Company Reports

Air Liquide benefits from operating in an industry with a very favorable structure. Despite selling industrial gases, which are essentially commodities, public industrial gas companies have consistently delivered lucrative returns because of their economic moats. Industrial gases typically account for a fraction of customers’ costs but are a vital input to ensure uninterrupted production. As such, customers are often willing to pay a premium and sign long-term contracts to ensure that their businesses are running smoothly. Long-term contracts and high switching costs contribute to industrial gas producers’ moats, helping them generate a predictable cash flow stream and lucrative returns.

Air Liquide grew its second-quarter comparable sales by 3.5% from the prior-year period, driven by 5% growth in the Americas and Asia-Pacific. The industrial gas firm expanded its second-quarter adjusted operating margin by 110 basis points year over year.

Air Liquide benefits from operating in an industry with a very favorable structure. Despite selling industrial gases, which are essentially commodities, public industrial gas companies have consistently delivered lucrative returns because of their economic moats. Industrial gases typically account for a fraction of customers’ costs but are a vital input to ensure uninterrupted production. As such, customers are often willing to pay a premium and sign long-term contracts to ensure that their businesses are running smoothly. Long-term contracts and high switching costs contribute to industrial gas producers’ moats, helping them generate a predictable cash flow stream and lucrative returns.

Industrial gas firm Air Liquide increased first-quarter comparable sales by 1.9% from the same period last year, driven by 5% growth in the Americas. Comparable sales remained flat in Europe/Middle East/Africa and decreased 1% year over year in Asia-Pacific.

Air Liquide benefits from operating in an industry with a very favorable structure. Despite selling industrial gases, which are essentially commodities, public industrial gas companies have consistently delivered lucrative returns because of their economic moats. Industrial gases typically account for a fraction of customers’ costs but are a vital input to ensure uninterrupted production. As such, customers are often willing to pay a premium and sign long-term contracts to ensure that their businesses are running smoothly. Long-term contracts and high switching costs contribute to industrial gas producers’ moats, helping them generate a predictable cash flow stream and lucrative returns.

Air Liquide grew its fourth-quarter comparable sales by 2.5% from the prior-year period, with positive year-over-year growth across all regions and business lines. Management announced a new margin target for 2027, increasing the total margin expansion target to 560 basis points from 2022-27.

Air Liquide benefits from operating in an industry with a very favorable structure. Despite selling industrial gases, which are essentially commodities, public industrial gas companies have consistently delivered lucrative returns because of their economic moats. Industrial gases typically account for a fraction of customers’ costs but are a vital input to ensure uninterrupted production. As such, customers are often willing to pay a premium and sign long-term contracts to ensure that their businesses are running smoothly. Long-term contracts and high switching costs contribute to industrial gas producers’ moats, helping them generate a predictable cash flow stream and lucrative returns.

Air Liquide benefits from operating in an industry with a very favorable structure. Despite selling industrial gases, which are essentially commodities, public industrial gas companies have consistently delivered lucrative returns because of their economic moats. Industrial gases typically account for a fraction of customers’ costs but are a vital input to ensure uninterrupted production. As such, customers are often willing to pay a premium and sign long-term contracts to ensure that their businesses are running smoothly. Long-term contracts and high switching costs contribute to industrial gas producers’ moats, helping them generate a predictable cash flow stream and lucrative returns.

European electricity prices for households and industry are well above those in China, the US, and pre-energy-crisis levels. The gap is set to endure, as network costs and levies continue to increase.

Air Liquide posted solid third-quarter results, as revenue increased 1.9% from the prior-year period on a comparable basis. Management reiterated its 2025 guidance as well as its long-term target of expanding operating margins by 460 basis points from 2022 levels by 2026.

Air Liquide benefits from operating in an industry with a very favorable structure. Despite selling industrial gases, which are essentially commodities, public industrial gas companies have consistently delivered lucrative returns because of their economic moats. Industrial gases typically account for a fraction of customers’ costs but are a vital input to ensure uninterrupted production. As such, customers are often willing to pay a premium and sign long-term contracts to ensure that their businesses are running smoothly. Long-term contracts and high switching costs contribute to industrial gas producers’ moats, helping them generate a predictable cash flow stream and lucrative returns.

Air Liquide agreed to acquire DIG Airgas, a South Korean industrial gas firm, from Macquarie Asia-Pacific Infrastructure Fund 2 for EUR 2.85 billion. Management expects the deal to close in the first half of 2026.

Air Liquide benefits from operating in an industry with a very favorable structure. Despite selling industrial gases, which are essentially commodities, public industrial gas companies have consistently delivered lucrative returns because of their economic moats. Industrial gases typically account for a fraction of customers’ costs but are a vital input to ensure uninterrupted production. As such, customers are often willing to pay a premium and sign long-term contracts to ensure that their businesses are running smoothly. Long-term contracts and high switching costs contribute to industrial gas producers’ moats, helping them generate a predictable cash flow stream and lucrative returns.

Air Liquide reported solid first-half results, featuring 1.8% comparable sales growth and a 100-basis-point operating margin expansion from the prior-year period. Management reiterated its 2025 guidance and 2026 operating margin target.

Air Liquide benefits from operating in an industry with a very favorable structure. Despite selling industrial gases, which are essentially commodities, public industrial gas companies have consistently delivered lucrative returns because of their economic moats. Industrial gases typically account for a fraction of customers’ costs, but are a vital input to ensure uninterrupted production. As such, customers are often willing to pay a premium and sign long-term contracts to ensure their businesses are running smoothly. Long-term contracts and high switching costs contribute to industrial gas producers’ moats, helping them generate a predictable cash flow stream and lucrative returns.

After taking a fresh look at industrial gas firms, we've updated our Morningstar Capital Allocation Ratings: upgraded Linde from Standard to Exemplary, downgraded Air Products from Exemplary to Standard, and maintained Air Liquide at Standard. We've maintained our fair value estimates and wide moat ratings for all three companies.

Despite a challenging macroeconomic environment, wide-moat-rated Air Liquide delivered a 1.7% year-over-year comparable sales increase in the first quarter, with solid performance across most regions and business lines. We are maintaining our EUR 187 per share fair value estimate, as our slightly more conservative near-term projections amid tariff-related uncertainty were offset by time value of money.

Air Liquide benefits from operating in an industry with a very favorable structure. Despite selling industrial gases, which are essentially commodities, public industrial gas companies have consistently delivered lucrative returns because of their economic moats. Industrial gases typically account for a fraction of customers’ costs, but are a vital input to ensure uninterrupted production. As such, customers are often willing to pay a premium and sign long-term contracts to ensure their businesses are running smoothly. Long-term contracts and high switching costs contribute to industrial gas producers’ moats, helping them generate a predictable cash flow stream and lucrative returns.

On April 2, President Donald Trump announced a 10% baseline tariff on all imports into the United States, with higher rates on imports from select countries. We are keeping our fair value estimates unchanged for the three wide-moat industrial gas firms under our coverage: EUR 187 for Air Liquide, $333 for Air Products, and $437 for Linde. After the tariff announcement sent the market down, Air Products' shares looks the most attractive from a valuation perspective, trading at a roughly 14% discount to our fair value estimate.

Wide-moat-rated Air Liquide finished 2024 on a solid note, posting a 2.6% year-over-year comparable sales increase in the fourth quarter. After rolling our model forward one year, we’ve raised our fair value estimate to EUR 187 per share from EUR 171, primarily driven by our more optimistic midcycle operating margin assumption.