AIR Liquide SA, the world's biggest maker of industrial gases, said first-half profit rose 8.1 percent on contracts to supply new Chinese steel plants and higher demand for hydrogen used to make cleaner gasoline.
Net income increased to 601 million euros (US$936 million), or 2.3 euros a share, from 556 million euros, or 2.08 euros a share, a year earlier, the Paris-based company said yesterday. Revenue gained 13 percent to 6.37 billion euros, according to Bloomberg News.
Air Liquide said yesterday it has seen no sign of a slowdown in demand and the company reiterated a target for profit growth of at least 10 percent this year, at constant exchange rates.
Chief Executive Officer Benoit Potier plans to spend 10 billion euros by 2011 on purchases and new factories to meet surging emerging market demand for gases in the oil-refining and health industries.
"Much of the business is performing well," said Martin Evans, an analyst at Cazenove in London with an "in line" recommendation on the stock. "Some inevitable weakness in end markets in electronics in Asia has been seen, but overall the result was reassuring."
The supplier of oxygen to hospitals advanced as much as 2.2 percent to 84.48 euros in Paris trading yesterday. The stock has fallen 8.8 percent this year, cutting its market value to 22 billion euros. That compares with a 2.4-percent decline at Munich-based competitor Linde Group, which bought BOC Group Plc for US$15 billion in 2006.
Analysts predicted profit of 575 million euros. Operating income rose 11 percent to 950 million euros, compared with a 955-million-euro analyst estimate.
The first half was "characterized by increasing inflationary pressure," as energy and transportation costs surged by more than 300 million euros, Potier said yesterday.
Half of that amount reflected increased natural gas prices, which are immediately passed on, he said. Planned cost cuts will allow the company to maintain its profit margins, he added.
The company is on track to reach 600 million euros in savings through 2010, with 102 million euros in costs stripped away in the first six months. Net income grew 11 percent at constant exchange rates in the first half. The operating margin in the company's main gases and services division will widen this year, Potier said.