Is AIQUY's Dividend at Risk? A Deep Dive into Air Liquide's Dividend Sustainability Amid Market Uncertainty

Air Liquide (AIQUY) has long been a cornerstone of the industrial gas sector, prized for its consistent dividends and robust financials. Yet, as global markets grapple with inflationary pressures, energy volatility, and shifting demand dynamics, investors are increasingly asking: Is AIQUY's dividend at risk? This article dissects the company's financial fundamentals and dividend safety to determine whether its payout remains secure—or if caution is warranted.

Financial Fortitude: A Foundation for Stability

Air Liquide's 2024 performance offers a compelling case for dividend resilience. The company reported €27.058 billion in revenue, with +2.6% comparable growth, driven by its Gas & Services segment, which accounts for 95% of sales. Notably, the Americas region saw a +7.3% revenue surge, while the Asia Pacific region grew by +1.6%, offsetting a -1.1% decline in EMEA due to strategic divestitures. These results highlight Air Liquide's geographic diversification and adaptability in volatile markets.

Net income for 2024 totaled €3.306 billion, a +7.4% increase, with recurring net profit hitting €3.466 billion, up +11.5% excluding currency impacts. Earnings per share (EPS) rose to €5.74, a +7.3% gain, underscoring the company's ability to translate top-line growth into shareholder value.

Debt Management and Cash Flow: A Prudent Approach

Despite paying €1.8 billion in dividends and investing €3.8 billion in industrial projects, Air Liquide's net debt stood at €9.159 billion as of December 2024—a manageable figure given its €6.539 billion in operating cash flow. This cash flow cushion, coupled with a 10.7% recurring return on capital employed (ROCE), suggests the company can sustain its dividend without overleveraging.

Importantly, Air Liquide's debt-to-EBITDA ratio remains within conservative limits, and its liquidity position is bolstered by strong working capital management. The company's ability to reduce net debt slightly in 2024, even while funding dividends and growth initiatives, signals disciplined financial stewardship.

Dividend Payout Ratio: A 55% Safeguard

Air Liquide's dividend policy is anchored by a 55% payout ratio of net profit, a target it has maintained for over a decade. For 2024, this translated to a €3.30 per share dividend, a +13.7% increase adjusted for a free share attribution in June 2024. The proposed 2025 payout aligns with this ratio, assuming continued net income growth.

This ratio is notably conservative compared to peers in energy- and capital-intensive sectors, where payout ratios often exceed 60%. Air Liquide's buffer provides flexibility to withstand short-term headwinds, such as energy price shocks or supply chain disruptions, without cutting its dividend.

Strategic Leverage: Margin Expansion and Operational Efficiency

The company's Advance strategy has delivered +110 basis points of operating margin improvement in 2024, excluding energy costs. With a new target of +460 basis points of margin growth over 2022–2026, Air Liquide is poised to enhance profitability further. Initiatives like organizational simplification, digitalization of operations, and expansion of business service centers are expected to drive efficiency gains, reinforcing the dividend's sustainability.

Risks on the Horizon

While Air Liquide's fundamentals are strong, investors should not ignore macroeconomic headwinds. A global slowdown could pressure demand for industrial gases, particularly in manufacturing and healthcare. Additionally, energy prices remain volatile, though Air Liquide's hedging strategies and cost management have historically mitigated such risks.

Investment Implications

For income-focused investors, Air Liquide's ~2.5% dividend yield (as of early 2025) is attractive, especially in a high-interest-rate environment. The company's dividend growth trajectory—with a 13.7% increase in 2025—signals confidence in its cash flow sustainability. However, investors should monitor its debt-to-EBITDA ratio and free cash flow conversion in upcoming quarters for early signs of strain.

Conclusion: A Dividend to Trust

Air Liquide's combination of strong cash flow generation, prudent debt management, and a conservative payout ratio makes its dividend one of the most secure in the industrial sector. While no dividend is immune to economic downturns, Air Liquide's financial fortress and strategic agility position it to weather uncertainty. For long-term investors, AIQUY remains a compelling addition to a diversified portfolio, offering both income and growth potential.

In a market where dividend cuts are becoming more common, Air Liquide's track record of 50+ consecutive years of dividend growth (a goal it is on track to meet) is a rare and valuable asset. The question is not whether AIQUY's dividend is at risk—but how much further it can grow.