Chemicals · Industrial Gases
Air Liquide (AI.PA)
The European-led global major: FY2025 revenue of €26.9B, recurring ROCE of 11.2%, Large Industries 27% of gas revenue, and a €4.9B investment backlog.
Selborne Research · · Equity Research Profile
Educational analysis for professional use. This profile is not investment advice or a recommendation to buy or sell any security, and it is not personalised.
Snapshot
- FY2025 Group Revenue
- €26.9B (€26,940M)
- Share of Gas & Services Revenue
- Large Industries 27% / Industrial Merchant 47%
- Operating Margin (recurring)
- 20.7%
- Recurring ROCE
- 11.2%
- Investment Backlog
- €4.9B (31 Dec 2025)
- Pipeline Network
- >9,500 km
- Net Debt
- €8,416M
European Contract Framing
Air Liquide files the most explicit take-or-pay wording of the four majors, and passes energy costs through to its large customers by contract. Gas & Services, 97% of the €26,940M group revenue, splits into Industrial Merchant (47%), Large Industries (27%), Healthcare (17%) and Electronics (9%); the shares are Air Liquide's own, on Gas & Services revenue of €26,085M. Engineering & Technologies sits outside. Comparable group revenue rose 2.0% in FY2025, and recurring ROCE (return on capital employed after tax, excluding one-off items) was 11.2%, up from 10.7%.
Large Industries, big plants each supplying one customer, maps to on-site supply. Its contracts run at least 15 years with take-or-pay clauses guaranteeing minimum revenue, and re-invoicing energy to customers keeps power-price swings out of operating income.
Industrial Merchant covers bulk deliveries, cylinders and small on-site plants. Air Liquide's FY2024 Universal Registration Document split it into bulk 31%, packaged 27% and small on-site 6%. The group also operates more than 9,500 km of pipelines, the filed measure of the network density behind the sector's premium.
How the Numbers Read
Air Liquide's recurring ROCE and Linde's adjusted after-tax return on capital are different definitions, so the two belong on one chart only with a note under each.
The investment backlog, investments in projects decided but not yet started, was €4.9bn at 31 December 2025. It includes €0.2bn for integrating DIG Airgas, the South Korean gases business Air Liquide acquired for about €3bn in January 2026. Projects expected to be decided within twelve months totalled a further €4.6bn, a quarter of them (about €1.15bn) for the energy transition.
Air Liquide reports no EBITDA. The nearest line on its income statement, operating income recurring before depreciation and amortisation, was €8,145.1M, 30.2% of revenue; the operating margin it publishes, operating income recurring over revenue, was 20.7%. Net debt was €8,416M, 31.2% of equity.
How You Would Value a Business Like This
The method values contracted and cyclical earnings separately, because a take-or-pay floor and a truck route carry different risk. For a group that reports by segment, the segment split is the input: Large Industries maps to the contracted piece, Industrial Merchant to the cyclical one, and Healthcare and Electronics need their own treatment.
What to Watch in the Financials
Recurring ROCE. The trend on Air Liquide's own definition says more than quarter-to-quarter merchant volume.
Large Industries against Industrial Merchant growth. Faster Large Industries growth adds to the share of revenue under take-or-pay floors; faster Industrial Merchant growth adds to the share on shorter contracts, which generally carry no minimum purchase.
How the backlog turns into start-ups. Track signed projects coming on stream, and keep the signed backlog and the opportunities under negotiation as separate figures.
The energy line in sales growth. Re-invoiced power flows through revenue, so read a margin change against the energy effect before reading it as a change in the business.
Key Risks
Segment mix beyond core gases. Healthcare and Electronics are material within Gas & Services. Air Liquide reports operating income recurring by region rather than by business line, so a gases-only sum of the parts needs estimates.
Euro reporting. Comparisons of debt and backlog with US dollar peers move with EUR/USD.
Industrial Gases Sector Primer
Contracted on-site cash flow valued year by year with a renewal value, the merchant and packaged slice on a market multiple, a backlog adder and a downturn test.
- 15 sections, from the three supply modes to a sum-of-the-parts valuation, a downturn test and ROCE against WACC
- 43 pages
- a packaged-and-merchant global leader and an on-site-heavy major
- 2 worked archetypes
- the listed gas majors on filed supply-mode mix, return on capital and backlog
- 4-company screen
The Excel model is the primer's sum-of-the-parts valuation live across 11 sheets: two archetypes (a global leader and an on-site-heavy major), each splitting EBITDA by supply mode, valuing the contracted on-site slice as escalated year-by-year cash flow over the contract plus a renewal value and the cyclical slice on a market multiple, adding a backlog value and deducting net debt; an on-site contract schedule; a supply-mode downturn test; ROCE against WACC; and a live sensitivity grid. Change the on-site share, the contract discount rate or the cyclical multiple and the value moves.
See what's in the Industrial Gases Sector Primer →£25 PDF · £59 with the Excel model · £159 for all three Chemicals industries
Learn the Concepts
Understand the valuation frameworks and metrics used in this analysis.
Take-or-Pay Contracts in Industrial Gases
AI Large Industries take-or-pay; LIN minimum purchases; APD fixed monthly fees; ~$62bn and ~$26bn RPOs; why wording differs but the cash-flow floor is the same.
Industrial Gas Business Models
On-site, merchant and packaged channels; contract lengths and minimum purchases; FY2025 mix contrast (LIN packaged 35% vs APD on-site 52%).
ROCE and the Gases Oligopoly
Four filers, four definitions of return on capital (LIN 24.2%, AI 11.2%, APD 10.1%, NSHD 7.1%), and why each is read against its own cost of capital.
Project Backlog vs RPO in Industrial Gases
Why a gases backlog counts capital still to spend and remaining performance obligations count revenue owed, what each filer puts in them, and one plant worked through both.
Industrial Gas Margins by Company
EBITDA and operating margins at four gases majors, each on its own basis, and why energy billed on at cost moves the percentage but not the profit.