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Operator: Good morning, ladies and gentlemen, and welcome to the Air Liquide First Half 2025 Results Conference Call. [Operator Instructions] I will now hand you over to Air Liquide team. Please begin your meeting, and I will be standing by.
Aude Rodriguez: Good morning, everyone. This is Aude Rodriguez, Head of Investor Relations. Thank you very much for attending the call today. Francois Jackow and Jérôme Pelletan will present the first half 2025 performance. For the Q&A session, they will be joined by Emilie Mouren-Renouard and Adam Peters, both VP overseeing respectively, EMEA and North America. Adam is on the phone with us from the U.S. In the agenda, our next announcement is on October 28 for our third quarter revenue. Let me now hand you over to Francois.
Francois Jackow: Thank you, Aude, and good morning, everyone. It's truly my pleasure to be with you today to share the highlights of Air Liquide's very strong performance in the first half of 2025. In what continues to be a turbulent environment, we have once again demonstrated our remarkable resilience. We are staying the course, focusing on optimizing what is within our control while consistently evaluating and adapting to the evolving external landscape. In this first semester, we delivered profitable growth and achieved major commercial successes, preparing for the future. Let's turn to Slide 3. The inherent strength of our operating model and the transformation momentum supported by our teams have enabled us to deliver positive performance across all our KPIs, a remarkable achievement given the current macroeconomic and geopolitical context. Sales grew plus 2% on a comparable basis, demonstrating solid resilience and ability to continue to grow. Several key performance indicators reached record levels, reflecting our strong operating discipline and the increasingly visible contribution of our transformation momentum throughout the organization. We achieved a record Gas & Services OR margin improvement, reaching plus 130 basis points, excluding the energy pass-through effect. We delivered record high efficiencies, reaching EUR 287 million, a significant plus 23% compared to H1 2024. Our recurring ROCE significantly improved to 11% in spite of increased investments, which is remarkable. And our ESG KPIs remained firmly on track with a few noticeable progresses this semester. For example, the start-up of 6 PPAs for an additional 1.4 terawatt hour per year of renewable energy sourcing or regarding the ECO ORIGIN offer, we have signed contracts with more than 100 hospitals to supply them with low-carbon oxygen. Finally, our solid investment backlog stands at a new record high of EUR 4.6 billion. These are CapEx commitments for signed projects that are already under construction, directly securing our future growth. Therefore, in H1 2025, despite the macroeconomic conditions, we have successfully delivered simultaneously on growth and profitability while diligently preparing for the future. This is truly the inherent strength of Air Liquide. Starting with performance on Slide 4. In H1 2025, we continue to execute and accelerate on the structural transformation program we launched 1 year ago. As a reminder, this ambitious program is built around 4 main initiatives, all of which are looking at structural improvements of the performance and leverage, of course, the power of data and artificial intelligence to maximize their impact. While we are rigorously executing every action within this program, let me deep dive on one specific initiative. I will focus on streamlining the organization to give you a tangible sense of the transformation, which is ongoing. Let's turn to Slide 5. Indeed, in the first half of 2025, we have already significantly streamlined our organization. This slide provides concrete examples of actions driving structural efficiencies. First, as part of our global initiative, we have successfully removed up to 3 management layers in several parts of the organization and also removed the 4 regional hubs organization. In addition, we have reduced the number of management units across several functions, including clusters, industrial directions, home healthcare, procurement and IT. The figures on the slide truly speak for themselves, showcasing the extent of this transformation. But beyond these global changes, we have also launched and implemented many local initiatives. We have previously shared some of these examples, and they highlight the breadth of the transformation. As an illustration, the merger of medical gas operations in Europe now under the same operational and management team as Industrial Merchant. In France, we have completed the home healthcare restructuring. Also, our Industrial Merchant and Healthcare operations in Canada are now under direct Airgas management. In Asia, our Large Industries and Electronics operations now share the same smart innovative operations center, providing many synergies. And as you know, we've merged our Engineering & Construction and Global Markets and Technologies teams into a single engineering and technology business unit with common management and support functions. These examples illustrate just 1 of the 4 core initiatives of our comprehensive transformation program. This program is driving profound structural changes that impact our entire organization and the way we operate. It starts to generate the ongoing efficiencies that Jérôme will discuss shortly. I want to thank our teams for their strong commitment to make this transformation a success. Now moving to Slide 6. I would like to focus on sustainable profitable growth. Indeed, Air Liquide is and consistently remains a growth company. Keep in mind that we have been posting positive comparable sales growth for the last 19 quarters, quite an achievement as a lot happened in this time frame. If we step back, we see clearly that our growth is supported by 4 engines that we can powerfully activate depending on market context and opportunities. First, low CapEx growth from optimized utilization of existing assets. These engines maximize the value of our existing asset base. It includes 2 key levers: pricing and volumes. This is clearly a reservoir of growth in today's environment of lower volumes, where most of the assets could be boosted with no requirement for additional CapEx. Second, growth from investments in our core activities. This engine benefits from our leading innovation and technology capabilities and the fundamentals of our business model. While carrier gas projects in Electronics are a strong growth driver, it's important not to underestimate the growth investments we continue to make across large industries, industrial merchant and health care as we see a continuous flow of opportunities in all those segments. Third, the energy transition. This growth engine goes beyond just low carbon hydrogen. It includes low-carbon oxygen like for the Exxon project in the U.S. and CO2 management solution. It is there to remain. Finally, M&A, our fourth growth pillar involves both bolt-on and strategic acquisitions. These 4 growth engines are supported by our strong fundamentals. We enjoy a healthy balance sheet to finance industrial and financial investments. And thanks to our diversified footprint in terms of geographies and markets, we can seize all those opportunities when they appear. Let me now illustrate 2 of these growth levers to support what I just mentioned. Let's turn to Slide 7. Firstly, Electronics activity is a perfect illustration of our second growth engine, investments in core activities. Over the past 18 months, we've achieved major commercial successes across all regions, significantly reinforcing our #1 position in the global Electronics market. These successes represent close to EUR 1 billion of new investment secured by long-term contracts. Let's look at some key examples. Our most recent announcement is a EUR 250 million of investment in Dresden, Germany to supply a leading semiconductor manufacturer. The state-of-the-art factory is the highest ever investment for the semicon industry in Europe, and it is also for us in Electronics in Europe. In the U.S. we have been committed an additional $50 million investment to build a new gas production plant for another leading semiconductor manufacturer. This is part of the EUR 350 million invested in the U.S. over the last 18 months, with the largest being our EUR 250 million project for Micron announced last year. In Asia, we recently announced a EUR 17 million investment to supply ultrapure carrier gases to a major semicon manufacturer in Singapore. Overall, we've secured over EUR 450 million in investments in Asia during the past 18 months. We also recently announced something which is quite important. Which is in Korea, the start-up of the largest molybdenum plant in the world for the semicon industry. This is a key strategic investment for Air Liquide as molybdenum is emerging as a promising replacement for tungsten in advanced chip manufacturing, particularly those driving AI applications. This highlights Air Liquide's unique innovation capabilities and position in advanced materials, further enhancing our leadership in the electronic sector. These are just a few examples, which demonstrate how our investments in core activities continue to fuel our robust growth. Turning now to Slide 8. Let me share more on our energy transition growth engine. We recognize that the current uncertain environment presents challenges for regulators in establishing effective financing frameworks. This, in turn, can lead to customer hesitation on major investment decisions. Despite this challenging backdrop, there are opportunities. Air Liquide has been successful in developing energy transition projects with our customers. We have a targeted strategy of selecting the most promising investments in this space. And this strategy is delivering results. We have been highly successful signing major energy transition projects, representing over EUR 2 billion in investments. These projects are currently under construction and are already included in our robust backlog, securing our future growth. For instance, the first start-up of a 200-megawatt electrolyzer in Normandy, France, is expected by the end of next year. I was there just a few days ago, and this is really an impressive first-of-its-kind facility. Other significant projects will follow like the recently confirmed FID for ELYgator 200-megawatt electrolyzer in the Netherlands. They will contribute to our growth trajectory. In parallel, we continue to develop new very promising energy transition projects. It is an important growth pillar for Air Liquide, but of course, not the only one. 60% of our investment opportunities remain in our core activities. This clearly shows that we leverage all our strengths for sustainable growth and do not depend on any single one engine. I will conclude on Slide 9. Air Liquide is delivering today. In H1, we have demonstrated strong resilience, delivered record high financial performance and achieved commercial successes securing future growth. Combined with these fundamentals, looking forward, we rely on 2 key elements: our ongoing transformation initiatives and our 4 growth engines. Those growth engines being the reservoir of growth of existing assets, the core investments, the energy transition and the M&As. They will allow us to seize opportunities across environments, ensuring we deliver both in the short term and in the long term. In essence, in H1, we have demonstrated that with our ongoing transformation, Air Liquide stands as a highly resilient, more and more efficient and sustainably growing company. We are very well positioned to navigate the evolving global landscape and deliver continued value to our shareholders. Thank you very much for your attention. I will now ask Jérôme to present the details of the H1 performance. Jérôme, please.
Jérôme Pelletan: Thanks, Francois, and good morning, everyone. I will now review our numbers in more detail. So regarding our first half results, I am now on Page 11. Group sales have been resilient overall on a comparable basis, excluding energy pass-through and ForEx. Gas & Services sales for H1 achieved a plus 1.8% increase versus last year. The new Engineering and Technology BU is also up plus 1.8% on a comparable basis. Order intake reached EUR 642 million, up 41% versus last year, out of which third-party sales represented 38%. So overall, group sales are up plus 1.8% on a comp basis for the first half, while published sales increased by plus 2.6%, benefiting from a positive energy effect at plus 2.3%, partially offset by the negative ForEx at minus 1.5%. There was no significant scope effect during the period. Please also note that the contribution from Argentina has significantly decreased in H1 2025 at only plus 0.4% versus 2.1% in H1 2024 and comparable growth specific to Q2 was at plus 1.9%, showing a slight but encouraging sequential increase from plus 1.7% in Q1. I am now on Page 12. All our regions are growing. From a business line standpoint, H1 growth was mainly driven by Healthcare, Again, our diversified business line and geographical footprint complemented each other, creating an optimal balance that foster resilience, especially valuable in the current economic environment. Let us now review more specifically the activity on our main geographies in Q2 2025. I am now on Page 13. So sales in the Americas have been strong overall, reaching plus 3% on a comp basis. Large Industry sales in the U.S. were solid and benefited from a major ramp-up in Airgases. Growth in hydrogen and Cogen was strong. In Merchant sales were driven by the continued solid pricing effect at plus 3.6%, supported by active pricing management at Airgas, which is close to 75% of the pricing impact in the Americas. On volumes, gas remains resilient overall, while hard goods remained low. Healthcare saw vigorous growth at plus 11.2% compared to last year. This was driven by robust pricing in the U.S. and strong volume as a consequence of an increased patient base in LatAm from health care. Finally, Electronic sales were fueled by solid volume on carrier gases and Advanced Materials, yet they did not fully offset the decrease in sales of equipment and installation compared to a record level last year. Sales in EMEA are resilient, supported by solid growth in Healthcare. In Large Industry, customer demand remained low, particularly in the chemicals and steel sector and soft in oil and gas, mainly in France and the Benelux. In Merchant, pricing stayed solid at plus 2.5%, driven by favorable indexation in bulk and sustained high pricing in packaged gases. While volume remains soft, they are still growing, excluding the last year divestitures of our operations in 12 African countries. Finally, Healthcare delivered robust growth at plus 3%, mainly driven by dynamic home health care activity. Activity in Asia was soft in Q2 with growth driven mainly by Electronics and Large Industry. In Large Industries, sales growth was supported by the start-up of the takeover of the unit of Wanhua in China that we announced last year and volumes ramp-up in Korea, partly offset by turnaround. Merchant sales were generally soft, in line with our expectations, while pricing remained low because of neutral inflation, it showed improvement compared to Q1. On China, China sales were robust, supported by bolt-on acquisition in packaged gases and this despite challenges in the helium market. The rest of Asia remained globally stable. Electronics finally, sales again saw a solid increase driven by double-digit growth in carrier gases from start-up contribution. It was partly offset by lower sales on Equipment & Installation and Advanced Materials, the latter impacting by the strong comparable basis last year. I will now quickly comment on our Q2 activity by business line. I'm now on Page 14. In Merchant, we continue to see solid pricing with plus 2.7% in Q2, slightly higher than Q1. Overall, gas volume remained flat, while hard goods were down in the U.S., in line again with our expectations. In Large Industry, we saw growing sales driven by the U.S. and China. On Page 15, next, we move to Electronics. With 7 start-up in H1, Carrier gases sales continued to grow this quarter, but could not offset decreasing sales in equipment and installation after a record level last year and low Advanced and Specialty Materials sales. Finally, Healthcare is the growth driver this quarter with sustained and resilient growth in both medical gases and from SK. Moving now to our margin on Page 16. As Francois highlighted, our transformation initiatives are clearly paying off. Group operating margin in H1 improved by a solid plus 100 basis points. And for Gas & Services, the increase is even more significant at plus 130 basis points. Of course, this is excluding the energy pass-through effect. Purchase have seen only a limited increase following energy cost increase, mainly natural gas. Personnel costs are flat despite the inflationary environment, thanks to the benefits of our organizational simplification plans. Depreciation is slightly trending upwards, reflecting the start-up of our new production units. On Page 17 now, the ongoing margin improvement is supported by 3 pillars of our structured execution plan. First, IM pricing remains solid with plus 30% increase since January 2022 and a sequential increase in Q2 2021 versus Q1. Secondly, we delivered EUR 287 million of efficiency in H1, an increase of plus 23% compared to H1 2024. This improvement reflects the acceleration of our structural transformation initiative effect, as Francois spoke in his opening section. Lastly, we continue to pursue active portfolio management, which was 7 acquisitions in the first half of 2025 and executed 3 divestitures with a continued focus on strategic profitable and margin accretive opportunities. Let us now review the bottom lines of the P&L. I'm now on Page 18. Nonrecurring operating income and expense accounted for EUR 47 million, mainly due to the restructuring costs linked to our transformation plan. Net financial cost, sorry, decreased by minus EUR 14 million with lower net cost of debt, mainly due to reduced factoring costs. The average cost of debt decreased slightly to 3.3%. Our effective tax rate stands at 25.1%, an increase compared to last year. This rise is primarily due to an exceptional one-off tax surcharge in France in 2025. So net profit growth is at plus 8%, excluding FX. And recurring net profit excluding FX is up significantly at plus 10.3%. On Page 19 now, our robust cash flow generation allowed us to finance a rising CapEx of EUR 1.7 billion. Our net debt is at EUR 9.8 billion as of June 2025, marking a EUR 635 million increase from December 2024 following the payment of EUR 2 billion in dividends in May. Our gearing is stable at around 33.5% adjusted, of course, for the dividend payment seasonality effect. I'm now on Page 20. As you can see, recurring return on capital employed continues to rise now at 11%, while we continue to grow our investment. This is well above our advanced objective and another clear sign of the improvement of the group performance in the last years. Moving now to Page 21. We will now review our main investment KPI. Firstly, as of June 2025, our 12-month portfolio investment opportunities remained strong at EUR 4.1 billion. This diverse portfolio includes many projects with over 40% dedicated to energy transition, mainly in Europe and in the U.S. Additionally, about 1/3 of these opportunities are in electronic business with projects across Asia, U.S. and Europe. Secondly, on investment decision reached a record EUR 2.3 billion for the first semester. And last, the investment backlog reached a new record of EUR 4.6 billion. Current investments are diversified, spread across approximately 80 projects across all geographies and 1/3 of this investment in progress corresponds to projects in the Electronics business. As a reminder, and as Francois mentioned, this backlog is only made of growth projects. In H1, we achieved EUR 1.157 million (sic) [ EUR 157 million ] of sales contribution from start-up and ramp-up. For 2025, we are confident that the contribution from our start- up and ramp-up of project will deliver more than EUR 310 million. On Page 22, as Francois mentioned in his introduction, we confirm our guidance for 2025 as well as our plus 460 basis point margin improvement outlook until the end of 2026 for the 5-year period. Thank you very much for your attention. I now hand over to Francois.
Francois Jackow: Thank you very much, Jérôme. So I think we are going to take the Q&A now.
Operator: [Operator Instructions] And now we're going to take our first question, and it comes from the line of Laurent Favre from BNP Paribas.
Laurent Guy Favre: The first one is regarding leverage and gearing. I think you mentioned that you've got gearing adjusted at 33.5%. I think it's one of the lowest levels we've seen since the acquisition of Airgas. I was wondering if you could talk about the plans for, I guess, leverage. How do you -- where would you see ideal leverage for you? And in terms of M&A as well, if you can talk about how you would assess the value creation merits from a financial standpoint on acquisitions? The second question maybe for Emilie is around the ELYgator project. You've got 60% of the capacity with long-term commitments. Can you tell us what the plan is for the remaining 40% of the capacity? Is it to go after merchant opportunities? Or would you hope to sign further long-term commitments before the start-up?
Francois Jackow: Thank you very much, Laurent. Thank you for your two questions. I would ask Jérôme to answer the first one and Emilie indeed to talk about this beautiful project ELYgator. All right. Jérôme.
Jérôme Pelletan: Yes. Thank you very much, Laurent. Good to talk to you. You said it, we have a gearing, which is quite stable, 33% in H1, and our balance sheet is quite strong coming from a long story. So we are clearly at the opportunity to save a big part of record of investment. And you know it's something that we said every time. We are very much, I would say, positioning to continue to grow and to take additional investment opportunities. And we have some and you know what we see both in terms of portfolio opportunities, which is above EUR 4 billion. And that we have clearly some opportunities that we continue to say and this is translated into investment decision. So we will continue to favor our industrial project. Of course, we also -- and in a sense, we can also go to some acquisition at some point. But basically, our opportunity is very to go to direct opportunities of investment. Then after that, if we would not be in this position, and it's something that we discussed a lot, if we will not be in a position to, I would say, allocate this cash flow to investment and long-term growth opportunity, then we would return more to the shareholders, but we believe today, we are not in that situation. So that's where we are.
Francois Jackow: Thank you very much, Jérôme. So next question, Emilie, please?
Emilie Mouren-Renouard: Sure. So on ELYgator, Air Liquide has taken a major step early July as regard to the ELYgator project. We've taken FID to invest more than EUR 500 million and launch the construction of ELYgator in the Netherlands. So maybe as a reminder, it's a 200-megawatt electrolyzer dual technology that we will build, own and operate with renewable power already secured. It will be located in the Port of Rotterdam and will be connected to our pipeline network. So indeed, it will supply TotalEnergies refinery with renewable and low- carbon hydrogen through a long-term contract, but it will also supply hydrogen for the industry in the area. As I said, this electrolyzer is connected to our pipeline network, offering us several opportunities for other offtakers. We will also develop in the area mobility transport market, especially heavy-duty mobility. Air Liquide will leverage our leading electrolyzer technology manufactured by our joint venture with Siemens Energy for this project. So overall, I think this milestone really demonstrates our ability to develop solid business models in the field of energy transition and more particularly low carbon and renewable hydrogen and leverage our differentiated technology innovation as well as our strong relationship with our strategic customers.
Francois Jackow: Thank you very much, Emilie. And Laurent, you know that this investment and this is the same for the Normand'Hy one of the very strong points is that we follow our strategy, which is to base this on industrial demand to get the economies of scale. And as mentioned by Emilie, and this is the case in northern part of Europe, but also in the same valet to connect that to the pipeline system. So that gives us a lot of flexibility to find different customers to meet different needs and also to use, I mean, this very good basis in terms of economies of scale to supply mobility project when they arise. So that's the strategy for ELYgator. Same thing for Normand'Hy, which is clearly demonstrating our leadership, hydrogen for the industry, but also for the mobility, the big one today being, of course, for the industry. Thank you very much. We take the next question please.
Operator: And the question comes from the line of John Campbell from Bank of America.
John Campbell: Two questions, if I can. So regarding your significant Electronics investment in Dresden, I wanted to know if you anticipate if this investment will entirely fulfill the anticipated needs of projects in that area? Or should we perhaps keep an eye out for other gas contracts developments in Germany? And perhaps could you clarify for me how this investment decision has been recorded in the context of first half results? Is it in the backlog as of the end of June? My second question relates to U.S. blue hydrogen. We now have 11th hour clarity over the 45V tax credits. I wanted to ask if you have noticed any impetus among potential developers now to get their projects over the line. To give you an example, I noticed that Chevron submitted tax abatement requests to Texas authorities shortly after the Senate approved the tax bill. Do you have a line of sight potentially on that project?
Francois Jackow: Thank you very much, John. So I'll ask Emilie to talk about the major project. And Adam to comment on the U.S. and what we have seen following also the One Big Beautiful Build because I think there's a lot to take away and quite positive out of this, and Adam will speak more about that. So Emilie, please.
Emilie Mouren-Renouard: Sure. So on this project, Air Liquide has been awarded a long-term contract to build, own and operate new state-of-the-art industrial gas production units in the heart of what is called the silicon factory in Dresden in Germany. So we will supply large volumes of high- purity gases to one of our major customers and one of the leading semiconductor manufacturers in the world. It's a bit more than EUR 250 million of investments, and it is the highest ever investment for Liquide in Electronics in Europe. So this will really significantly enhance our #1 position in global Electronics market and in Europe. So the market in Europe is forecasted to grow with demand for semiconductor products, but also driven by sovereignty purposes and resilience of semiconductor supply chain. In this region, in particular, we're also benefiting from decades of established partnerships with customers and also from highly skilled workforce. So really, our idea is to continue to expand and benefit from this growth in the market in this region, in particular, but overall in Europe in Electronics. So to conclude, this project is obviously well aligned with our strategy and one of our 4 growth engines, strategic investments in our core activities. Air Liquide is already the leading industrial gas supplier to the semiconductor industry in Europe, and this will reinforce our #1 position in Europe, which will enable us to continue to grow in this market with higher demand.
Francois Jackow: Thank you very much, Emilie. And if you have been to Dresden, you see clearly, I mean, the footprint that we have with multiple units. We have also pipeline connections going to different customers. So we know that there is -- there are several other projects in the area. And we are, I think, very well positioned to capture also this growth in what is the really heartland of Europe for semicon industry. Emilie, you had also a question on the backlog...
Emilie Mouren-Renouard: Sure. In terms of backlog, we have in our backlog today for this project, EUR 124 million already accounted for in the backlog.
Francois Jackow: Thank you very much. Adam, do you want to speak about what we see in the U.S. following some of the recent legislative events?
Adam Peters: Yes, absolutely, Francois. Thanks a lot for the question. I'd like to maybe step back on the One Big Beautiful Bill and talk about the impact to Air Liquide, which I think is very positive actually. And then come specifically to your question around 45V and what we can expect there. If I look at the beginning of this year and the administration change and the like, I think there were sort of 3 areas of uncertainty that we were facing in the U.S. One of them was around the reconciliation bill or what we call the Big Beautiful Bill for the Trump administration. The other one was around interest rates and the third one was around tariff uncertainty. I think on July 4, when the One Big Beautiful Bill was passed into law, this took away one major uncertainty factor about how things are going to progress and opening up the doorway for final investment decisions from customers and certainly from us. So if I look at the bill itself and I look at what passed into law with that bill and coming specifically to your question around 45V, 45V was passed in such a way that basically it allows companies to have until January 1, 2028, to start construction on projects, and this really reflects projects which will benefit from low carbon hydrogen, including blue hydrogen, as you mentioned. So it gives a runway of 2.5 years to develop those projects and start construction in order to make those work. So to your point specifically, I think this is going to open the doorway for a number of projects to move forward in the low-carbon space to allow for the development of an ecosystem for hydrogen in the U.S. So this is, I think, very exciting. Specifically to the Chevron project, I don't know if there's anything in particular to talk about on that one there. This is something that we have followed extremely closely over the past 2 years in terms of developments in blue hydrogen. There have been many, many projects that have been on the table in terms of development and the like. I imagine now with the passage of 45V in terms of clarity, we'll have more and more projects come together. Chevron is certainly a company that we have worked with in the past and continue to work with. So I won't comment specifically on that, but I think that we'll start to see more projects develop and come to fruition from serious players in the market, which I think is great. A couple of other points to mention on One Big Beautiful Bill. One is around 45Q. So this is the carbon tax credit that comes for carbon sequestration and utilization. This actually improved under One Big Beautiful Bill. So now carbon utilization has the same tax credit as carbon sequestration at $85 per metric ton. So I think this was an advantage also for energy transition. Another one for Air Liquide is around the corporate tax rate. So there was talk of a corporate tax rate basically for foreign companies with business enterprises in the U.S., and this was removed from the bill. So while this was a little bit of a concern point during the negotiation of the bill. I think it's a very positive outcome at the end of the day. The final one I'll talk to is around the CHIPS Act. You may know in the U.S., the CHIPS Act for reshoring of the semiconductor industry was in place for projects that started by the end of 2026. It was previously an investment tax credit of 25%. That's been raised to 35%. And this also, I think, bolsters the investment opportunities that we see from large clients that are -- that we partner very closely with in the U.S. market. So there's a number of other provisions. I'll stop there. But altogether, I think this bodes very, very well for the investment landscape in front of us in the U.S.
Francois Jackow: Thank you very much, Adam. And thank you, John. Let's move to the next question please.
Operator: And the question comes from the line of Jean-Luc Romain from CIC Market Solutions.
Jean-Luc Romain: One refers to -- back to the projects, hydrogen projects in the Netherlands. I think the Dutch government announced some helps for some projects last week before you announced ELYgator. How much of the EUR 500 million CapEx could be covered by European Union subventions? That's the first question. Second question is, could you update us on your carbon capture projects for cement plants and like EQ and other ones?
Francois Jackow: Jean-Luc, thank you very much for those questions on the energy transition in Europe. Emilie, do you want to give us some light on this?
Emilie Mouren-Renouard: Sure. So thank you for the question. Indeed, we received several fundings for ELYgator from -- coming from Europe and also coming from the Dutch government more recently. Overall, if you can have an order of magnitude for these projects, electrolyzers and more energy transition projects, we are about between 30% and 50% of CapEx subsidies that we typically receive combination from Europe and governments. On the cement project, so overall, I would say, in the cement activity, our customers are still very active in terms of development. I would say -- of course, there are still uncertainty in the regulation, but cement players are very active to continue on their journey to decarbonize their plants. We are actively working with them. Now it depends before taking FID depends on ETS price. It depends on some other mechanisms such as carbon contract for difference, for instance, and it depends on the viability of the whole CO2 chain from the capture unit to the sink. But overall, I would say, still a good momentum on cement projects. They still benefit from a lot of funding as well from Europe, and we accompany them along their journey to develop their projects.
Francois Jackow: And you know very well that for those projects, the infrastructure is very important, and there has been recently quite a bit of progress in that. I mean, the ratification of the London protocol to be able to export CO2 from one country to another one in several European countries, for example, but also the availability of some sink and expansion like the Northern Light announcement. So we see clearly things which are moving ahead in this space with a good momentum from the customer side, as mentioned by Emilie. So thank you very much. We move to the next question, please.
Operator: And the question comes from the line of Thomas Wrigglesworth from Morgan Stanley.
Thomas P. Wrigglesworth: First question, if I may. Just in terms of the kind of the near-term dynamics, possibly more as a read for other industries. Could you talk a little bit about how your comparable growth is progressing as we exit 2Q? Specifically, do you think that you can kind of repeat the rate of comparable growth that we're seeing in the first half and the second half? And I'm particularly interested if you're seeing offsets like certain areas or regions that are cooling, you're able to offset that with growth in other areas above and beyond the kind of the new projects that you've called out?
Francois Jackow: Okay. Thank you very much, Tom. So I think given the context, we expect the probably the same top line momentum for the rest of the year. This means that the sales will remain resilient in all the geographies with overall positive sales growth in all the business lines of Air Liquide. We could see some upsides, and we hear some positive things from customers. But I think in the current context, given all the uncertainties, we have to be cautious about that. It's true that we start to see some momentum in Electronics. As mentioned by Adam, we start to see also some momentum, maybe some effect of the new policy in the U.S. But again, I would really would prefer, and that's what we are doing internally, stay cautious and probably confirm the trajectory that we have seen so far. This being said, we also expect to see the same momentum in terms of project development with a very strong portfolio of projects in Electronics, in the energy transition, but also more in, I would say, the classical large industry, especially in the U.S. So all those are, again, positive signs for the midterm. This being said, maybe just to conclude, for us, for Air Liquide, for the management team and the teams, we will continue to really focus on what we can control. We will, of course, also leverage the transformation initiative to continue to deliver higher profitability. And for sure, we remain agile and seize the opportunities along our 4 growth engines.
Thomas P. Wrigglesworth: And Francois, just a follow-up to that, please. Obviously, the margins running ahead of your guidance. So will you revisit what your targets are out through '26 at some point? Or and could you grade the outperformance that we've seen versus the -- on a run rate basis, can that continue to accelerate through the next couple of years?
Francois Jackow: Well, Tom, I think it's quite early to update, I mean, the guidance that we gave. What I can say is that based on the results, based also on the momentum, the real momentum of our transformation program, we feel extremely confident that we will deliver our commitment for 200 basis point improvement for '25 and '26. So that's where we are today. We are extremely focused on the execution, but things are going well. It's a challenge. It's not easy every day, but we are making very significant progress. And since you see more and more the structural transformation of the group are contributing, I'm confident that looking forward, this will continue. Next question, please.
Operator: And now we're going to take a question from James Hooper from Bernstein.
James Hooper: My first question is a little bit about the transformation initiatives. You said in the release that you set up a group industrial department. Can you give us a little bit more detail about what this group is intending to do? And do you see the kind of central costs being, therefore, higher from here on for delivering more efficiencies? And then secondly, just to follow up on Tom's question. Can we go a little bit more detail into Electronics and the outlook for kind of carrier gases, advanced materials, equipment installations and how you see that progressing around the regions, please?
Francois Jackow: All right. Thank you very much, James, for those questions. I will talk about the transformation and maybe Jérôme and also Adam will talk a little bit about the electronic outlook overall. As you mentioned, I mean, that was an important step where before we had 5 industrial directions for every -- for each business line, the IM, the Large Industry, the Electronics and so on with quite a bit of overlap, but to some extent, also probably some silos. So we have put all that together. So there is a little bit of cost to bring that all together, taking into account that we are absolutely convinced that as an organization, this will be more efficient that will leverage all the skills of the group and of course, offer opportunities for people to contribute to different parts of the business. So what are we doing there? We have already started to identify, I would say, the best practice within Air Liquide, but also with the industry in general. So the benchmarking part has been extremely important, make sure that, for example, we take the best practice of the electronic business in terms of reliability, and we use that in other part of the business. So we continue and we have set up a whole system on that. We have also with that, I mean, defined a very strong set of KPIs and management system to make sure that we manage the performance of our industrial operation much more closely. And we give also the tools of everybody in the company to understand where they are and how they can improve, making also available best practice and standard practice for them. What we have done, which is extremely powerful is that we have identified a limited set of initiatives where we want to enforce that. We used to have a culture maybe where it was a little bit menu because we are -- we were a very decentralized organization. So people can pick and choose basically what they wanted to do in terms of operation. We are much more streamlined and, I would say, clear on what are the expectation, and we are much more focused with centralized team who can implement the solution, for example, for the most advanced process control and data management across the group. So we have kind of a squat team, which is working on that, working with the operation and implementing those initiatives across the group. We have done more than 400 site visits and action plan. So that's ongoing. We start to see the benefit already, but that's ongoing. The last thing that I would like to mention, of course, is the fact that with this unified industrial direction, we can leverage even more the use of data that we have been developing for the past 10 years. We have been using AI for many of our models. We have close to 10,000 models within our operations, which are using AI. But the next revolution is really to leverage the Gen AI capabilities. Many people are talking about that. Very few are actually doing it in a sense where it's adding value. That's what we are working on, and that's where this industrial direction give us, I mean, the visibility to focus on what is the most relevant, what is going to contribute the most and to go the fastest on that. So again, we have put the foundation. It's the beginning. We start to see already progress and contribution from the industrial direction, but definitely more to come. Now let's move to the Electronics. Adam, maybe you want to give us a little bit, I mean, what you see from the U.S. but also global customers and Jérôme will complement on this.
Adam Peters: Absolutely, Francois. James, thanks a lot for the question. So we talked about Electronics. One of the slides that you saw in the deck was around our position in Electronics being #1 globally and really enhancing that position with the major investments that we see in each of the geographies around the world. When we look at the market dynamics and you think of the reshoring activity that's taking place in the U.S. right now, and that will be enhanced further by the CHIPS Act, what that's allowing for is next-generation advanced fabs to be built in the U.S. in particular, which will utilize many molecules that Air Liquide produces in terms of advanced materials, but also leverage carrier gases for infrastructure build-out and basically being that core anchor point for each of those investments. And I would say that we're in a very strong position and have leveraged that strong position in terms of landing new agreements, not only in the U.S., but also in Europe with some major wins that Emilie mentioned earlier as well as in Asia. And I believe that when you look back at the last -- at the first half of this year, our growth in those 2 areas in Advanced Materials and in carrier gases in the U.S., in particular, were a solid double-digit percent growth over previous year. The downside that offset that was on the E&I piece. And I don't look at that as a negative. I look at last year as a very solid year for Equipment & Installation activity. It was actually a record year for us in terms of Equipment & Installation, really building on the fact that many customers were starting to build out new fabs in the U.S. market and enabling us to sell equipment and help them with turnkey solutions for that. But now we're on the other side of that and basically starting to build out the more material side of the business as volumes begin and will take off in the years to come. So the prospect is still very strong for Electronics, and it still remains a very good growth driver for us. I would also say that, as I mentioned earlier, with the CHIPS Act enhancement for a 35% investment tax credit for our customers by the end of 2026, it's a nice enhancement for them to increase their investment in the U.S. market and reshore activity further here, which creates even more opportunity for us. Maybe I'll stop there and turn it over to Jérôme.
Francois Jackow: Yes. Thank you very much, Adam. And Jérôme, briefly because I see that we have a few more questions...
Jérôme Pelletan: Of course. Let's go quick. But basically, James, thank you for your question. In terms of Electronics, the underlying demand remains strong and whatever tariff or whatever we talk about that. So long-term basis, there is absolutely no discussion that this will continue to grow. As we have to specifically 2025, we believe today that in the second part of the year, we have the impact of all the good projects we signed and the ramp-up of start-up and ramp-up of carrier gases. It's more than 50% of our mix in Electronics. So this is going well. We should have also an accelerating Advanced Materials compared to the months before. We will have still to compare to a high base on Equipment & Installation. We have a very significant base that we have to compare. But overall, we should grow in H2 overall in Electronics.
Francois Jackow: Thank you, very much. Again, overall, we feel very confident about this market where we are #1. And when you look at the trajectory, all the forecast of the industry show that the segment will double by 2030. So it's a growth engine for the group for sure. I think we have maybe time for at least one question. We see if we can do more. Geoff?
Geoffrey Robert Haire: Just two quick questions. One was that -- thank you very much for the details on the industrial transformation program that you gave. Those details and that program, is that going to last just up until the end of '26? Or is there more opportunity around what you're doing into '27 and beyond? Or will there be new programs that you will look at? And then the second question is just, obviously, you had an EBIT loss in the non-gases and services business of EUR 190 million. That's obviously impacted by the disposals that you made in engineering. Is that the sort of run rate on the EBIT loss of the non-gases and services business that we should expect as we go through into the second half and beyond? Or were there one-offs in that, that we need to be aware of?
Francois Jackow: Geoff, thank you very much for your two questions. So Jérôme will answer the second part. For the first one, definitely, this is just the beginning. So we are setting up the foundation. Today, we have a lot of other initiatives that we could launch and more will come as we see also development in AI and Gen AI. So I think really, we are opening a new era in terms of industrial performance. So there's more to come beyond 2026 for sure. Jérôme, do you have a comment on the second question?
Jérôme Pelletan: Yes, not so clear about the question. But basically, we do not have any write-off related to engineering and construction. What we have specifically for second -- for the nonrecurring item for H1 was really the restructuring costs that we put in exceptional costs. We cannot give you more detail on that. Of course, as the second part of the year, we might come back as this is going to fruition. But so far, that's where we are.
Francois Jackow: Thank you very much. So we'll take 2 more questions, but we try to be very brief.
Operator: And the next question comes from the line of Georgina Fraser from Goldman Sachs.
Georgina Fraser: Two quick questions. One of them is, I'd love Air Liquide's read of the inflationary environment. So if you could give us your thoughts on how pricing should develop in each of the regions in the second half of the year? And then my second question was, I was surprised that Americas was the strongest region in the first half. Could you just explain what was driving that? So I've got a better grip.
Francois Jackow: Thank you very much, Georgina, thank you for your two questions. For the inflation, we do expect things to continue on the same trend overall. We still see a very strong momentum in North America, especially, and this is a mix of, of course, I mean, the environment, but I mean the skills of our teams, not only to follow but to also the inflation, but also to provide the value-added services and innovation to our team. In Europe, I mean, we resist very well, and we continue to pass positive pricing. There is one area in the world where it's more challenging. It's China today for some part of the business, especially on the bulk, the helium, of course, but it's a very specific case, where we are basically price neutral for this. But we have a very strong growth for the IM, it's high single-digit growth in China. But the pricing is probably the weakest for the group in China. For the rest, remains solid and will remain solid. For the U.S. and the contribution of the U.S., I think it's different things. The overall very strong resilience, of course, of the model. We have seen good development in terms of pricing, as I mentioned. But also, we have to recognize the contribution of the health care activity being extremely solid. At the same time, very solid in the U.S., in North America for med gas for the hospital. With a very strong growth there, but also the home care activity, mostly in LatAm, which was extremely strong and robust in terms of growth. Keep in mind also that we had some start-up effect in the large industry in the U.S., especially that contributed to that. Once again, I think we have to keep an eye on the U.S. because we know that the U.S. economy is one which is very reactive. Again, it's too early to give a direction, but we start to see at least on the project, I mean, some things which are happening. And given our footprint overall, you know very well that we will be able to seize any opportunity for growth in the U.S. I think we have to stop here now. So this will conclude this session. Thank you very much for all your questions. To summarize, we delivered again a strong performance in the first half while being able to prepare the future growth through successful development on major projects as we have just discussed. In essence, with our strong ongoing transformation, Air Liquide stands as a highly resilient, increasingly efficient and sustainably growing company. We are very well positioned to navigate the evolving global landscape and deliver continued value to our shareholders. Thank you very much. For the one who are going to take some vacation, I wish you a very good summer break, and thank you again for your attention. Have a good day.
Operator: This concludes today's conference call. Thank you for participating. You may now all disconnect.