2007 Revenue and Results 2007: strong increase in results Strengthened growth momentum February 15 th , 2008
2007 revenue and results Agenda � A successful 2007 John Glen � Be the recognized industry leader Benoît Potier 2 2007 revenue and results - 15 February 2008
A successful 2007
2007 highlights Growth 07/06 Growth 07/06 In €m 2007 as published comparable* Group revenue 11 801 +7.8% +7.6% Gas & Services revenue 9 999 +3.8% +7.1% Gas & Services -- 18.1% +50 bps OIR margin Net profit 1 123 +12.1% -- More than Total capital expenditure 2 668 doubled ROCE 12.3% +40 bps -- * excluding impact of currency, natural gas and, for the Group, the Lurgi acquisition 4 2007 revenue and results - 15 February 2008
Strong market demand � Booming emerging economies � Increasing demand for steel & chemicals � High growth markets: solar cells, energy and refining � Continued strong demand in homecare & hygiene � Strong 2 nd half semiconductor & flat panel demand � Buoyant engineering market 5 2007 revenue and results - 15 February 2008
Revenue growth of +7.8% FY 07 07/06 07/06 In €m revenue as published comparable* Group 11 801 +7.8% +7.6% Gas & Services 9 999 +3.8% +7.1% Engineering & Construction 831 +118.7% +27.3% Other 971 +3.3% +4.1% � Excluding currency impact, Group revenue +10.8% � Lurgi: € 361m, contributes +3.3% to growth * excluding impact of currency, natural gas and, for the Group, the Lurgi acquisition 6 2007 revenue and results - 15 February 2008
Accelerating every quarter Gas & Services Comparable growth* +9.1% 10% +7.9% +6.3% +5.3% 5% 0% Q1 2007 Q2 2007 Q3 2007 Q4 2007 * comparable: excluding impact of currency, natural gas and, for the Group, the Lurgi acquisition 7 2007 revenue and results - 15 February 2008
In Q4, all regions contributing � Europe: good growth comparable basis � Strong volumes in Germany Q4 2007 � Stable activity in France +6.3% Europe +5.8% � Homecare acquisitions +8.1% Americas +4.6% � Americas: solid performance +19.1% Asia Pacific +14.5% � Regained activity level +9.1% Total G&S* in Large Industries US +7.1% +10.4% Total Group � Strong pricing and demand +7.6% in Industrial Merchant US 0% 4% 8% 12% 16% 20% & Latin America � Asia: strong growth, particularly in China • * Includes Middle East & Africa revenue of €44m in Q4 8 2007 revenue and results - 15 February 2008
Three WBLs already in line with Objectives Industrial Merchant full year: +4.8% Large Industries full year: +7.1% +4.8% +7.1% 10% 15% 10.6% 5.4% 5.1% 10% 4.3% 6.4% 4.3% 5.9% 5% 5.5% 5% 0% 0% Q1 2007 Q2 2007 Q3 2007 Q4 2007 Q1 2007 Q2 2007 Q3 2007 Q4 2007 mid-term revenue objectives Healthcare full year: +8.7% Electronics full year: +16.6% +8.7% +16.6% 15% 26.2% 28% 11.1% 20.1% 10.4% 21% 10% 7.2% 5.9% 11.4% 14% 8.8% 5% 7% 0% 0% Q1 2007 Q2 2007 Q3 2007 Q4 2007 Q1 2007 Q2 2007 Q3 2007 Q4 2007 All figures represent Gas & Services comparable growth: excluding forex & natural gas 9 2007 revenue and results - 15 February 2008
Engineering & Construction fully loaded Full year pro forma � Engineering & Construction activities ≈ €1.2bn third-party sales � Total order-intake*: €1.6bn, 100% of 2007 total sales � Orders in hand*: €4.9bn Total Order-intake breakdown* 7% ASU 8% HyCO 11% Traditional Energy 63% 11% Alternative Energy Renewable Energy * Refer to glossary on slide 35 10 2007 revenue and results - 15 February 2008
Strong profit delivery In €m 2006 2007 07/06 +8.1% Operating Income Recurring 1 659 1 794 -- Margin: Group 15.2% 15.2% Gas & Services 17.6% 18.1% +50 bps Net Profit (Group share) 1 002 1 123 +12.1% 4.17 (1) Basic EPS (€) 4.69 +12.5% Dividend per share (€) 2.00 (1) 2.25 (2) +12.5% (1) Adjusted for 2006 bonus share and 2007 split (2) Dividend to be proposed at the AGM on May 7, 2008 11 2007 revenue and results - 15 February 2008
OPAL delivered � OIR improved +34% over 3 years � €400m cost savings, ≈ 1/3rd retained in P&L � OIR margin up +130 bps at constant 2004 natural gas prices 19% 18.5% 18% 17.2% 17% 16% 0% 15% 2004 2005 2006 2007 OIR Gas & Services margin at constant 2004 natural gas prices 12 2007 revenue and results - 15 February 2008
Optimized balance sheet In €m 2006 2007 07/06 Funds provided by operations 1 889 2 054 +8.7% WCR (109) 94 Others (13) (46) Net cash from operating activities 1 767 2 102 +19.0% Cash invested into business: More than (capex + acquisitions) (1 201) (2 668) doubled Cash back to shareholders: (distributions & share buy-back) (502) (973) Nearly doubled At December 31 Net indebtedness (3 447) (4 660) +35.3% Debt to Equity ratio 52.5% 72.0% ROCE 11.9% 12.3% +40 bps ROE 16.4% 17.8% +140 bps 13 2007 revenue and results - 15 February 2008
Be the recognized industry leader
2007: excellent set of figures � Growth � +7.8%, acceleration quarter by quarter � Total capex €2.7bn � Efficiency / Productivity � Gas & Services operating margins +50 bps � +12.1% net income growth � Optimized balance sheet � ROCE at 12.3% � WACC down � ROE up +140 bps � Maintained “A rating” 15 2007 revenue and results - 15 February 2008
Strategic positioning in 2007 � Ahead in €10bn capex program � Unique Asian springboard � Undisputed homecare leadership in Europe � Adapted technology portfolio for Energy developments � WBLs driving change 16 2007 revenue and results - 15 February 2008
Gas markets* offer strong growth potential +8% Middle East & Africa Industrial Merchant Eastern ≈ +5% pa Europe >+10% p.a North America South America Healthcare +7% pa China 50% Electronics ≈ +5% p.a Asia-Pacific +8% pa excl. Japan Large Industries Western +12% pa Europe Japan Share of expected Industrial gas market €45bn in 07 Growth % Annual growth 2007-2011 * Air Liquide estimates 17 2007 revenue and results - 15 February 2008
Mid-term growth objectives Industrial Merchant +8 to 10% p.a. constant FX +4-6% pa Emerging economies � Energy Healthcare +2 +8-12% pa � Emerging economies to 3% Homecare consolidation New geographies � Healthcare & Electronics +1% Electronics � Current growth +8-12% pa +5 Asia to 6% Large Industries +8-15% pa Energy Emerging markets 18 2007 revenue and results - 15 February 2008
Ambition: be the recognized industry leader � Leading market shares in key markets � First to develop new markets and geographies � Providing competitive, innovative and environmental solutions based on new technologies � Sustained superior financial performance with sustained growth in net earnings � Mid-term objectives: � Accelerated mid-term revenue CAGR +8-10% � Delivering €600m cost savings over 3 years � While maintaining ROCE between 11 and 12% 19 2007 revenue and results - 15 February 2008
Four strategic levers to achieve ambition Build leadership Drive innovation positions Be the recognized industry leader Develop talents Deliver efficiency 20 2007 revenue and results - 15 February 2008
Deliver and transform Key projects Capital saving Cost efficiency to drive Growth project project ROCE: 11-12% €600m cost Growth Capital productivity reduction + 8-10% improvement over 3 years Definition of business models Group culture Communication People Management 21 2007 revenue and results - 15 February 2008
WBLs approach to cost efficiency � Large Industries – Energy management Cost efficiency � Procurement through global platforms project ROCE: � Plant automation / network optimization / sourcing arbitrage 11-12% � Energy efficient investments €600m cost � Industrial Merchant – Supply chain improvement reduction over 3 years � Generalized telemetry for bulk distribution � Cylinder tagging � Centralized procurement Group Cost stack � Electronics – Centralized procurement in Asia €9.1bn � Specialty Gases � Standardized equipment & installations 32% Energy Mgt � Healthcare – Global procurement Purchasing 19% � Homecare equipment Personnel 22% � Program costs of €200m Outsourcing 14% � Expert employees � Equipment investments Other 13% � Industrial IT systems � Increased costs and savings expected each year 22 2007 revenue and results - 15 February 2008
Reducing capital intensity Capital saving project ROCE: � Design-to-cost - to reduce capital 11-12% Capital intensity, Large Industries and productivity In €bn Industrial Merchant improvement Expected Capex 10 2007 - 2011 � Asset management - better asset productivity in Industrial Merchant Existing Property, 8 � Better cash management, in particular plant & equipment Healthcare and Electronics WCR 1 23 2007 revenue and results - 15 February 2008
Industrial Investment cycle “ ” Negotiation � Signature � Construction � Commissioning � Sales Portfolio Decisions Capex Start-ups Ramp-ups 1 - 2 years 1 year 2 - 3 years 2 - 5 years 100 Revenue 50 50 50 40 30 2007 2006 2007 2006 2007 2007 2008 2009 2010 2011 2012 2008 2009 2010 2011 2012 5 - 7 years 24 2007 revenue and results - 15 February 2008
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