Ladies and gentlemen, and welcome to the Air Liquide 2020 Results Conference Call. I will now hand over to the Herbaliq team. Please begin your meeting, and I will be standing by.
Good morning, everyone. This is Rose Rodriguez, Head of Investor Relations. Thank you very much for joining our conference call today. Benoit Poitier and Fabienne Le Corveysier will present the full year 2020 performance. For the Q and A session, we are joined by Francois Jacob, Executive VP, supervising Europe, Africa, Middle East and Healthcare Hubs and on the phone from Mike Graf, Executive VP, supervising Americas and Asian Hubs and the Electronics business line.
Agenda, our next events are on March 23, our Sustainability Day and on April 23, our Q3 Fair revenue announcement. Let me now hand you over to Benoit.
Thank you, Rod. Good morning, everyone, and thank you very much Thank you for attending this call. Directly Page 3 of our presentation, as you can see 2020 has been Spending year in many aspects in the circumstances, we've been able to deliver a significant margin improvement And net profit growth in global crisis environment, thanks in particular to the agility of the teams To adapt to this lower activity level. 2020 brings a clear demonstration The strength of both our business model and our diversified portfolio with a mix of growth and resilience pillars. And And I could also add the strengths brought by our wide geographical presence.
This year has also accelerated the pre COVID trends to The benefits of Air Liquide activities being it in energy transition, healthcare or technologies, and I will come back I'll discuss
on that later. Business Development has
been very active also this year despite the pandemic. And we see a clear acceleration of projects linked to energy transition, which positions us very well So overall, an outstanding year in many aspects. Thanks to the dedication and courage of our teams worldwide during what we can On Page 4, starting with performance, we have just recalled on the left of the graph of the different IP 2020. Facing this situation, sales were more or less preserved at minus 1 point 3 on a comparable basis and minus 6.8 taking foreign exchange and energy into account, very close to the level on the comparable basis. The operating income recurring margin improved again by 80 basis points, Excluding energy pass through impact, reaching a record level of 18.5 for the group, With a strong leverage on net profit growing by +8.6 as published and even by 4.4% On a recurring basis, excluding foreign exchange.
Investment decisions have been high, again, this year above EUR 3,000,000,000. Notably, thanks to a strong cash flow, the net debt had been reduced and the gearing ratio is now back below its 20 15 level before the Airgas acquisition. And Fabienne will come back later on the details of the performance. On Slide 5, you can see the effect of worldwide recovery on our sales. This is Q4 Sales, 3 regions out of 4 showing positive sales growth: Europe, Middle East, Africa and Asia Pacific.
Starting with Europe growing at +4.3, the Healthcare activities representing close to 40 answer. The sales of the region have remained fully mobilized to support hospitals during the COVID wave 2. Industrial activities also show a solid recovery in Western Europe with sales while sales are growing in Eastern Europe. Growth is also positive in Asia with 2 strong drivers, China and Electronics. The rest of Asia is improving.
In America, the recovery is continuing in the North for industrial activities, while health care is mobilized to supply medical oxygen to hospitals. South America is growing. Africa, Middle East region is back to growth in Q4 for all activities. So clear recovery everywhere In Q4, the negative number in Americas is a significant improvement compared with Q3. If I now turn to Page 5, if we take a step back, the main outcome today from this global sanitary crisis The acceleration of pre COVID trends.
The first one is the energy transition. 2020 clearly marks An acceleration of this trend. This means new opportunities for our large industry and Through low carbon hydrogen offers, but also industry decarbonization projects, as an example. The second trend is the transformation of the health care system, which is reaching a new step, Mostly with the development of digital, which enriches our value based offer. Our Healthcare activity It's fully aligned with these changes and integrates products, equipment, now digital and services.
And as the COVID The crisis was a sanitary crisis. I think there will be changes in the medical sector globally and the The need for digital will be increasing as we go. The third trend is the increasing Take of technologies, including digital. Technology is already a game changer in the 21st As one of our key drivers, I think it would benefit all our activities and the scope is very large From digital to low carbon to electronics with the specialty gases and the advanced materials, Deep cryogenics, but also quantum computing and so on. Our position in those markets is strong and Our portfolio of investment demonstrate that very well.
On Slide 7, indeed, in only 1 year between the end of 2019 and the end of 2020, We see a clear shift towards Energy Transition and Electronics in our investment opportunities. This is very visible on the left part of the We had a 60 onethirty 9 split that became 30 ninesixty 1. This is really a very interesting change. In 2019. This trend drives a second shift towards Europe, where most of the projects linked to energy transition are currently located.
And Asia, the main Our locations are currently located and Asia, the main region of our semiconductor customers. These two regions now represent more than 70% of the total portfolio, as you can see on the right part of the slide, compared to less than 60% in 20 In addition to these 2 major shifts, the total portfolio of opportunities, which are projects, our development teams We are actively working on, have been increasing up to EUR 3,100,000,000 in 2020 despite the difficult environment. A large part of these opportunities should turn into signing, showing that we are well positioned for future growth, On Slide 8, there's a focus on sustainability, which has also been reinforced in 2020, on the left, you can see the 4 topics of our next Sustainability Day on March 20 3rd, decarbonization, no doubt, hydrogen ambition, but also societal contribution and governance. On the right, we I've illustrated the progress made related to our carbon intensity objectives and 2 KPIs on key 3 topics for Air Liquide, safety and gender. On carbon intensity, with a carbon intensity at 4 point We are at the level of the 2025 objective, which doesn't mean that there is no work to do in between And 2025 because we are growing, so we are investing and keeping this intensity at 4 2020 to reach the lowest rate of the last 20 years, and we will, of course, pursue our efforts.
And in 20 20, we reported 30% of women among managers compared to 29%, which is an improvement of 1 point in 2019. And our objective is to reach 35% by 2025. We are convinced that sustainability is key for long term performance on which We remain committed to our shareholders. On Slide 9, indeed, after Full dividend payment in 2020, which represents a +12% increase compared to 2019, We propose for 2021 a dividend per share of EUR 2.75, representing an increase of 1.9 percent in line with the recurring net profit growth, which would lead to payout of 55%, as you can see on And a +7.8 percent compounded annual growth rate of dividends over 20 years. In addition to that, the Board of Directors had decided to consider a new free share attribution for June 2022.
The dividend payments represent a significant part of the cash from operations and we reinvest most of the remaining cash in the business to prepare future growth and performance as shown on the next slide, Page 10, where we have an illustration on the management of our cash Allocation. This is cash allocation based on 2018 to 2020. It is then based on 3 years, last 3 years. The shareholder remuneration represents 30% of cash allocation, Most of it from dividends, of course, but we have also identified here the incremental dividend coming from free share issues. The majority of the cash allocation goes to industrial CapEx, as you can see.
And together With acquisitions, it is 60% that went to the business on average over the last 3 years. We have a very solid project portfolio, which continues to rise. Our main projects are all confirmed And 2020 is showing a high rate of project signing higher than our peers. This prepares, of Of course, very well for future growth and performance. And the last point I'd like to make on this slide is that this is just a cash view, But it doesn't take into account the appreciation of the share after we have distributed a bonus share, Which is something that in terms of net worth perspective, you need to keep in mind.
I will now let Fabienne explain the 2020 Explain the 2020 performance.
Thank you, Benoit. Good morning, everyone. I suggest to review now in detail The Q4 activity and the full year performance. I'm on Page 12. Q4 has in fact shown marked recovery compared to Q3 and even Moving to Q2.
As mentioned by Benoit, we are back to growth at plus 2% on a comparable basis. And this growth It's supported by higher demand than expected for Medical as a consequence of the COVID wave 2, but also by stronger large
industries compared to relatively low
Q4 twenty nineteen, Compared to relatively low Q4 2019 by the pursued recovery of Industrial Merchant, even if we are still under last year's call and by solid electronics. Looking now at full year numbers on Page 13. This Q4 improvement results in sales, Which are quite stable for the full period on a comparable basis, meaning excluding ForEx, energy pricing variation and significant scope effects. Gas and services at minus 1.2 percent following your Q4 at plus 1.6 percent. Engineering sales fully recovered in Q4 with major projects moving forward even if the full year is still at minus 23% for third party sales.
To be noted, total sales, including group projects, Yes, minus 9%. Order intake was also high in Q4, and we finished the year at EUR 820,000,000 A level very close to 2019. Global Markets and Technologies end the year at plus 6%, thanks to biogas development in In particular, we have a stronger order intake as well close to €600,000,000 Consequence group sales at minus 1.3 reflect an outstanding resilience in the crisis context. Public sales are hampered by significant current ForEx effect at minus 2% and the energy price impact at minus 1.8%. Group effect at minus 1.4% is mainly attributable to the Let's now look at the activity for each of our main geographies.
My comments will be mainly Release it to Q4. After a very low Q2, Americas continue to improve sequentially. Volumes are higher in large Industry knowing that hydrogen volumes in the U. S. Suffered from several turnarounds last year.
Industrial Merchant South America continues to grow while we see a clear sequential improvement in the U. S, supported by packaged gas for food and Pharma as well as metal fabrication markets, which are doing a little better. Due to the wave through the pandemic, in the U. S. In particular, medical applications sales were also above expectations and electronics growth remained solid driven by car and gases and equipment and answer.
Europe is posting 4% growth in Q4, thanks in particular to This is still up by more than 8%, which as mentioned by Benoit represents 40% of the 2020 European business. Large industries are clearly stronger, in particular in Eastern Europe and were boosted by a one off sale to a Russian customer. We also see Signs of recovery in Western Europe, notably for metals and chemicals, while refining remains low. From solid pricing throughout the zone is progressing double digits in Eastern Europe, while recovery continues in mature economy. Southwest, in particular, It's back to slide growth.
Asia continues to be pretty contrasted with China and electronics as main growth drivers. Large Industries also benefited from high hydrogen volumes in Korea and in Singapore, and merchant returned to growth in Q4, led by double Growth in China, even if Singapore and Japan remain under last year's level. In electronics, Equipment and installation are weaker, but carrier gazes and advanced materials are still close to 10%. Africa Middle East is also Showing solid growth, mainly driven by better Middle East and India in all businesses and high demand for medical oxygen throughout the zone, In particular, in Egypt and North Africa. Looking now at the business slide on Page 16, Industrial Merchant is the only one to remain slightly Under 2019 by daily volumes pursued, they're recovering in Q4 and we also saw a slight improvement for hard goods.
The good news is that we were able to maintain solid pricing at plus 2.2 percent even if the helium component is now reduced to 0.3 Food and pharma markets continue to grow. There is visible improvement for craftsman and network and fabrication, but constructions remains quite soft. In Large Industries, sales are increasing in all regions driven by better volumes and ramp ups. The most difficult market remains refining where full recovery is not expected before 2022. It is now improving even in mature And we have signs of chemical recovery, notably for air gases in Europe.
Escale and Electronics are growing consistently with previous quarters. We expected a progressive slowdown in medical gases and equipment, which did not happen due Due to the COVID wave 2 and to the extension of oxygen high flow treatments. In Payel, the abilities the home health care sales in Europe. In Electronics, fluctuations from 1 quarter to another are mainly due to equipment and which were in particular lower in Q4. However, the book to bill ratio is ramping up at 1.4@yearend.
Excluding Equipment initiation sales were strong at plus 7% in Q4 with high car agencies above 10%, thanks to new projects and more than
20% growth in China.
To conclude the activity, we To conclude the activity review, I would like to emphasize again the strength of our diversified portfolio, balance between Growth and resilience activities as well as the solidity of the business model supported by long lasting customer relationships. The strength as well as the alignment of the teams is also demonstrated by the performance improvement. I'm on Page 18, With margins being up 80 basis points for the group and 90 basis points for the Gas and Services, excluding the impact of the energy price decrease. Compared to Publish sales at minus 6.5%. Purchases are down 11.7% globally and minus 9 If we exclude the energy and gas sourcing, personnel expenses are, of course, helped by divestitures, but also down Excluding scope effects, we have a 1.5% headcount reduction as site average wages increased at +0.3 percent driven by developing economies.
The decrease of other expenses includes a reduction for travel cost and transportation cost. Depreciation are flat with the effect of scope, contract renewals and drops compensating for start ups. As a result, operating income recurring margin Which is 18.5%, the highest ever for Alkyd, a 120 basis point improvement Last year, or 80 basis points adjusted for the energy pricing impact. Gas and Services margin stands at 20.4% 90 basis point progression excluding energy. This margin progression on Which I would like to come back results from the combination of first, the deployment of our structured plan for performance improvement Based on pricing and mix, efficiencies and portfolio management, we've an estimated contribution of approximately And second, are the crisis management, including cost containment and more favorable mix We've less equipment and installation and are good.
I would like to focus on the structural part on Page 20 See as it is really what is sustainable for the years to come. Pricing has been solid all along the year despite the economical difficulties. Helium component, which represented 30% of the price improvement in H1, is now under 15%, meaning that our teams continue to better manage Efficiencies at €441,000,000 are also very high and here we need to insist The efforts of our teams to continue to deploy our program, procurement, part innovative operation, Business support centers all along the year, while learning from the new context to capitalize on more frugal ways of working. Portfolio management was pursued as well with 8 small divestitures on top of the Schulke sale and 23 bolt on acquisition in merchants in particular in China in the U. S.
And in Oumelscare in Europe. We also reinforced our portfolio of technologies with 2 small And around 10 small divestitures are ongoing as we speak. If we look now at the bottom of the P and L on Page 21, our nonrecurring income and expenses include 2 Major elements, the capital gain linked to the divestiture of Schulke, of course, but also write off and provision in connection with an in-depth review of our portfolio of assets. The objective of this review was to take into account the strategic Reflection that we will embark into our new medium term plan following the closure of Neos and the COVID crisis. Exceptional COVID costs are less than EUR 50,000,000 for the full year, plus EUR 50,000,000 of severances.
Financial expenses are down despite an exceptional one off cost associated with the anticipated reimbursement of the remaining Airgas pre acquisition notes. The consequence of the reduction of average cost of debt now at 2.8%, a 20 basis point reduction to last year and to the decrease of the average debt level. The effective tax rate is particularly low Due to the low tax rate applicable to the proceed of the Schulke sale. To finish with, net profit as published It is up 8.6% and even 11.2% excluding the ForEx effect on a recurring basis, meaning Excluding the IR Gas note financial one off, the Schulker divestiture, the impact of the asset review and the COVID cost, Net profit is up 1.5% and 4.4%, excluding ForEx in line with our guidance. I'm now on Page 22.
The quality of earnings also translates into a very strong cash flow At 24.1 percent of sales, another record high for Air Liquide. Thanks to tight collection and inventory management as well Back to some VAT deferral payments, we also have a nice improvement in the working capital requirement level. Industrial CapEx for the year stand at EUR 2 €26,000,000,000 stable to last year and the total net CapEx are, of course, lower due to less acquisition spending than last year and to the impact We remind you also that we paid our full dividend in May 2020 as we We decided to decline all of the French government proposed subsidies. As a result, net debt at year end It's down EUR 1,700,000,000 with approximately EUR 1,000,000,000 decrease being linked to the ForEx and the sugar and EUR 700,000,000 linked to the management of the operation. To be noted, and Benoit As stated already, our gearing is back to the pre Airgas acquisition level, meaning that we've been able to swallow the acquisition debt within 4 years.
And that within 4 years. 2020 has also been characterized by a high number of investment opportunities already Discussed as shown in the 12 months portfolio, which is now reaching EUR 3,100,000,000. In terms of decisions, we are pretty proud About our success rate with new contract signed, decision for the year accelerated in Q4 and reached EUR 3,000,000,000 with industrial Decision at all both this level for the 3rd consecutive year. Our backlog is increasing accordingly, and we deliver EUR 1,000,000,000 Of additional sales after ramp up. As a reminder, none of these figures include the Sasol project.
In terms of start ups and ramp ups and despite the delays due to the COVID, in particular in the 1st part of the year, we finally managed to deliver €100 €91,000,000 eventually not so far from the initial objective. For 2021, we expect a contribution
around €250,000,000 with on top the additional
sales resulting from the €50,000,000 with on top the additional sales resulting from the Sasol takeover in South Africa, which are estimated at the moment at €100,000,000 in Touring mode, but which depend on the actual closing date currently planned at the end of Q1. 2020 was also the last year of the Neos plan and the time to evaluate our level of achievement before In the new plan, however, 2020 has been a very specific year due to COVID in terms of sales evolution, but also in terms of cost And Investment Management and therefore, we believe it's not relevant to include 2020 numbers in the medium term performance assessment. As a consequence, we decided to review the news achievement at the end of 2019. And I'm on Page 25. Average sales growth at 6.5% was well aligned with the NIOZ objective globally.
And for the business lines, efficiency We were over delivered at EUR 1,100,000,000 over 3 years compared to an initial objective of EUR 900,000,000. Leveraging was strong and recognized by Standard and Poor's by a positive outlook, while CapEx remained in the 10% to 12% range. In terms of return capital employed, the objective is maintained and double digit POC remains our minimum target, but we realize that COVID crisis will last longer than initially We continue that we will lose more than 1 year in terms of net profit growth, while we decided nevertheless to accelerate investments in Therefore, we plan now to reach double digit in 2023, 2024 depending on the exact timing The crisis exit. We will give you a more precise objective for the future during the year 2022 Capital Market Going back to 2021, to conclude, we plan for first half, which will still be seriously impacted by the pandemic, but also for recovery in H2, while pursuing our efforts towards performance improvement and continuing to The increased margins and to deliver net profit growth. This is what I wanted to share with you this morning.
Thank you very much for your attention And we will now open the Q and A session.
Thank you, Fabienne. So we will take the First question.
The next question comes from the line of Tim Wigglesworth from Citigroup.
Tom Wrigglesworth from Citi. Thanks Benoit, thanks Fabienne for the presentation. Two questions, if I may. The first question It's around the recent developments and announcements you've made with regards to hydrogen, specifically the MoU with Siemens Energy, I'm kind of keen to understand in concept what Siemens is bringing versus what Air Liquide is bringing answer. To that understanding, how that will play out in terms of commercial prospects?
Answer. Will you share the economics of any projects that you participate in going forward? And is there exclusivity? So that's kind of one Certain questions. And the second one is, clearly on the outlook statement, you're talking about increasing operating margins.
On Slide 19, you said You had 20 basis points of margin from kind of COVID effects. Is your assumption that those now kind of You kind of lose that and or it returns to normal and it's your structural drivers that pick up the rest of the margin improvement. Just Your thoughts there on the margin bridge? Thank you.
I will take the first question and answer. So this deal, this MOU was announced after a few months of discussions. The Situation is the following. We have all technologies, including CC carbon Capture for all the hydrogen plants based on natural gas. We have taken the stake In Hydrogenics in North America to develop the renewable Production of hydrogen, but we didn't have so far really any agreement in Europe.
And Europe This is the place where there are many projects. We as you know, if we go into the details, there are several Technologies on electrolyzers and the PEM, the so called PEM technology, proton Exchange membrane is the one that is promising because of the flexibility it gives to operate With renewable energy. So we are looking for a pretty strong partner able to bring scale For the very large scale projects and bringing also a European base. If Air Liquide has know how So in the production and the operation, we don't have an extensive know how In what is called the balance of plants, if you build the cells themselves, that's one thing, But an electrolyzer able to produce hydrogen reliably needs to have the balance With all the electrical connections, the optimization, the consumption of energy And this is exactly what Siemens brings. We bring to the partnership, of course, our knowledge Marquette of the operations.
Now you said, are we going to share projects? Well, whenever Air Liquide has the lead to develop its own projects, of course, nothing will change, Except that if we have a big scale based on renewable in Europe, we will naturally use the Siemens Technology and by the way, the technology that will be further improved together. If we are in small Projects elsewhere in the world, we are free to use whatever we want. So it's not really an Xevity, it has parts of the world and specific domains where we will be using Siemens. And of course, We think that joining forces at this point in time is important for the development of the large scale projects.
And I think this is a very promising partnership between 2 major European Companies that have their own skills, and I think it will allow us to accelerate the development of clean hydrogen, in particular, in The second question, Fabienne, on the OIR margin.
Yes. We have tried and you've seen that in the slide to sort out in the margin improvement what is due to our structured Improvement plan and what is due to the very specific crisis cost cutting plan. We believe that there are 20 basis points in the improvement, which are linked to the cost cutting. That will not be Sustainable over time. One example is the travel expenses, meeting costs, etcetera.
When the situation comes back to normal, we will have to start again, maybe not in the same extent, but we will have to start again to make sure we maintain the cohesion of our teams worldwide. So If you start working on the bridge of the OEI to sales for 2021, it's our view that we start with Minus 20. Then the performance improvement plan continues. The mutualization Our plans are progressively deployed. So we are very confident still in our capacity Q1 is not the plus 80, it's the plus 60 and you should start from that to work on the future improvements.
Thank you, both. Very helpful.
I hope this is clear.
Very clear. Thank you.
London.
Yes, good morning. Thank you for taking my question. It's So regarding pricing, I was wondering if you could update us on pricing initiatives or campaigns in Europe And in the U. S. For this year, have you done any?
Are you planning any? And then separately within that, I think Fabienne, you mentioned A slower impact of helium in the Q4 pricing, I think you mentioned 30 bps. I was wondering if you could talk about how You're thinking about this through 2021. Do you think that we will start to see already pressure from new capacity? Or With the recovery in IRMs and well, hopefully, parties in the summer, we could see helium testing again.
Thank you.
So I will ask Francois to talk about the pricing environment in Europe. And Mike, if you could take U. S, but also Helium because Airgas is a very strong distributor of Helium in the U. S. So that will be interesting.
First, Francois.
Thank you, Benoit. Good morning. So regarding the pricing in Europe, overall during the year, we have been able, in spite of the environment, to maintain Good pricing. If you look at the full year, we are at 1.7% for Industrial Merchant. And And we don't see really a degradation during the year, maybe some kind of softening at the end of the year, But we stay in that kind of range.
Of course, it's lower than what we have seen in the previous years. As we discussed before, this is a combined effect of the overall environment and also to some extent, a slight decrease In the helium contribution, which was not very high anyway in Europe, but this is decreasing. What we see is our ability to maintain some positive pricing, probably with a decrease during the year 2021, of course, highly dependent on the economic situation, but still in the range of 1% to 2%, probably closer to 1% range than the upper 2%. However, we should keep in mind that this is a strong contribution. And due to the fact, again, of the cultural shift in Europe, we have launched Several price increase campaign, we have a few which are planned that we will trigger when we think it's appropriate given the market situation.
But again, this is, I think, relying strongly on The capacity of the team to manage the customer relationship and at the end to deliver value for the customer in the European
session. Thank you. Mike?
Thanks, Benoit. Good morning, everyone. Just to build on what Francois said, I think we saw continued strength, especially in the Americas from a pricing standpoint throughout 2020. Recognize that before the impact of COVID, we had already embarked on a number of pricing campaigns, Which played out through the entirety of the year. In addition, as we've talked about before, There was a strength in helium pricing and a few other areas as well throughout the year.
And as we entered the Q4, we started to see The softening in helium pricing, I think the combination of some of the impacts of demand for helium, especially in the retail space With the impacts of COVID, along with the expectation of new supply coming on, soften that pricing perspective a little bit. And we expect that trend to continue as we move into 2021. At this point, we have not announced a new pricing campaign For 2021, similar to what Francois said, any campaign would be aligned with the economic circumstances in the markets As we see how things will evolve, I think the expectation, similar to what Francois talked about, Certainly comes off the level it's been at and thinking about 1% to 2% depending on the evolution in the markets and some of the key products that we sell And also any inflationary trends that we will see as things evolve as well. I think that that will actually have an
Thank you. And maybe if I can follow-up on pricing in Asia South Pacific, where you've had a couple of quarters with a bit of pressure despite recovery in China. Can you maybe talk about the dynamics between China and the rest of Asia? Thank you.
So I think in terms of Asia itself, I think pricing has been mitigated To some extent, as you know, the impact of COVID in Asia It's been a little bit disjointed as you look at the impact in various countries. I think from a merchant standpoint, We see the very strong recovery in China. And I think in the rest of Asia, Especially in Japan and Singapore in the merchant business, it's still been fairly soft. So I think that the pricing fundamentals are a bit different There is though another key element, especially in China. There is a very strong comparator in pricing going back To the latter half of twenty nineteen, where there was shortage in argon, which drove pricing up significantly, answer.
Which ones that equilibrated with supply situation returning and meeting And needs that equilibrated more to a normal level. So I think you'll see a similar trend in Asia as we go through the year, that we saw in 2020. I think the key there will be the full recovery of the merchant business to begin with in all sectors and then the strength of the evolution of those markets as we move through 2021.
Thank you very much. Thank
you.
Next question?
The next question comes from the line of Martin Roediger from Kepler Cheuvreux.
Yes, thanks. I have questions On health care, I see that health care, especially in Europe, performed rather well. Would you agree that the demand for medical gases For COVID-nineteen patients overcompensated the demand for hospital guests for ordinary surgeries. So in other words, Was Healthcare a net beneficiary of the COVID-nineteen pandemic? And as a follow-up to Healthcare, you mentioned in one of your slides An acceleration of value based offers, does this have also a positive effect on selling prices in Healthcare?
Or did you benefit from mix effects? Thanks.
Well, I think this question is very much linked to Europe. And Francois, you can
Thank you, Benoit. If I speak for the world first, overall, Healthcare Indeed had a very strong performance and because we were more than 8% growth overall. And within that, Europe was close to 10%. Europe has benefited indeed from a very strong demand for Decision to treat the COVID patient, that was true in the 1st wave, but even more so in the 2nd wave. As As we have seen the development of the high flow therapy with a very strong demand for hospitals We are treating COVID patients.
So this has clearly contributed to the strength of Medgas. You remember that met gas typically in Europe is flat or growing at 1% or 2%. In southern part of Europe, for We were above 7% growth for the full year. So yes, it has compensated for Those countries, the drop in the classical oxygen demand for the hospital. However, if you move to other geographies, it could be different.
Overall, for the Americas, The met gas demand was very strong and actually extremely strong in Latin America, In Brazil especially, but this is also in Canada, for example. And that again has highly compensated the drop of the oxygen in the hospital. However, in Asia, We have seen overall a negative impact on the medical oxygen because oxygen was not Generally used therapy to treat COVID patients, and we had less patients going to the hospital and requiring oxygen. So overall, the growth of med gas oxygen, med gas in Asia was Negative. Finally, if you look at the Middle East and India, the growth was very, very strong and It still is today as we speak with a large demand for medical oxygen.
And in this case, we are talking about doubling or tripling the Excision consumption for those countries. If now we talk about the value based offer that you mentioned For Home Care, this is clearly a strategic direction that we are developing, where we are adding value To the service we are providing to the patients but also to the payers, using and leveraging services and digital capabilities And transforming also the model where the payment, the reimbursement is based on the outcome, not just This is getting a lot of traction and that has been actually accelerated in the COVID environment Where the classical services requiring physical presence were less possible in many geographies And boosted, I mean, the digital capabilities and the value of the remote services. So that's a direction which, especially in the most advanced countries, in Western Europe, especially, is answer. Countries in Western Europe especially is developing and we enjoy a strong market position on those
Thank you, Francois. We'll take the next question.
Question comes from the line of Charlie Webb from Morgan Stanley.
Good morning, everyone, and thank you for taking my questions. Just one follow-up on the margins and one on Electronics. Just on the margins, Fabienne, can you just help clarify Your earlier comments, is it right am I right to understand that you are suggesting that the kind of core business, the underlying business continues to Yes, deliver some sort of 50 basis points of underlying margin improvement driven by the structural savings, the pricing And the portfolio and then we just net out that 20 basis points of temporary savings. Is that the right way to think about it? And then on Electronics, just obviously a decent end to the year.
Just if you could update us on the current trends you see As we head into 2021, do you expect the strong demand you're seeing for carrier gases to continue and advance the cereals into 2021? And where is the book to build as we think about E and I? Because, obviously, that can be a bit more volatile, just wondering where we are today On that as we look into 2021, that would be great. Thank you very much.
Okay. So Fabienne first and Mike, can you take the second one? So first,
yes, it's exactly what we are trying to tell you. The underlying improvement So 2020 is around 60 basis points, same as what we delivered in 2019 actually. So it's a very good performance in A crisis environment. And then we have 20 basis points, which is temporary, driven by Your containment plan and that is not sustainable over time. So your understanding is definitely the right one.
So I think clarifies the margin ratio point. Mike, what are the trends in the Select segment, particularly carrier gases and E and I.
Sure. Good morning, Charlie. I think that we went into 2020 With a clear expectation of continued growth from a digital perspective. And that was really expected to be driven by things like 5 gs introduction, further development of the Internet of Things and big data, artificial intelligence, So augmented and virtual reality. In all of those trends, we're clearly evident as we move through 2020, even Despite the impact of COVID, on top of that, with the rapid evolution to a work From home type environment that was driven by the impact of COVID, we also saw You can increase in terms of demand for personal computers as well as for servers to manage data in the cloud.
As a result, I think what we saw over the course of the year were PCs and servers were up 7% to 8 percent, Internet of Things was up 20%, and the numbers for big data and artificial intelligence We're up 40% 50%. And I think that those drivers continue as we move forward into 2021 and beyond and we saw in our own numbers, maybe I already had explained the strength in the electronics business over the year. Not only did we see very, very strong activity levels, especially in Carrier Gases and Advanced Materials, But aligned with that increase in the production for integrated circuits, we saw a very high level of business development And Fabienne and Benoit referred to that already in their comments. So we not only see, I would say, the strength in activity levels as we move from 2020 into 20 21 and beyond, but a significant uptick in terms of the level of announcements of new fabs to meet some of this demand and some of the things that will evolve. And in addition to that, towards the end of the year, a clear increase in what had been a Soft environment for E and I as the book to bill ratio has gone back up to 1.4, which in some respects signifies that For some of the companies, they are now accelerating the build out of the fabs that are already been constructed to go ahead and outfit them with equipment and get those facilities up and running.
So I think you're going to continue to see those Trends into 2021 and beyond without a doubt. I think in the advanced materials space, the numbers were very strong throughout the year. As a matter of fact, over the last year, There was a very significant uptick in the demand for advanced materials, probably a little bit more than what the market actually showed in terms of production. And I think as we were in the midst of the Q4 of 2019, many of our customers that were about Startup new fabs, built inventory in respect to go ahead and prepare for that. And then I think as things evolve With COVID, there was a concern among customers in their value chains and supply chains in general.
And I think that they not only bought what they needed to go ahead and maintain a very high activity level, but also to provide a bit of a cushion from an inventory standpoint. So I expect things will be reflecting that as we go through the coming quarters. But the very, very strong demand, I think, for digitization And next gen technology is very pronounced and it will be very, very strong and continue to show that both with Carrier Gas Investment and Advanced Materials as we move forward.
That's really helpful. Just trying to clarify one thing on that. So obviously, we're seeing and hearing about Some shortages in the semi industry, most notably, I guess, on automotive. Do you expect that book to bill on On E and I, that's at 1.4. Do you expect that to continue to trend higher as we move into 1st part of the year?
Is that the sense you're seeing in terms of new CapEx, new projects?
So I think there's 2 elements there. I think in terms of automotive, it's a bit of a different dynamic there. Recognize The automotive and industrial applications declined significantly for electronics in the first half of the year. I mean, obviously, we all saw what happened in the manufacturing space as a result of COVID. And I think what happened there was with that decline and at the same time that significant uptick in demand for PCs and servers, Some of the analog and OSD manufacturers, that's Opto Sensor and Discretes That served both the automotive and industrial space.
We're running foundries where they could shift production to Some of the growth markets. And I think one of the things we've seen is automotive recover very rapidly, probably more rapidly than expected. But that production that it shifted was already committed for the short term. And I expect that to resolve itself. And I think you will see the supply evolve to go ahead and meet demand everywhere and especially as we start to see further business development.
In terms of book to bill, I think it's just a signification of where we are. Equipment needs to Follow capital investment in the fabs themselves. So I think what we're seeing right now is an uptick recognizing the number of fabs That are already built or about to be completed. And I think then this next generation of fabs that are already announced And committed, we'll then follow with additional E and I, but it's got to follow that sequentially.
That's very helpful. Thank you very much.
Fabienne, you wanted to add something on the E and I, maybe just a word?
Yes, Benoit, I just wanted to remind that Usually, book to bill takes 2 quarters to materialize into sales that E and I were pretty high in Q1 21, 2019 2020, sorry, just for your models.
Thank you.
Okay. Thank you. So next question.
Next question comes from the line of Tony Jones from Redburn.
I've got 2 left. Firstly, on refining, it looks like it continues to still be fairly weak. Could you update us based on your customer discussions how that's going, particularly the U. S. And the Middle East?
And then coming back to the Partnerships that you set up in Europe and Americas for electrolyzers, how are you thinking about Asia? I know you're exploring any arrangements with some of the low cost Chinese producers. Thank you.
The refining, I mean, if you are interested in understanding what is happening More in details in North America and Middle East, I'll ask both Mike and Francois to answer. But It is clear that refining suffered because of a lack of mobility last year due to COVID, And that's more temporary situation. It's also clear, but we know that by heart that the price of oil has an influence on how This refining sector is doing. But I'll make a more global comment. It is also obvious that Last year was a sort of awareness by the oil and gas sector of the fact that The mix of the future in terms of energy is going to be different.
And we've seen a lot of them Starting thinking about how to adapt their assets to the new mix. And Just as a comment, I would like to say that going from the Situation we have today where most of them are self producing their hydrogen based on natural gas, we'll see as we go A shift towards cleaner production of hydrogen, outsourcing and carbon capture. So the refining sector He's suffering from the temporary situation, but also it has to undergo a significant transformation. It is highly visible in Europe. It is not yet visible with the same intensity in the U.
S. And Asia in many cases in a different situation because there's not a lot of oil there. And so the question is, do they import oil Forever or do they import clean products or cleaner products in the future. But I think it's interesting to just think about the refining in The oil and gas industry as an industry that will be deeply transformed in the years to come. Stop here, and I hand over to Francois and Francois in Middle East and Mike on U.
S.
Thank you, Benoit. So indeed, for the Middle East, We have seen clearly in 2020 a pause in the overall activity in refining. 1st, a drop in the loading rate The refineries, both to meet the drop in the local demand, but more important So to cope with the decrease in the export requirement, both for gasoline, diesel and very much for jet answer. We have seen also during the year a pause in the projects, which were contemplated in the region. But clearly, the things are changing.
And we see in the past few months, at the end of the year and beginning of this year, Really, the activity picking up the gain. To some extent, the loading rate, but it's more moderate. But clearly, the projects With the new dimension, as mentioned by Benoit, the carbon view and the carbon management view, which is a topic which It was not so much present before, but which is gaining momentum. So clearly, we see that we are probably at the beginning Also a shift in terms of strategy for the refiners in the Middle East.
Thank you. Mike, What is the U. S. Viewpoint?
So I would just to build on everything that's already been said, I think that clearly Fine in utilization rates for refining throughout the Americas with the impact of COVID. It is We covered to some extent over the course of the last three quarters, but still is quite low as you're aware. So I think if you look at the demand for hydrogen, for example, in North America, it's probably about 90 answer. Percent of normal, just to put it in perspective, recognizing it was closer to 80%, 83% about 6 months ago. So I think it's improved And I think we'll continue to see that improve over the course of 2021, but I think it'll take a while, given where things are in terms of the demand for transportation fuels and other elements.
At the same time, we do see some uptick in refining in Latin America with our startups, both in Argentina and in Mexico to support their refining industry as well. So actually that's been a benefit for us as we look at large industries growth on a year over year basis in Q4. So I think it's a mix. I think it's clearly softer. And to the point that Benoit made And also Francois, I think there are some trends as well with the energy transition that are very evident in Europe currently And I think are more contemplated at this point in time in the U.
S, but clearly being looked at.
Thank you. That's really a detail.
Thank you. And on the electrolyzer, the question about partnership in Europe and Asia, I think What you have to realize is that there are 2 issues. 1 is related to the cost And Asia Pacific is a good place to actually make partnership with local manufacturers because the cost of manufacturing is lower Lower definitely in Asia. We have some. We have some in Asia, in China, for example.
And it's more related to the distribution equipment than to the manufacturing of electrolyzers. The second issue is the technology It is related to membranes, to catalysts, to electrodes, and there are a lot of improvement And it's more sophisticated. I would say today, it's not obvious to detect and find someone in Asia that has a real leading 1 in Asia that has a real leading edge in those technologies. If we exclude The membrane and the fuel cells manufactured by the car industry, I mean, namely Toyota and Hyundai, Essentially, and some others in China. So we are better off for the production facilities to find partners It's either in Europe or in North America because this is where the leadership is today.
But if in the future, we had opportunity To find partners or potential partners in those technologies in Asia, of course, we would contemplate also signing partnerships with Asia. So it's open, But I think what we've done today is to have 2 feet, actually 1 in North America and 1 in Europe, and that It's very well with what we have to do right now.
Thank you.
Thank you. Next question?
The The
next question comes from the line of Gunther Techman from Bernstein.
Hi, good morning, everyone. Firstly, on the margin potential for 2021, one thing missing from the Slide 19 is any operating leverage that you could get from volume growth. And then with IP rebounding consensus as you add 6% comparable growth in 2021, How much margin improvement should we expect from this growth? And then secondly, on the ROCE target, it seems that the growth investments are the bigger factor Of the two reasons you gave to push that 2 years down, what level of CapEx Should we therefore expect over the next 2 to 3 years, should we be at the higher end of the 12% to 13% CapEx to sales range or even above that? Thank you.
Fabienne, you take the margins, and I will supplement on the CapEx.
Yes. Well, I think these margin questions are turning to harassment, right? As you know, we are not going to give you a number for next year. Actually, the decrease of IP, which resulted in a lower activity in the industrial businesses It was compensated by the cost cutting plan and was overcompensated by this cost plan by 20 basis points, as I explained. So you should not expect a specific rebound due to the IP Pickup because we just compensated this IP downturn by the cost cutting.
So when the IP picks up, we will have to release the cost and then you shouldn't expect any specific rebound from that. You should expect As explained before, from our improvement performance improvement plan that we have described many times. In terms of level of CapEx, so the industrial CapEx are EUR 2,600,000,000 in 2020. Should continue to increase probably up to EUR 2,930,000,000 In 2021, given the number of projects signed and the increased backlog.
So it means
that in terms of CapEx to sales, you referenced of about 12% will probably increase slightly. This is just math, but it's good news because when we look at the nature of those investments, Most of them are related to growth, but we have also now introduced efficiency and part of our CapEx are just driven to efficiency, which by the way is also why we have such improvement in margin ratio. So Canix, the process of injecting CapEx into the company for efficiency is now delivering. I think It's good. But back to our previous comments, because of the Energy transition trend, it's clear that Not just the CapEx, which is the expenditure of past decisions, but the investment decisions Very strong.
And it means that in the years to come, if the trend continues, which we think it will happen, We should see more and more opportunities in the energy transition, which will translate into more investment decisions And more CapEx. Now I'd like just to make a comment on how we select our projects And how important is the return in the selection process? We keep the same discipline in the allocation The question of cash to CapEx, it's not because we had a 1 year in COVID and the lack of growth In general, in the world that we forget our targets in terms of returns on our projects and then On the return on capital employed. So all those projects have to be profitable. We have not changed our rules.
And so all those investments will We made with the same discipline as the one we had before. Just to comment, but I wanted to make it.
Great. Thanks. And if I can sneak in one Follow-up, if I may. Just on the net profit guidance, can I just confirm that that's you expect an increase in net profit Despite probably higher tax rates as you don't have the benefit from the Schulke divestment benefiting the tax rate anymore?
Tax rate, I think, deserves an answer from Fabienne because there are several points that we may just highlight. Fabienne?
Yes. We confirm that the guidance on box, yes, new increase in net profit even If the effective tax rates will come back, let's say, to normal, probably between 25 0.5% 26%. However, you notice that this guidance is given excluding any Impact of a U. S. Tax reform, because if Mr.
Biden deploys his plan As early as 2021, we will have a strong impact on the taxes paid in the U. S. Probably in the $70,000,000 range. So it's recurring net profit even if the tax rate is coming back to normal and excluding Any impact of a potential U. S.
Tax reform. Okay?
Fantastic. Thank you.
Thank you. Next question.
The next question comes from the line of Alex Stewart from Barclays.
Hello, good morning. Thank you for taking my questions. They're hopefully very straightforward. You talked about a one off Impact in Russia and the European Large Industries Business, can you just try and quantify for that for us if it's Meaningful to help establish the underlying trends. And then finally, if you could possibly, Ivan, give some indication of where you expect The DNA charge to be this year given the investments, but also the moving parts with consolidation and deconsolidating new assets would be really helpful.
Thank you.
Yes. Maybe Fabienne, you can take this one off impact.
Yes. This one off consists in the transfer of some civil war construction to AA customer just For the start up of the new unit. And apart from that, Large Industry would be more or less flat in Q4 in Europe. So the underlying trend is
flat to slight growth in room. And the impact, what do we expect to be in D and A?
Well, in D and A, in H1, you see that we have quite a number of start ups which are planned and should Tribute in 2021, so we expect clearly D and A to be back on the growing side For 2021 and Assurly at Assurly.
And just for memory, you Remember that D and A was flat in 2020, but 2.1% increase excluding ForEx. So it's a modest increase, just for I mean, remember. And we have, of course, ups and downs. The ups are the start ups and ramp ups and the downs are the drops, but the drops The CapEx that we had 15 or 20 years ago. So of course, the increase due to start up and ramp up Higher than the drops, but that's just a normal way of managing CapEx and depreciation.
And to add on that, the takeover of Sasol, when it's going to be effective, is also going to contribute, of course, to the increase of the D and A
The next question comes from the line of Adam Collins from Liberum.
Yes, good morning. I've got a couple left, please. Firstly, on healthcare gases, to what extent is the dry ice business benefiting from vaccine storage? And then on the energy transition, you've got a pretty distinctive offer in biogas development, Including quite a high profile project now in the UK, how significant do you think that biogas will be in the low carbon hydrogen
I think Francois can take the first question on Healthcare and take the second one. Francois?
Yes. Regarding
the vaccine and the impact on the business, You know that there are many different vaccines, but I think you're referring to the one which needs to be stored and transported At very negative temperature, the logistics is a very specific logistics, which requires dry ice. We do supply logistics either the pharma company or the logistics provider in the different parts We are not able to disclose names of customer, but indeed, I mean, wherever we are present In the Americas, in Europe especially, we do contribute to this. This is overall a small part of the business. It's very critical to ensure the proper logistics today, but the financial impact at the scale of the ARDQ Group is quite limited.
2nd question on biogas. Biogas is developing nicely. I mean, this is Due to the fact that we have a unique technology membrane based, and we've been able to really to in Europe at least, But also in the U. S, we've been able to offer this technology and package it into a service offer It's not yet significant at the group level, but if you take GMT, which is our Global Markets and Technology, Biogas is above 20% of GMT. It is bringing growth to GMT.
And I don't think it will stop there because there is a demand resulting from Sort of a trend in energy transition, but also in a clean and in the circular economy. There's a need and there's a demand for more recycling in agriculture, but also In the energy field. So we think the number of opportunities will increase, and we think that what we've been able to do so far We'll continue in the years to come. It may represent more of the GMT activity, it's more than 20% today. But GMT itself is rather small In the group.
So you don't have to expect a significant impact at the group level. But At the GMT level, yes. And finally, I want to make a comment on biogas. Biogas for us is this Service to purify biogas into biomethane. But biomethane, even if it is subsidized today, We'll have more and more value because it's natural gas coming from renewable.
So it is qualified if you take the European Commission, biogas So I think, bio will find its place in the energy mix, including As a source of product to produce renewable hydrogen. So I think that's why we need to consider this product not just as an energy, but So as a source of primary energy for hydrogen in the future. I hope it covers your point.
Hydrogen, yes. Thank
you. Thank you. Next question?
The next question comes from Peter Clark from Societe Generale.
Yes. Good morning, everyone. I'm looking west. So these are probably for Mike, but just your biggest competitor was pointing to some encouraging trends that were happening on the packaged gas And hardgoods side in the U. S, certainly going into January.
And I noticed in Q4, your I'm sales Volumes in North or in Americas were still down over 8%. So I'm just wondering on your thoughts as we look into 2021 for that business So we're still very depressed even in the final quarter on a year on year volume basis. And then also on the investment opportunities, Obviously, the Americas has fallen sharply. I think it was 14% on your slide. Clearly, that reflects probably some of the customers, refiners.
There's no or less electronics there. But I'm just wondering, your thoughts on that because obviously 40% of your gases business is there. I know it's I'm weighted, but effectively it's a big chunk of business. Just wondering if there's some energy transition comments you want to make about that 14%. Thank you.
Yes. I think Mike is well placed to answer all those questions. Just comment before I hand over to Mike. I think you're right in pointing the fact that there were less investment opportunities in the U. S.
Recently, but it's very simple actually to understand that. The Energy World is in Big transformation, as I explained earlier. And at the same time, Electronics, in particular, in Asia is very strong. I said That the investment decisions in electronics today are about 3 times more than they were 5 years ago. So Definitely, there is a big wave of investment in electronics, and it is in Asia.
And the energy transition today is more in Europe. So Until and unless, but I think it will come, the U. S. Actually moves to the real energy transition. There might be Less opportunities in the U.
S. Than in Europe and Asia, just for the reasons I mentioned. But I will leave it to Mike to supplement and I'll give you more details. Mike?
Thanks, Benoit. Good morning, Peter. First of all, just focusing in on the U. S. Market and maybe looking at it from an air gas perspective, as we've talked about through the year, I think that different markets obviously that we serve We've reacted in different ways throughout COVID.
Clearly, anything tied to food, beverages, life sciences and pharma Remain strong through COVID and they are clearly in growth mode as we look at where we are today. What continued to be soft was retail, Obviously, with all the impacts with lockdowns and also limited availability in the retail space for people to enjoy that. What did happen, I think, is after we got through the depths of the impact of the second quarter, We started to see clear improvement in the transportation sectors. And as we moved into Q4, an even Stronger demand in transportation and uplift from an industrial perspective and even heavy equipment began to strengthen in Q4. So you see significant growth in both commercial and passenger vehicles.
And you've also seen now clear improvement from a durable goods standpoint. So that improvement in capital goods, be it for machinery, be it for factory equipment, Clearly began to show itself in the Q4. And as you've seen, whether it's PMI or some of the other key indicators, they all strengthened in the Q4 answer. And kind of got back to or above where they were before we entered the COVID environment. So all that's been strong.
What remains weak though is the Construction activity in general and also anything that touches the oil and gas markets. So in kind of looking at that in general as things evolve as We went through the Q4. On average, we said we were 90% recovered. I think as we went through the year And into the later part of Q4, we continue to see improvement. I think From a liquid standpoint, it's almost fully recovered.
It kind of ebbs and flows. And clearly, there's very strong demand for medical oxygen. But in the industrial space, it's close to being recovered. I think in packaged gas volumes, depending on what region you're in, you're 90% to 95% recovered. So clearly in those areas that are more affected by construction or by oil and gas, you're still seeing an Opportunity for further recovery, in hard goods are roughly at that kind of 90% level of where we were pre COVID.
So I think that's kind of where we are. I think the trends are there. Cold chain logistics are going to remain strong. You see heavy duty Class 8 truck orders Now, up to 30,000, 35000 units above the 4,000 they were in April. Medium truck orders are the highest they've been since June of 2018.
Railcar capacity utilization is starting to improve. Automotive sales are clearly getting back to pre pandemic rates. So I think all those signs Very good. And we see those trends continuing as we get into the Q1. So I think that's where we see it.
We do need to see though the improvement in construction And in some respects, in those limited markets where it's an impact that kind of the oil and gas activity. In terms of business development in large industries, as you're aware, we continued actually to sign projects. I think we had 2 projects we announced throughout 2020 as well. So we were able to continue to demonstrate business development activity. But as you're aware, I With the softening of the markets, especially in the durable space, while there were a number of projects contemplated pre COVID, Some of those were deferred.
They weren't canceled, but they've been deferred until the markets fully recover and the companies can see daylight. So I think that's why you see Some level of softening in some of the projections. We still I mean, we're going to see 10 startups in the Americas over the course 2020, so a very strong year from that perspective. We still were able to see some signings. And to the point Benoit made, I think the energy transition and its impact is very evident in Europe.
Here, as you know, we in the Q4 Last year, we started up the new industrialized pen membrane activity up in Beckingor that's up and running and running very well. We've got the new facilities that are being built in Nevada to supply the needs in California for the introduction of hydrogen fuel cell vehicles there. And I think what we will see with the continued evolution of the energy transition and concerns Regarding climate, we likely will see an uptick in opportunities there, joint with the opportunities that will begin to prevail as markets recover in the normal space, especially from a chemical standpoint. So I think chemicals continues to strengthen, steel is actually strengthened We're waiting for oil and gas to recover.
Got it. Thank you very much.
Thank you. Well, given the time, I think we We have time for one last question, but as we have another session with analysts this afternoon, I think you can just keep your questions Listen, we can have another discussion. So last question right now.
The next question comes from the line of Jean Luc Romain from Market Solutions.
Thank you for taking my questions, Jeremy. I would like To ask 2 questions about technologies, the first one is about refining. You mentioned the new consciousness of refiners In the Middle East and elsewhere to reduce CO2 emissions, do you see a market for your CreoCap Technology there, that's the first question. And the second is on hydrogen. A new entrant in France, Schlumberger seems to be willing to develop solid oxide technology with CEA of Grenoble And of our companies, what's your view on that technology?
So quickly, CryoCAP, yes, We have, as I said earlier, we have now the experience of CryoCap. CryoCap is working well And there's an interest in the market. And we have discussions with several refiners to actually implement this technology In existing plants. So yes, there is a market for that and it's actually good news. A new entrant in Haridien In Schlumberger in France and the use of solid oxide use air technology with This is the 3rd technology that is being promoted.
It's a high temperature technology, different From the alkaline and the PEM, it's less obvious that this technology Will be used extensively. It is very specific. It's more a niche to me in the different technology Matt, but it might be in some occasions, some, Sao Tome said, it might be interesting. Now the fact that there's a new entrant, there are Many new entrants everywhere. We hear about initiatives, I mean, everywhere in the world, which is the proof that there is High interest on hydrogen and that hydrogen will find its way.
So it's market wise, it's good news. For competition, I think it's just a normal game that we experience every day. So nothing More to say about nor that this new entrant nor the technology. So thank you very much. I'm sure you have other questions, But as we have planned another analyst meeting this afternoon, I think this will be the right time to continue our discussion.
So thank you very much. Again, a good year, very good year under the circumstances, Growth and resilience, and I think a lot of opportunities, as we've been discussing, For the future, so I think we are in good shape to continue our growth and The improvement of our margins in the years to come. Thank you very much and have a good day.
Thank you very much. Bye bye.