Guest of Hedwig Chevrillon

BFMTV, December 11, 2013

HC Hedwig Chevrillon

BP Benoît Potier

HC You announced, Benoît Potier, in your day "investors" - we know that it is an appointment very, very important, I want to say, especially for Air Liquide has a very diverse ownership, rather broke you have announced 10 billion euros of investment over the period 2016 to 2020 then certainly. But that means that somewhere you believe in the "recovery" of growth in France, Europe and worldwide.

BP Yes, what is interesting is that we first brought both our institutional investors, since we had our day 'investors', you said, which is finished to approximately four o'clock in the afternoon and individual shareholders as we celebrate our centennial stock exchange listing in 2013 and combined the day "investors" and this celebration. So it was very interesting to have the shareholders as a whole, the same day in the same place. It was therefore the Palais Brongniart, so it was also symbolic.

$ 10 billion of investment, this is the second phase. In fact, what we wanted to say is that we are first in the middle of a period of 5 years from 2010 to 2015. We tried to make a waypoint. And we did. This period is to summarize a period in which we have invested $ 12 billion in total that is to say, a pretty significant amount, knowing that some of these investments are a little ahead of phase 2016-2020 . So we made ​​our accounts and communicate to our shareholders that these investments will occur in the second half and we were able to put additional $ 10 billion in the 2016-2020 period in order to ensure growth.

So I actually answer your question, yes, you have to believe. In each meeting, "investors", was an update on the markets by saying what is the dynamics of these large contracts that we sign in the world, what can we expect from mature markets, what can we expect countries developed in the fields of health, and other electronics. We posed these questions and we arrived, in fact, an estimate of the market and from there we gave our projections, which I remind you, are doing better than the market in both the 2010 period -2015 and 2016-2020.

HC We will remember that your turnover in 2012 was $ 15 billion, in 2013 it will be about ...

Uh BP is not yet ...

We had the first six months of the year, one to two percent growth. So there is a significant effect of changes that must be remembered and unfortunately for all firms in the euro area is relatively large, but I recall that Air Liquide, it is second order because we do not export product we do not materialize gains or losses.

HC What are the most promising markets. We know that the United States was very important to you. Are they still? If we try to do a world tour with your eyes, Benoit Potier, where the growth markets are?

BP This is quite interesting because I think the main message we tried to convey to our investors is that we believe that it necessarily must look at the world and the future growth in only a geographical perspective . We had used until now to watch the advanced countries and emerging markets. The rule of the strategic game was to get this growth in China, India, the Middle East or South America. In fact, what we see today is that the growth differential between mature and emerging countries has increased from 10% to only 5% and this differential will continue to decrease with time. So we must now imagine a strategy that will not only be geographical but that is to get in growth markets where they are in the world including in our mature areas. And so, it's still a sizeable shift in strategy since we now worry about generating new markets whether in France as well as Europe, the USA, Japan, in China and Middle East, South America.

HC Is this we can say that this is a specificity of Air Liquide, that is to say you produce "local" gift it takes up growth compared to other industries.

BP Yes, this is actually a feature. We need to generate it is to say that if we do nothing, the first of January of each year, each of our customers consume about what he consumed the previous year plus a small something and therefore we have a very low rate of growth will, simply put, roughly equivalent to the growth of industrial production, but that's all. So in order to generate growth 5, 6, 7% must be invested, we must seek projects is why we plan to invest 10 billion euros for the period 2016-2020.

So HC 10 billion investment in what? Yet all that is health is more or less 40% of your sales?

BP No, it's less. It is a small 20%

HC So your goal with that $ 10 billion is to develop yourself not by region but so by sector.

BP I do not eliminate geographic areas. I'm just saying that there is a second view that we must have on the world beyond the geographical vision is the sight of these new markets and new markets will come in what area, what country, what area . This is a sum of two components of growth. I return to the geographical aspect. It is undeniable that China still continues to be an engine of growth of about 10% but we have experienced growth rates of 30% in China. So today, we are obviously much bigger one billion euros in turnover, but the growth rate is expected closer to 10% than 30%. Africa and the Middle East are a relatively interesting sector for the relatively distant future, India least since India became industrialized slower than China. Remaining countries Eastern Europe are growing rapidly today and those of South America. You asked me the question about North America, there is an energy issue maybe we will have to see just now.

HC Yes, even for you, North America is a very big market. It represents how?

BP 23% today

HC For you, it is already too?

BP Absolutely not, I think the renewal is due to energy, this issue of shale gas in the U.S., is welcome. In fact, we find golds already short-term North America has a growth rate much higher than other developed countries. And we have invested and continue to invest in the future to take advantage of these opportunities just shale gas but also technology - because the U.S. are still countries in the world where it is possible to invest in technology.

HC Well, we will not repeat the whole debate but it is interesting nonetheless because you shale gas has been a great opportunity, we can say it like that.

Yes BP finally not directly since we do not of course have been producing shale gas but our customers, in fact, have invested in the North American region in order to build large factories and use the shale gas cheap to manufacture their products particular chemical.

HC So you saw the shale gas miracle with these limits may be. For you, is Europe going to forego something with shale gas?

BP There may be two observations which are quite non-confrontational. The first is that we do not know if the quality of soil in Europe is such that one can extract shale gas. That we do not know. Should do for this exploration, which is not easy on the whole of Europe.

The second thing is that even if we could get it back, we do not know if these reserves are actually exploitable in the same proportions as those of the United States and we do not know the exact impact on the environment. Air Liquide as company provides gas industry operating in the U.S. to essentially reduce water consumption that is related to technology and this is obviously great for the environment because part problems of shale gas are related to water consumption.

HC But does that mean you think we could find better solutions? In particular, your gas could be improved - we talk about innovation in a moment - so that there is no such problems of hydraulic fractures as powerful and frightening somewhere.

BP To some extent, yes, to save water and actually go look where the gas can dissolve instead of crack rock. There are technologies that are applicable in all types of terrain.

HC And you think we will one day find a technology that will be less afraid.

BP There are experts who are better placed than I to answer this question but I think we can improve the technology.

HC There is actually a very important part is the bill of innovation, an engine of Air Liquide. How you spend your turnover to innovation?

BP It is 2% a little less than 2%.

This bit is HC

BP Yes, it is not much when compared to the European objectives. That said, we invest heavily. We are in fact called "capital intensive" in English. We need a lot of capital to invest and generate growth. And in fact, when you add that generate capital growth with capital that generate long-term growth, that is to say research, we reach 17% of turnover. To generate our growth, we are an industry that generally invests heavily.

HC is talking about health park we know that this is a very important center, even if it is for the moment only 23%, it is a pole that is emerging strongly. In any case, you have big ambitions in the investment plan the share devoted to health is how much?

BP In fact, it is roughly proportional to the turnover, but it is not representative. Because health is a profession where one invests less factory mainly so the investment is less. Proportionally, we invest more. So this is one of two areas with large industry will be one of the growth engines of the group not only in the next two years but I would say in the next seven years.

HC So you invest in electric vehicles including Germany. You have ambitions in this case equip hydrogen stations.

BP Air Liquide has been involved for a long time, as you know, in research on the use of hydrogen as an energy carrier. One of the key elements or applications, it is obviously the car engine hydrogen fuel cell. This is a battery which uses hydrogen to produce electricity. A technology known for a long time and on which a number of European, American and Asian automakers have been working for at least twenty years.

There again and it's very interesting is that today's construction technology stack and systems in the vehicle are developed to the point that manufacturers are willing to sell these vehicles beginning in 2015.

HC But compared to electric vehicles that we know, that particular Renault develops. I do not understand very well between hydrogen and electric ...

BP I'll explain. The electric car is in both cases but the autoliths example of vehicles which are operated with a battery so the energy is stored in the battery. This is why it needs recharging. In the hydrogen vehicle, there are more battery but there is instead a fuel cell and a hydrogen tank and that's what actually replaces the battery.

HC And this technology, you obviously develop in Germany. You do not grow in France that is not part of the country you have listed, why?

BP Because Air Liquide is actually associated with car manufacturers. It is not we who build cars. And these are the German manufacturers and Japanese manufacturers who are the most advanced in these domains. So the contribution of Air Liquide, is to produce hydrogen and bring in service stations so that consumers can directly fill the tank with its fuel with hydrogen.

HC But there is no risk of explosion? It may be a matter of philistine, but in my opinion, I'm not the only one asking it.

BP No, it was the first question that was asked by the manufacturers. And in fact the technologies that have been raised by the manufacturers. And in fact, the technologies that have been developed to date are all new technologies that come from aerospace and which are actually technologies that eliminate the risk of explosion of the tank because the tank is designed with a carbon fiber coiled and therefore it can not explode.

HC This is a major project development, investment and one is experimental, Benoit Potier?

BP It was five years ago, I would have said it was experimental and in our labs, we were passionate and we imagined a future.

Today, we bought our first two vehicles in France, registered in France our first two vehicles from Asia, Korea. In France, we were the first to do so. We obviously have the technology stations. And we are also partners of both coalition in Germany to invest one hundred and three hundred service stations in Germany and partner with Toyota in Japan with which we have set up a joint venture to build service stations for hydrogen vehicles. innovation of tomorrow is practically available today.

HC to Air Liquide they are innovations that can be done in health because there we're all imagining lots of things. Will you tell us they are the main innovations?

BP So a little reminder: Air Liquide is in the hospital. From that side, it is well known mainly oxygen and other services. Air Liquide is also at home. We developed home health. And this is that innovations are the most numerous. Why? Because today, the health system needs to be organized differently for both better treatment and lower costs. Or a well-treated preventively home patient is a healthier patient and a patient who is less expensive to the entire system. So, we have developed not only the service that has been the last decade. We are currently developing technologies. To illustrate, these are technologies that connect the patient to the doctor, the company providing the service, that is to say, Air Liquide and the insurer, the social security fund for check and encourage the patient to follow his treatment. And the mere fact of adherence to treatment and to talk with her ​​doctor, in fact, greatly improves the health status and the overall cost to society.

HC felt that there was a lot of innovations, I received yesterday Bernard Charles, head of Dassault Systèmes, again there are many innovations, connected home ...

BP Here and there we talk about health connected

HC I do not know if you saw the declaration of Mario Draghi said that the European Central Bank must ensure that liquidity irrigate many businesses. Will you say that there is a funding problem for businesses.

BP Not for large companies. We we, in fact, attended a decade deep enough change financing by banks to markets. Today the vast majority of corporate financing is done by the markets. We have the liquidity markets and we are as large companies, I would say very well served by all markets. By cons we have clients who are small businesses and we see particularly in southern Europe but not limited to southern Europe a number of small businesses have so much difficulty actually finding funding.

HC So it is right to make this digression. We talk about the price of electricity, in this case, because you said just now that you were a business, a business, a sector in all cases, which consume a lot of capital but also a lot of energy. You are part of the companies that belong to a consortium of large companies, a consortium that negotiated, there was what, five six years with EDF, a long-term but long-term contract that today you extremely high prices, I think, 47 € when normally the price could be 42 €. There is a negotiation is in progress, it is a bit complicated but today we speak of EDF tariffs including vis-à-vis individuals. Is this for you, it becomes something to renegotiate an emergency?

BP Yes, then there is both the problem Exeltium is the name of this company is a consortium between a certain large industrial energy consumers in France and many other question that is wider , which is the competitiveness of companies in France and Europe related to energy prices.

I actually think that there is urgency to renegotiate the contract that gives Exeltium actually 10% more electricity paradoxically costs for large consumers while the initial idea was to make it more competitive contract with respect to the average

HC ... with a possibility of early exit

BP but now a problem of non-competitiveness for large industrial establishments that are part of this consortium. It is true that we have to find a solution. It is looking for a few years. It should we find it today.

HC That means that in 2014, you must find the. You can not have a surcharge of 10%, I guess.

BP consequences in the short and long term would in fact be dramatic for companies would be obliged actually to organize differently and produce elsewhere.

HC This is a key factor, it is clear that in the context of the energy transition, in businesses like you

BP This is an interesting topic because it is both a subject and a long-term European issue. We as manufacturers in Europe took a very clear position that is to say if Europe until now is much more concerned about climate change and security of supply to the detriment of the competitiveness of the energy.

And we actually asked European leaders for some time to put the issue of the competitiveness of the energy at the same level as that of climate change and security of supply.

HC Thank you, Benoît Potier, 2013 will be a year halftone?

BP Yes, because in fact we must remember that the first quarter was quite difficult for everyone. The economy has already suffered since mid-2011. We saw an improvement in the second draw and keep the third quarter, the fourth is not finished look accounts. But what is certain is that we have not yet found enough confidence and it is a little key word that I wanted to put on the table. It is this confidence is lacking today, this confidence in the short term is likely to bounce.We tried to develop long-term by providing our goals yesterday.