L'Air Liquide S.A.

Aude Rodriguez - Head, IR Fabienne Lecorvaisier - EVP, in charge of Finance, Operations Control and General Secretariat Mike Graff - EVP, Americas and Electronics Guy Salzgeber - EVP, Europe Industries

Stephanie Bothwell - Bank of America Merrill Lynch Laurent Favre - Evercore Patrick Lambert - Raymond James Thomas Wrigglesworth - Citi Laurence Alexander - Jefferies Peter Clark - Société Générale Francisco Rodriguez - Banco Sabadell Theodora Joseph - Goldman Sachs Andrew Stott - UBS Markus Mayer - Baader-Helvea Chetan Udeshi - JP Morgan Martin Roediger - Kepler Cheuvreux

Good morning, everyone. This is Aude Rodriguez, Head of Investor Relations.

Thank you for joining today’s conference call. Fabienne Lecorvaisier will present the third quarter revenue, Mike Graff, Executive VP, to provide supervising Americas and the Electronics business line and Guy Salzgeber Executive VP supervising Europe Industries, are also with us and will participate in the Q&A session.

As a reminder, our next announcement of full year 2017 results is scheduled for February 15th, next year. Let me now hand you over to Fabienne.

Thank you, Aude. Good morning, everyone, and thank you much for being with us for our Q3 presentation.

I will start with the activity review with two specific focus, one on China and one on Industrial Merchant, then update you on the Airgas integration on synergies objectives, and on the investment of the period before opening the Q&A session. We had in fact a very good Q3, marked by an acceleration in our Gas & Services growth at plus 4% on a like-for-like basis, despite the hurricanes’ impact to be compared to 2.7% in Q2.

All business lines are improving and in particular Industrial Merchant up 4.3% and Electronics mix up 7.2%. We are also happy to report that our efficiency program is well on track and that the synergies linked to the Airgas integration are now running ahead of plan.

Looking more precisely on the numbers Gas & Services sales are nearly flat as reported due to minus 4.1% negative ForEx effect, only partly compensated by plus 1% positive energy pricing impact. Compared to 2016 adjusted, as if we had acquired Airgas on divested conflicted assets January 1, 2016 sale are 4% and are even up 4.4% if we exclude the hurricanes’ impact, which is a key acceleration to previous quarters.

Engineering sales continued to decrease with the gap to last year, reducing progressively along with better order intake. Global market and technologies are 13.2% and as a result, total group sales are up 3.5% on a comparable basis.

In terms of macroeconomic context, industry production [indiscernible] in all zones since the beginning of the year, even if we now see a stabilization in the US. However, the ForEx impact has completely reversed with the 4% negative impact at the group level in Q3, in connection with the reinforcement of euro versus U.S.

dollar, Japanese yen and yuan in particular. Energy price impact continues to grow positive but softening at plus 1% for the period.

Current trends in terms of ForEx and energy are expected to continue. And we now plan for a negative price impact, minus 6% in Q4 and minus 2% for the full year.

The energy impact for the full year is forecasted at plus 1%. As a reminder, ForEx only creates the translation effect and has no impact on the margin.

As you have seen activity has been globally strong in Q3, but our sales have been particularly encouraging in some of our core markets. The most impacting is of course pursued recovery in Industrial Merchant, now clearly above 4% despite a negative working day impacting Europe and Americas.

But I would also like to highlight the excellent performance in developing economies at plus 10%, driven by China and Latin and Central Americas; Asia globally at plus 8% and in terms of businesses, Electronics at plus 7%. As mentioned earlier, global markets and technologies are again progressing double-digit.

The growth improvement comes mainly from a better base business in all business lines and in particular merchant and Electronics now at plus 2.6% above the last two years’ progression. The contribution from the development initiatives should strengthen [ph] in Q4 and for the next year, with more startups and in particular large project in China, the U.S.

and South America. In terms of geographies, sales in Americas have been impacted by double hurricanes with an impact over $20 million for August and September.

Nevertheless, we show a steady progression at 3% supported by a 4% growth in Industrial Merchant. Daily sales are strengthening in the U.S and Canada where all end markets and in particular metal fabrication, and oil and well servicing are bettering.

[Ph] Excluding the hurricanes impact, large industries are in line with Q2 with solid volumes in Canada and South America. Electronic is back to a 6% growth and its cash going double-digit in Canada and Latin America.

Europe at 2.5% is also doing better, merchant is above 4% despite one less working day with growing volumes, both in bulk and packaged gas as well as improved pricing. Large industry is slightly down, but we saw hydrogen volume improving at the end of the period.

Healthcare at 4% benefits from Home Healthcare development, eye equipment sales and solid activity for Specialty Ingredient. Asia is accelerating the most with an 8% growth.

Industrial Merchant is very strong in developing economies, with an outstanding performance in China on which I will come back in a moment. Large industries are also high at 8% supported by more start-ups.

Electronic is very dynamic at plus 20% for China and Taiwan with new contracts starting and booming advancement. Healthcare is also high, thanks in particular to an Home Healthcare acquisition in Japan.

Africa, Middle East is supported by start-ups in Egypt and strong healthcare in South Africa, as well as by a full loading at Yanbu for the quarter. Coming back to China for a moment, we had very strong quarter in all business lines.

Large industries are above 10%, thanks to an extended business strategy and new start-up to an increasing outsourcing trend. In Merchant, our densification strategy is delivering with high volume and pricing and growth above 15%, even if we may have benefited from anticipated sales linked to the party congress.

In Electronics, we reinforced our number one position with new contract with Taiwan [ph] customers; growth is strong for the last two years and is above 20% in Q2. And Healthcare, even if it is small, shows promising development.

Looking now at the businesses, we are improving sequentially in all business lines. For large industries, volume was solid, in particular in hydrogen and we had a few start-ups but sales were temporary penalized by the hurricanes on the Gulf Coast.

As a reminder, we added significant exceptional indemnity from a customer last year in Q4, which will create a very high comparison basis for the end of the year. I would link now to focus on Merchants as it now represents 47% of our Gas & Services piece.

Sales are up in all regions as shown on the map with many countries delivering middle high single digit growth, thanks to the deployment of our multichannel capillary distribution organization and to the constant improvement of our offers to better meet customer needs. The global pricing effect at 1.3% in Q3 benefits from an improvement in Europe at plus 4.6% and in Asia at plus 1.8%.

Healthcare also had a good quarter, supported by very solid Home Healthcare volume driven sales, above 5% and strong growth in developing economy. Growth in Electronics, after a difficult period of abnormal comparison basis is now aligned with underlying trends at plus 7%.

We benefit from new contracts from strong carrier gases and from our unique position with large customers in Advanced Materials, which continued to progress between 20% and 30%. In Engineering, order intake continues to recover at €504 million year-to-date over two times what we had last year which should drive progressive recovery over 2018.

Global market and technology’s intakes are also solid, in particular from biogas purification units and maritimes tank. So overall, a really good quarter in terms of activity.

In terms of performance, the good news is that we are also well aligned. Efficiencies are well on track with €300 million in NEOS objective for the year, slightly above last year-to-date.

At the end of September €229 million have already been extracted from industrial projects for 43%, procurement initiative for 35% and from reorganization for the balance, in particular in our engineering business. The very good news is that we are running ahead of plan in terms of Airgas synergies.

We announced $175 million of cumulative synergy at the end of 2017 and we are already at $177 million. In fact, cost synergies are delivered quicker than anticipated.

And thanks to the efforts of the team, we are two to three months ahead. Therefore, we raised our objective for the year by $20 million.

This means that at the end of 2017, we will have materialized $195 million of synergies. Of course, most of them are linked to cost but we are also starting to see the impact of the cross-selling assets.

Cash flow at the end of September reaches €2.9 billion or 18.7% of sales. This solid performance together with controlled CapEx at 10.7% of sales enable us to reduce our net debt level under €15 billion and our gearing under 90%.

In terms of investments, our 12 months portfolio is stable at €2.1 billion and we are actively bidding on new projects. We decided more than 600 million in new investment within particular takeover linked to the Pemex contract in Mexico, additional investments in our core business as well as three new projects in Electronics in Asia.

We have also closed five small acquisitions for a total amount of €44 million biogas in the Nordics, healthcare in Japan and three for Airgas. We divested the refrigerant gases subsidiary of Airgas, which will be excluded from the comparable business for the next four quarters to come.

The contribution of start-ups and ramp-ups is improving slightly at €51 million for the quarter, or €121 year-to-date. The forecast for the year is confirmed at €170 million, we are waiting for large start-ups at the end of this year and at the beginning of next year.

Not much to say about the backlog. Start-ups are compensated by new projects signing and then it’s broadly stable.

So, to conclude this presentation, I would like to insist again on improvement of the activity levels, in particular in Industrial Merchant, efficiencies and synergies are more than on track, net debt is under control, now back to under 15 billion and therefore we confirm our outlook, which is to deliver net profit growth in 2017 and our alignment with new plan objective. Thank you very much for your attention.

This is the end of the presentation. And I would like now to open the Q&A session.

Thanks, and good morning everyone, and thanks for the presentation. Just a couple of very quick questions for me.

So, the first one was on the 7% underlying growth that you had in Electronics in the third quarter. Could you perhaps split that and give us an understanding in terms of how much that actually came from start-ups and ramp-ups over the course of that quarter?

And the second question was on the hurricane. Obviously, the hurricane impacted your underlying growth trajectory over the course of Q3.

When you think about the fourth quarter and looking ahead to 2018, do you see any additional opportunities coming from the increased industrial activity within the US in terms of rebuilds et cetera which would be actually positive for Air Liquide over the course of next few quarters? Thank you.

Thank you for your question. I will answer to the first one on electronics, and then I will let Mike to talk about the positive -- the potential opportunities following the hurricane.

In Electronics, what we see is a very solid growth in carrier gases and this of course goes along with the start-up of new contract, but it goes along also with an excellent loading of the fabs of that customers. Carrier gases are up 6% or so and only one for that would be linked to new contracts.

And as you know what is also driving the growth in electronics is the excellent growth in advanced materials. In terms of opportunities following the hurricanes, Mike?

Thanks, Fabienne. In terms of the hurricanes themselves, we don’t expect to have any further negative impact in the quarter.

Everything recovered fairly quickly, both in terms of our own operations and majority of our customers are now fully back up to speed in operation, except for those that chose to stay down for a turnaround. In terms of potential upsides, I think that we saw some fairly strong activity from an industrial perspective, both in large industries as well as in the Airgas businesses going into the hurricane; and coming out of the hurricane, those activity levels come back to the normal they were.

A lot of the post-hurricane opportunities from a construction standpoint are likely more in residential construction. So that’s really not an area that will likely benefit us.

However, the car industry, which was beginning to go ahead and see a bit of a decline in production, likely will be bolstered. The latest estimate that I had seen in terms of the number of automobiles that were lost in the total impact of the storms was about 800,000.

So, I think that the impact is such that I don’t expect a significant uplift as a result of the hurricane. I think it will likely reinforce the continued industrial growth that we had already seen throughout the year.

Yes, good morning. I’ve got two questions, the first one is on Industrial Merchant pricing in the Americas.

You have talked about acceleration of activity. Pricing seems to have faded through the year, 1.8% and 1.6% and 1.2% in Q3.

I was wondering if you could talk about what’s behind that, is it mix or is it I don’t know, fading impact from currency on local currency in LatAm et cetera? The second question is on your comments on cash flow -- operating cash flow pre-working capital margin.

This is a number that you do provide away from topline, about 18.9% I think in the first half, 18.7% in nine months implying 18.2% in Q3. Is there any lumpiness cash cost, cash tax, cash interest that would drive Q3 significant lower than in the first half or is that a reflection of lower EBITDA margin?

Thank you.

So, in terms of pricing in America, you know that is a mix of the pricing in North America and the mix of the pricing in South America where it’s mostly inflation driven. So, what we’ve seen in North America is a pricing which was nearly steady, there is of course a mix impact and in particular the fact that there was a stoppage during the hurricane of the outgoing delivery to our customers which is a gas which is well priced is impacting the average pricing.

But, I don’t think we should worry about that, we should see the pricing coming back next quarter. I don’t know Mike, if you want to add to that.

The only thing I would add Fabienne is that if you look at the Airgas pricing over the entire year, once we have completed the full integration at the end of last year, we will quickly move forward with our business plans. And so, we hit pricing pretty hard in the first quarter.

So, we accelerated our pricing plans. And you really had a year-over-year comparator that was a bit ahead from where you were in 2016 prices versus what we introduced in 2017.

So, for the end of the first quarter and into the beginning of the second quarter, you had a more significant delta in terms of the comparator, and now that’s pretty much equalized.

In terms of cash flow, we have a lower cash flow during summer because that sales in August in Europe are much slower, it’s a very small amount for us. On top of that the end of the quarter was on a weekend, which is not very good for collection.

But, there is no specific issue in terms of EBITDA margin.

And the correction point, wouldn’t that have an impact on working capital, given that the margin you provide is pre-working capital?

That’s right, but you also had the hurricane impact which came into play.

Okay, thank you.

If you look at the historical numbers, it always low in Q3, so that’s regular seasonality.

Good morning and congrats for Q3 sales. Few questions, the first one on outsourcing trend and specifically Sinopec contract that you just signed and we discussed that a bit earlier with Pemex, too.

Is there -- is your view that outsourcing is potentially a bit bigger the next few years for CapEx for Air Liquide as a whole, meaning that you see more projects coming out of existing plants? And if Sinopec in particular, should we see a bit more traction from the overall network of Sinopec or is it just a one-off of that refinery?

First question. Second question, on start-ups for Q4.

I think if I look at your forecast, it’s basically flat in terms of about €50 million in Q4. Is that the right way of thinking?

First. And second, is there any -- what do you expect in terms of number of plants being started in Q4?

And any delays, again looking ‘18, delays of the big ones, the big contracts, anything you can put color in terms of timing of those, if anything has changed there? And finally, a very quick one on healthcare bolt-ons.

Could you quantify a bit the acquisition -- small acquisition impact in terms of growth?

So, coming back to the outsourcing trend, it’s absolutely clear that it is and remains a strong component of our growth in large industries. You know that we will be at the very end of the year, starting our Sasol project in South Africa, which is going to impact sales and which is a result of outsourcing.

Regarding Sinopec in particular, we already have four contracts with Sinopec. They will continue to outsource one more.

They maybe still want to diversify their supplier base. So, it’s a continuous trend.

You know that takeover has a lot of upside. It allows us to skip the construction period and to have immediate return and also to reduce our construction risk.

So, we still have a few in our portfolio and we hope to continue to sign some. In terms of start-up and ramp-up contribution, you are right, the math is right.

It’s around 50 million in Q3. If we compare to what we announced at the end of H1 in terms of start-ups, we remain on this plan.

And the larger start-ups will be Sasol at the very end of the year. So, it will not contribute this year but it will contribute next year.

And we confirm a much stronger contribution of start-up and ramp-up for next year around 370 million.

So, Fujian will start in Q1. We should -- end of Q1?

Yes. Fujian will start in Q1, absolutely.

In terms of healthcare bolt-on acquisition, you know that we had a lower bolt-on acquisition contribution this year than for the year before. This recent acquisition in Japan is increasing a little bit the trend that the contribution is in the 1% range in terms of growth, not more.

Two questions if I may. Firstly on the Industrial Merchant growth in the U.S., obviously 2.6% adjusting for the impacts of the hurricanes.

We were talking at the first half results about there being an increasing mix between hard goods and rentals in that sales number. I was wondering if you could give any color about volume growth and the split between hard goods and rentals.

Second question, if I may, bit of a -- just a small one but a trend. You note in your investment opportunities that now 40% of the portfolio corresponds to projects of less than €50 million whereas before you’ve said 50% i.e.

half. So, aren’t we seeing a shift in the mix of the investment opportunities?

Are the projects getting bigger or are you saying they’re smaller? Could you just clarify what trends you’re seeing as you state that the number of opportunity or the size of opportunities are changing?

Thank you.

Maybe for the IM growth in Americas, I will hand over to Mike.

Thanks, Fabienne. So, we talk about the overall markets and growth, and maybe a little bit of color and a little of perspective.

Over the course of the year, if you looked at the energy and materials and chemicals markets, we certainly have gained momentum throughout the year, clearly driven the recovery in the upstream in terms of onshore drilling and also hydrocarbon processing and distribution. So, there has always been the momentum there over the course of the year and now we’re also seeing momentum in mining and materials markets as well.

So, that’s been strong, it’s been very sound, really good growth throughout the year and continues to proliferate as we look at that growth. In terms of the non-residential construction, sequentially, throughout the year, it’s had growing momentum as well in the specialty contractor market, especially with pipelines and power plants, if you look at the Northeast.

It’s offsetting a little bit kind of a sluggish general contractor market that’s a bit lumpier. A lot of the major projects on the Gulf Coast, as they complete, end up with a bit of void in terms of the activity level there with more to start in the not too distant future.

So, there is a little bit of headwind there. But overall, it’s been good through the year.

Food and beverage have been very strong. And I think that the use of gas is there, especially with the Food Safety Modernization Act in the U.S.

have really proliferated some growth in that space. In government defense and aerospace that’s been fairly flat through the year.

Gases were actually strong, gas sales there hard goods have been fairly flat during that period of time. In the life sciences and healthcare market, we’ve seen good growth over the course of the year, steady growth especially in terms of pharmaceuticals and also in university research markets.

So, that’s been steady. The manufacturing and metal fab piece at the end, we’ve seen very strong growth in industrial and heavy equipment, primarily as a result of the recovery and onshore drilling.

It’s been offset slightly by a beginning of the decline in the automotive market, but as we spoke about earlier that may get mitigated with the after effects of the hurricane. And metal processing has been very, very strong through the year.

So, I would say that we had a good mix in terms of steady growth in gases and hard goods. And actually at this point in time as we saw the third quarter evolve, we saw strengthening in hard good sales throughout the quarter which could bode well as we think about the future markets.

In terms of investment opportunities on portfolio, we’ve seen more small projects and a better balanced portfolio recently than we had for example three years ago. So, we have few large projects but we have many more small ones.

If you look at the average size of the project in the portfolio, it is very stable Q1, Q2, Q3.

No real change is taking place in that?

No change.

Good morning. Three quick things.

Is your overall portfolio of opportunities flat or is it growing? Secondly, is U.S.

merchant pricing running above 2%? I don’t know if you can give that of level of detail.

And finally, can you comment on the trends in welding equipment sales in North America?

So, the global portfolio of opportunities, you mean above 12 months I guess, is broadly stable. In terms of merchant pricing, we don’t disclose the pricing by country but it has been quite stable I think in the U.S.

We had, as Mike explained earlier, a price campaign at the beginning of the year, we launched some. So, it has stabilized quite a bit in Q2, Q3, and we are continuing our pricing action.

Trend in equipment sales in North America, Mike?

I can’t say that there is a significant trend here, I can’t say that I have got that much visibility other than what we see directly in used and what we see in hard good sales. Clearly with some of the major projects and the Red-D-Arc business, we have seen the demand for welding equipment grow with the demand for hard goods.

And we are currently seeing a growth in the level of hard goods but I can’t equate to further level in the growth and equipment at the moment.

Yes, good morning. Thank you.

I have just got a couple of questions in terms of I guess China. I am looking at the Industrial Merchant number you have, and if I strip out the hurricane effect, it looks like it’s strongest probably from 2010.

Obviously, China is a smaller part of the whole now but it is growing very strongly at 15% plus. Just wondering within that volume price, because you are making it quite clear than the other to make it quite clear, you got decent price momentum now.

I would guess volume still remains 10% plus but price might be ahead of the Asian region leverage. I am just trying to get a feel for that price momentum in China.

And then, following on from that, what’s happening on the ground in China in terms of utilization, I know it’s finger in the air stuff, I know the market is complicated by the wholesalers et cetera and distributors. But, given numbers of the market could have been well under 60% utilization rate, only as late as beginning of 2016.

Obviously now we are coming toward the end of 2017. It feels like this tightened very significantly, if we could have a stab at that that would be very helpful?

Thank you.

So, you already have all the answers. I am just going to confirm.

It’s true that we have a really strong growth in the Industrial Merchant in China. We are deploying densification strategy, a kind of Airgas kind mode.

It’s clearly delivering. You are right, volumes were above 10% and we see a clear recovery in pricing, and pricing line above 4% for the quarter.

And this is linked to your second question is that the loading of the facility has increased quite a lot in China. We are now in the 75% range, which is quite high.

So, it seems that the overcapacity that we had for quite a long time, in particular on the cost, is progressively resolving. It’s also linked to the fact that we have late start-up in large industries globally for the market.

So, we have liquid capacity coming on stream, and then the result is a better loading of the existing facilities and better pricing supported by this loading but also by the solid demand.

I just have one question, it was regarding Industrial Merchant. And you feel that you could have some additional acceleration in growth for Q4 in a sense that -- I mean, your comments on the U.S.

seem very positive, also we’ve just heard about China, and the industrial production in Europe seems to be accelerating. So everything seems going in that direction but I’d like to have a bit of color in that side, if possible?

Thank you.

Okay. So, maybe I will ask Guy to comment on the Industrial Merchant growth in Europe and on the outlook.

Okay. For Europe, I think we’ve had -- we have enjoyed a very solid third quarter.

So, I would say that the underlying markets remain solid and we expect them to continue at that level. So, we’d expect last quarter in that sort of range, probably confirming the consolidation we’ve seen over the last -- since the beginning of the year with this market.

Remember that NEOS objective for Industrial Merchant is in the 3% to 5% range. So, we are in the middle with the weight we have in merchant economy.

We could not expect merchant to grow much, much quicker than 5%. So, it’s what we have now is already very, very solid.

Mike, do you want to add on the Americas?

The only other thing I would add and I already spoke to the strength in the merchant markets for Airgas. We also see strength in Canada, and it’s driven by a return of activity in Western Canada, both in terms of what’s happening in the well, oil services space as well as the mining operations in Alberta.

But, the other point I would make, and we talked about this when we announced first half results is in addition to I would say the continued strength in the merchant market as we move into the fourth quarter, especially in North America, we had a very difficult comparator a year ago. And so, we saw a significant decline in merchant activity in the fourth quarter last year in North America.

So, the comparator should show some strengthening.

To make it short, we continue to expect the merchant and the demand in merchant to remain very solid, not necessarily on acceleration.

Hello, good morning. Thanks for taking my question.

I just had one question and it’s something I find quite interesting. So, in your base business volumes, you mentioned growth about 2.6%.

And if I look back historically the one in the quarter that you had about close to 3% growth was in 2014, since then growth has been quite flow. Can you provide some color how we should think about base volumes growth going forward?

Was there any specific one-off this quarter, is it sustainable? Thanks.

No, we don’t have one-offs in the growth of the base business in Q3. I think we have sequential improvement in all the business lines, mostly in merchant and electronics as mentioned before.

So, it should continue to be quite solid, in fact, in all of our business line and in particularly in merchant.

Yes, good morning. Thanks for taking -- two questions.

First one will be for Mike really. You mentioned a couple of times reference to early signs of contributions from sales synergies from Airgas.

I just wonder if you can just give some examples of what you’ve achieved so far. That’s the first question.

And the second question was for Fabienne, it’s a general one. Any thoughts on EBIT margin in the second half, just sort of lots of moving parts now, I guess with mix in FX and some of the one offs from last year.

So, just any sort of thoughts overall would be helpful.

Mike?

So, in terms of the sale synergies, clearly, we’ve seen an acceleration in the cost-related synergies and continue to drive that. The sales-related synergies are definitely beginning to ramp and pick up.

It takes a little bit longer to go ahead and basically educate the 1,000 sales professionals in the Airgas organization on a lot of the additional offers that would be available with Air Liquide technology and applications, and also to begin to move the knowledge and the operational know-how of Airgas into adjacent operations like Canada and into Mexico. So, in the early days, we’ve clearly seen the beginning of small onsite nitrogen generators in terms of sales of those types of facilities and operations into the Airgas system.

So, we’re able to go ahead and install these, we own these. And we continue to go ahead and meet the customers’ needs through that offer.

This is something Airgas did not have in their portfolio until they become part of Air Liquide. Another key aspect that we’ve begun to see, probably a good effort is in Mexico.

We have developed a strategy to enter the hard goods and packaged gas business in Mexico right about the time that we announced the acquisition of Airgas. Airgas already had a hard goods business in Mexico but they did not liquid supply to really begin a cylinder operation.

With now the joint operations in Mexico we already have one full plant in operation outside of Monroe and that business is beginning to grow as well.

Well, thank you for the question on the EBIT margin. When we published our H1, we showed an improvement in the EBIT margin, which had decreased a little bit following the Airgas integration.

And we said we would further improve this level of margin for the full year, so we are still aligned with this declaration.

Good morning. Two questions remaining on the cash flow again, you had 18.6% for the nine months of last year and now 18.7%.

Can you -- but last year you only had one month Airgas included. Can you give us like-for-like operating cash flow growth nine-months versus nine-months last year?

That would be my first question and secondly, synergies, they are two to three months ahead of plan. When should we expect an update of this overall synergy target?

So, for the first question, we have not restated cash flow statement, so I cannot respond to this question. The margin is improving and the cash flow is improving as well compared if we look for example on a monthly basis where we had Airgas in 2016 and the Airgas in 2017.

So, I can confirm it, it’s improving but I don’t have the restated number for last year. Synergies are ahead of plan because we are delivering quicker than expected, in terms of EBIT, Mike?

In regard to the synergies, besides what Fabienne discussed earlier and the acceleration, especially on the cost synergies in 2017. We’re in the stages of implementing the last major project in terms of cost-related synergy capture and we should have that complete by the end of the fourth quarter.

That will allow the full integration of the bulk production and distribution facilities and allow for the full optimization of the entirety of the bulk distribution system. So that will be in place by the end of the year and we will continue to see the benefits from those folks synergies along with a lot of procurement benefits continue to flow into 2018.

So, when we look forward, probably by the end of 2018, we will have captured the majority of the cost related synergies. So, again accelerating from where we had been at the beginning, when we announced we will capture all the synergies by the end of 2020.

That’s on a very, very good rapid track. And as we discussed earlier, the growth related synergies now are really starting to go ahead and accelerate and we see them accelerating quarter-by-quarter.

In terms of additional synergies, the way we really look at this is that we have the synergies identified and we are certainly well-ahead and accelerated on the capture of those synergies. Those are what we knew, what we thought we could accomplish before we became one.

And now that we are fully integrated, we understand more deeply each other’s organization, capabilities, the business models, we see more upside opportunity that we will in the future report as efficiencies and will become part of our growth platform. And I think towards the end of next year, maybe even by the middle of the next year, we can have a more detailed discussion about that to begin to highlight where we think some of that will evolve too, but I think that will be a discussion for next year.

Okay.

Thank you, Mike. Next question?

Yes. It’s Chetan Udeshi, JP Morgan.

Few questions, over the past six to nine months, there has been increased activity or increased crackdown related to environmental concerns in China. Can you explain how does that impact Air Liquide, either positive or negative?

The Second question I had was, we’ve also seen an increase in utilization across steel industry, and does that help you in any way in terms of improved prices or improved volumes about the take or pay contracts? And last question is on the competitive environment in terms of bidding for large projects.

Do you see any material change in those -- in that? Thanks.

I will take the first question, and I guess you talk about increased regulation in China which has forced to close certain number of plants? So, its impact on us has not been negative as we were mostly -- we still won customers.

So, we’ve not experienced customers being exposed to a forced closer of their facility. On your positive triggering renovation of a certain number of units, it’s triggering the need for more energy-efficient units, which is really part of the Air Liquide.

We have very good growth in large industry and I think we more benefit from this trend than anything else. Steel industry, maybe for you, Guy?

I think we’ve continued to see quite a high level of demand in the steel industry. It has maintained quite a solid level.

And the outlook basically is on those bases also for the coming months. So, quite solid there in Europe on the steel for the coming...

I would just add, in the Americas, depending on the geography, in Canada, we’ve seen clearly an increase in oxygen sales into the steel markets and that’s continued to grow. Whereas if we look at other operations, especially like in Trinidad, we’ve seen a cessation of some operations there.

So, there’s a bit of a mix. I think overall, steel has remained strong in terms of those basins where you’ve got the clear demand.

But, I can’t say that we are seeing a significant change in pricing or in take or pay contracts as a result of that. I think we’re just seeing the ability to go ahead and move more molecules and reap the benefits of that.

In terms of business activity, I don’t know exactly what you are referring to, but no visible change. All the competitors are very active and in particular the large international is as usual.

Yes, thanks. Three questions also on my side.

Again, coming back to the Industrial Merchant, where you mentioned pricing in China was more than 4%. Is it fair to say that this was the only reason why on -- the pricing in Asia was up by 1.8% or were there other regions in Asia which contributed to the price increase in Industrial Merchant?

That’s number one. Number two is, in engineering, can you put some numbers on your statement that you saw order intake has improved significantly in terms of let’s say Q3 compared to Q2 and Q1, so that we see really an acceleration and can we expect that you might be able then to show strong recovery the next year?

And on large industries in Europe, you saw this comparable sales growth of minus 0.9% in Q3 and you mentioned termination of activity in Ukraine while the overall volumes obviously elsewhere outside Ukraine were quite strong. Can you help me to get understanding what was the impact from seizing the Ukraine business to get a better understanding about the underlying growth in large industries in Europe?

Thanks.

I will first come back on the pricing in Asia. So, yes, we have strong pricing, positive effect in China, but not only -- you know that the Australian market has been very difficult for the last two quarters, where quite significant market adjustment in terms of pricing in particular that has now stabilized.

So, we are back to a slightly positive pricing in Australia, which is also contributing and globally, we have positive pricing in all the developing economies in Asia. In terms of engineering and constructions, so you have the order intake quarter-by-quarter on page 14 of the presentation.

So, there is some volatility from one quarter to another which is normal, but you see that globally. We are doing much better than last year.

In terms of sales, what does that mean? That means that probably in Q4, we will be in the range of what we had last year.

So, we should see a stoppage of a terrible decrease we’ve seen in the beginning of the year. Now to see real increase, we’d probably have -- to solid increase, we will have to wait until H2 of 2018, of next year.

In terms of large industry in Europe. Guy?

Yes. So, large industry in Europe has -- overall is quite stable at a solid level.

We are impacted this quarter as well as since the beginning of the year by the stoppage of our activities in Ukraine. The order of magnitude I think we’ve mentioned for the Ukrainian business is around €20 million a year.

So that’s what we’re talking about. So indeed that swings basically the business in Europe to slightly negative.

But in fact it’s a solid slightly positive activity with some ramp ups of activities, particularly in the refining business as we said that towards the end of the period. So, we see that continuing in the coming quarters.

So, we should stay at a reasonably solid level. However, we need to just highlight that in Europe that we do not have significant startups and therefore, we should not anticipate any significant step ups.

Maybe a one follow-up on the latter. I mean, when I take €20 million and divide it by 4 quarters, you have €5 million.

So, this is only 1% of last year. But you had to let’s say minus 0.9, which is basically -- actually the rest looks to be pretty stable but not growing, is right understanding?

That’s right. Excluding Ukraine, we would be slightly positive, this is the math.

We had center number of customer negotiation and few startup, as Guy said. So, we are between flat and slightly positive.

As I mentioned during the presentation, we’ll be however in Europe negative in Q4, because we had a significant one-off last year.

So a quick follow-up. Could you remind us Fabienne or Mike, the Airgas contracts we’ve completed as long-term contracts, where we are in terms of renewing those -- not renewing those but switching to Air Liquide, maybe in terms of percentage of completion?

And do you have -- if I remember correctly, it was about 180 million at COGS level. Is that correct?

So, the contracts with competitor would be renewed and replaced by Air Liquide sourcing for as long as three to four years to come; for the moment, only a small part is being executed. So we have more to come in particular in 2019.

Maybe we will take the last question now.

Hi. Thank you for the second question.

I was wondering if you could comment a little bit on what you’re seeing in France and Italy. They seem to be accelerating a little bit.

And I would like to have your feeling about the situation in those two countries? Thank you.

So, this one is clearly for Guy.

So, it is true that we have had a quite a solid activity, both in France and Italy, overall in all parts of Europe, we should include also Iberia since the beginning end of the year and particularly in the last -- in this quarter of Q3. We see that across the board in all the different markets, particularly in IM.

So, that’s quite good news. All the sectors, whether food, whether -- all the manufacturing activities and also that technology and research have showed and posted quite solid activity in those two geographies, three geographies should I say, because we should add also Iberia to that.

Thank you, Guy. I think we stop there.

Thank you all for joining. Thank you for your questions.

To conclude, a good Q3 for Air Liquide; we had good level of activity and a performance well on track. Thank you very much.

Good bye.