By Andrey Sychev and Tristan Veyet
(Reuters) -Air Liquide's investment backlog hit a record 4.2 billion euros ($4.44 billion) in the third quarter, the French industrial gases firm said on Wednesday, eyeing growth opportunities coming from the U.S. energy transition in the future.
" Air Liquide (EPA:AIRP) will be a key player in the hydrogen development across the U.S.," Chief Executive Francois Jackow said during a post-earnings call.
In the next 12 months, the firm is considering spending 3.4 billion euros on investments, with about half of them in the energy transition field, including in the United States.
Air Liquide, one of the largest hydrogen producers in the world, is seen as a beneficiary of the global energy transition, supported by the U.S. Inflation Reduction Act(IRA) and the EU's net-zero emissions programme.
U.S. HYDROGEN HUBS WIN
The French traditional company with 60 years of experience in hydrogen production, was chosen as a partner for six out of seven planned clean hydrogen hubs by the U.S. Department of Energy (DoE), which will allocate $7 billion for the projects within the bipartisan infrastructure law.
The hubs would connect future hydrogen plants, customers, and local energy infrastructure, and are set to be the basis for the country's future clean energy network.
Deutsche Bank (ETR:DBKGn) analysts estimate that thanks to the project, Air Liquide would be exposed to up to $16 billion of private investment.
This might potentially bring up about 264 million euros from tax returns to earnings by end-2024 already, as per Deutsche's calculations, with any profit from the hubs' operation five years away.
THIRD-QUARTER RESULTS
The firm has confirmed its annual outlook in its third-quarter earnings release. "In 2023, Air Liquide is confident in its ability to further increase its operating margin and to deliver recurring net profit growth, at constant exchange rates," Jackow said in a statement.
The company's sales rose 1.5% on comparable basis (excluding energy and currency effects) reaching 6.81 billion euros by the end of September, which was in line with Vara Research analysts' forecast.
Including changes in energy prices and currency, sales dropped 17.4% annually. Energy prices fell year-on-year after spiking following the Russian invasion of Ukraine, while the euro strengthened to the U.S. dollar in the July-September quarter.
Air Liquide passes energy costs to customers by automatically including them in contracts, which especially hits its energy-intensive large industries customers, namely metal and chemical companies.
($1 = 0.9459 euros)