By Olivier Sorgho
(Reuters) -French industrial gases company Air Liquide (OTC:AIQUY) on Tuesday beat analyst expectations for third-quarter sales, as strong demand across its businesses offset a drop in volumes from large industrial customers in Europe.
"We've seen (...) some customers that have shifted production to the Gulf Coast from Europe given the high energy costs," Executive Vice President Michael Graff told analysts in a call.
Air Liquide, which supplies gases such as oxygen, nitrogen and hydrogen to factories and hospitals, posted sales of 8.25 billion euros ($8.15 billion) in the quarter, up 8.3% from a year earlier, and beating the 8.11 billion average forecast from a company-provided consensus.
Its shares were up 4.4% as of 1043 GMT, as JPMorgan (NYSE:JPM) in a note called the results "reassuring".
All three of its major segments recorded top-line growth despite a "complex" macroeconomic environment.
Industrial Merchants grew by 18%, helped by pricing and resilient volumes, the firm said. From a geographical standpoint however, Europe experienced a slowdown particularly in Large Industries.
INDUSTRIAL SLOWDOWN IN EUROPE
Sales in Europe contracted by 0.2%, hit by Large Industries (LI) where revenue dropped 27.5%, while volumes fell 6%, "impacted by a slowing demand from Steel and Chemical customers, notably in Germany and Benelux."
The euro zone is likely entering a recession, with business activity contracting in October at its fastest pace in nearly two years, a business survey showed. Factories have been particularly hit as energy prices soar while supply chains are disrupted from the COVID-19 pandemic and an additional hit from Russia's war in Ukraine.
Air Liquide said in August that ammonia production disruptions hit its C02 supplies, and in September announced its plan to withdraw from Russia.
12-month portfolio investment opportunities stood at over 3 billion euros at end-September, with 40% of the figure related to the energy transition. The group is hoping to benefit from its investments in green energy, notably hydrogen.
Air Liquide confirmed its full-year guidance for an increase in operating margin and recurring net profit growth at constant exchange rates, "assuming no significant economic disruption".
($1 = 1.0126 euros)