-year contracts that represent one third of the revenue generated by 20-year contracts and long-term industrial partnerships that allow the Group to best anticipate its future results and its high profitability, which announces a 25% operating margin.
- Finally, Air Liquide is able to build shareholder loyalty thanks to a dividend distribution rate that exceeds 50% of profits and bonus share programmes every two years. The share has outperformed the CAC 40 for more than 20 years and is now considered as a core portfolio security thanks to its results, which have been growing steadily for more than a century.
The disadvantages of the Air Liquide share as a stock market asset :
Of course, the Air Liquide share does not only present advantages for investors and it is also necessary to highlight some of the company's weak points before embarking on online trading.
- Firstly, the Air Liquide Group's activity is considered to be highly capital-intensive. There has also been a price increase in the Group's take-or-pay contracts, the repercussions of which are not immediate and which favour the protection of margins in the medium term.
- In addition, the company is currently experiencing the negative effects of the slowdown in global industrial production. Subsidiaries dedicated to electronics, engineering or construction are the most affected here, especially in the Middle East where they are currently taking a break.
- Finally, Air Liquide is also experiencing a significant deterioration in its debt, despite a capital increase in the autumn of 2016 to finance its takeover bid for Airgas.