Tony Jones

Tony Jones asked about the project backlog and which major end markets are expected to drive growth once the electronic CapEx cycle peaks.

Answer

Sanjiv Lamba, CEO, clarified that the electronic cycle is not expected to peak next year but rather continue for the next five to seven years due to ongoing fab expansions. He also highlighted a strong project pipeline across other end markets, including steel in the U.S. and India, chemicals and refining, and decarbonization projects with solid economic foundations.

Tony Jones from Rothschild inquired about the project backlog, specifically asking which major end markets are expected to drive growth once the electronic CapEx cycle peaks.

Answer

CEO Sanjiv Lamba stated that the electronic cycle is expected to continue for the next five to seven years, driven by ongoing fab expansion plans. He also highlighted a strong pipeline of projects across various end markets, including steel in the U.S. and India, chemicals and refining in other regions, and decarbonization projects embedded within existing end markets.

Tony Jones asked if the new cost reduction program would lift 2025 EPS by 1-2% and whether this benefit is incremental to the typical growth from management actions.

Answer

CFO Matt White confirmed the program has a roughly one-year payback and its full run-rate savings will be realized in the second half of 2025, meaning most of the benefit will be seen next year. He clarified that this action is incremental and a key part of the overall 'management action' effort needed to offset the company's weaker macroeconomic outlook.

Tony Jones of Redburn inquired about the impact of refineries switching to lighter crude on hydrogen demand and the current cost dynamics between blue and green hydrogen given energy inflation.

Answer

Francois Jackow, Executive VP, explained that while some traditional refineries are using less hydrogen due to lighter crude, this is more than offset by growing demand from new biorefineries. He stated that high natural gas prices have significantly increased the cost of gray and blue hydrogen, which in turn makes green hydrogen—produced with more stably priced renewable electricity—increasingly competitive, accelerating the trend in its favor.

Tony Jones of Redburn asked if the urgent need for healthcare gases in India presents a new long-term opportunity, whether price campaigns are sufficient to cover rising raw material and logistics costs, and if investment trends from oil and chemical customers are improving.

Answer

François Jackow, Executive VP, described the dramatic situation in India, where Air Liquide has pivoted to supply medical oxygen, but noted the company's presence there is small and industrially focused. CFO & Executive VP Fabienne Lecorvaisier stated that no significant cost inflation impact has been seen yet and confirmed a strong investment trend from oil and gas customers, largely driven by their energy transition and decarbonization projects.

Tony Jones requested guidance on the absolute currency impact for Q4, the sales perimeter impact from recent bolt-on acquisitions in 2021, and the potential risk of helium prices declining in 2021 due to improved availability.

Answer

CFO & Executive VP Fabienne Lecorvaisier projected a full-year currency and energy impact of approximately -2% each. She noted that while bolt-ons and divestitures should largely offset, the Schülke & Mayr sale will create a significant scope impact. Regarding helium, she does not expect new sources to contribute significantly until 2022, suggesting prices will remain stable through 2021.