Good morning, everyone. This is Claude Rodriguez, Head of Investor Relations. Thank you very much for attending the call today. François Jacob and Jérôme Pelleton will present the First Half 2026 performance. For the Q&A session, we will be joined by Emilie Mouren-Renoir and Adam Peters, both VP overseeing, respectively, EMEA and North America. Adam is on the phone with us from the U.S. For our next event, we look forward to welcoming you to our Digital Capital Markets Day on October 6th. Let me now hand you over to Francois.
Thank you, Ode, and good morning, everyone.
It is my pleasure to share Air Liquide's operational highlights for the first half of 2026. Against the industry, it demonstrates its resilience, delivering sustained growth and strong financial performance. Crucially, while driving robust execution today, we continue to secure our long-term growth trajectory through a record volume of new project signings. Let's start with slide three. Our first half results clearly reaffirm the structural trends of our business model. comparable sales growth increased to 3.5 percent in the second quarter landing above expectations and representing a pickup compared to the 1.9 percent in the first quarter this positive momentum was primarily driven by a strong underlying performance across both booming electronics and improving industrial merchants overall sales growth in the second quarter which five plus two five point two percent excluding effects and energy bolstered by the successful and speedy integration of DIG airgas in January this on top line performance validates our proven ability to drive growth both organically and through highly disciplined acquisitions in core geographies at plus 110 basis points margin progression is well on track with all levels of our transformation program contributing recurring net profit reached double digit growth of 10 percent cash flow remains strong, up plus 8%, both excluding currency impact. Our recurring ROCE stands at plus 11% in spite of increased investments, which demonstrates our disciplined capital allocation and improved performance. Our strong cash flow and balance sheet give us the firepower to continue to invest in the long term. Indeed, the first half of 2026 is marked by record-high signings, driven by an exceptional momentum in electronics and several major projects in large industries. This drives our backlog of signed projects under execution to another record of 6 billion euro up versus 5.5 billion euros in Q1 26. Combined with our active MNA strategy, this directly secures our future growth. Our ESG KPIs remain firmly on track with a few noticeable progresses this semester. One is a startup of two renewable electricity sourcing contracts in Segunda in South Africa. As of now, close to 50 percent of these contracted sourcing has already started up, aligned with the objective to reduce the group CO2 emissions by more than 30 percent in one of the largest industrial gases production sites in the world by 2031. So, in summary, in the first half of 2026, despite the macroeconomic conditions, we have not only successfully delivered simultaneously on growth and profitability, but also prepared the next phase of growth. This is truly the inherent strength of air liquid. Now, on slide 4, Air Liquide remains intensely focused driving strong margin expansion across our three main levels. We reached accelerated industrial merchant pricing of plus 5.2% in Q2, successfully addressing inflation through smart pricing management. We deliver also almost 300 million euros of operational efficiencies in H1 through continuous improvement and executing, and that's very important, our structural transformation program. We pursued active, accretive portfolio management to optimize our footprint and increase our local density. We are successfully executing our rigorous merging expansion plan, delivering, as you see, clear and measurable results. Moving now to slide five. We are driving an exceptional momentum in electronics, signing new projects and strengthening our number one leadership position. In fact, in just the first six months of 2026, our electronics project decisions reached over 1 billion euros. If you think about it, that's one and a half times of our total for all 2025. The momentum is supported by a diverse mix of projects and geographies, almost all driven by artificial intelligence needs. Looking at the various projects on the slide, following our acquisition of GIG, Airgas in Korea, we further leveraged our global relationship with key players like SK INIX with project wins both in the US and in South Korea. In the US, we secured three large-scale projects during the first half, representing a total investment of over $480 million, all dedicated to advanced chips with leading semiconductor manufacturers. Meanwhile, in Asia, our project signings achieve outstanding momentum, totalling more than 550 million euros. These wins reinforce our global market leadership and give us strong visibility on long-term profitable growth. On slide 6, we are catching the growth in large industries with the signing of three major projects in the first half. They expand our presence in the U.S. and directly support U.S. industrial reshoring. In large industries in the U.S., we are investing $350 million under a new long-term agreement to supply air gases to Hyundai POSCO in Louisiana for their landmark low-carbon steel plants. This new infrastructure directly supports the development of critical, domestic, and low-carbon materials. It also enables our customer international expansion while actively contributing to the reshoring of American industry. In Texas, also, we strengthen our long-term partnership with OXEA Chemicals by expanding our production capabilities at their base city site. This strategic $200 million investment involves the construction of a new, highly efficient plant to produce low-carbon thin gas and hydrogen. This project will reduce the group CO2 emissions by 64,000 tons while providing also additional capacity. This project, and that's important, underscores our technological leadership to capture profitable growth in a key U.S. industrial basin while supporting climate objectives. Finally, in Kazakhstan, we have entered into a new long-term agreement with Sileno to supply nitrogen to their upcoming polyethylene facility. Through this €70 million investment, we will own and operate two state-of-the-art energy-efficient nitrogen production units. This project consolidates our presence in these strategic industrial basins, allowing us to capture strong operational synergies and also support a key regional petrochemical hub. We have to keep in mind that these major large industries wins demonstrate our relevance and differentiation across a broad number of strategic and structural growth areas. To conclude, on slide 7, air liquid's performance in H1 demonstrates operational and strategic execution on all counts. First, our results show strong growth despite the challenging context, along with great progress on our margin expansion roadmap. Also, our active M&S strategy continues. We were able to close our landmark GIG air gas transaction ahead of schedule. We look forward now to the growth this will continue to provide to the group. Finally, backed by a record level of project signings, securing future growth, we are very well positioned to sustain our long-term growth profile. In a nutshell, I'd like to say that we are executing today and preparing for tomorrow. I thank you for your attention. I will now turn over to Jérôme to detail the financials.
Jérôme, please. Thanks, François, and good morning, everyone. Turning to page nine, I will now go through our financial performance in more detail. So for the second quarter of 2026, Group Cells deliver strong comparable growth at plus 5.2 percent excluding energy pass-through and currency effects and including the scope effect from the dig air gas acquisition net of the biogas divestiture on the comparable basis rose to that growth stood at plus 3.5 percent landing above expectations and representing a strong pickup over our first quarter performance at plus 1.9 percent I will briefly call out the engineering and technologies, reaching 420 million in H1, up plus 4.6% on the current basis and plus 8.8% in Q2. This increase is explained by the finalization of several unit construction for third-party customers in engineering and construction. So looking at the first half overall, Group has published sales increased by plus 0.8%. Our reported top line was impacted by currency and wins at minus 3.6%, which were only partially offset by the plus 0.1% positive energy impact. Additionally, the strategic acquisition of DIGR gas, net of our biogas divestiture, contributed a positive scope effect at plus 1.7% during this period. Consequently, total comparable growth for the first half of the year landed at a solid plus 2.6%. So now moving to page 10, showing all our regions are growing. In America, health growth remained the same high level seen in Q1, and in Asia, we delivered sequential growth led by material pickup in activity. EME has also seen a modest increase in growth versus last quarter. From a business line standpoint, the growth increase in Q2 was driven by strong electronic sales and an improved industrial merchant performance. Health care continued steady contribution, and the line remained mixed. We have created, as you see, a balanced portfolio across business lines and geographies that provide inherent operational resilience, proving again its value throughout every stage of market cycles. Let us now provide you with more granularity on the activity in our main geographies in Q2 2026. I am on page 11. Indeed, we sustained high growth in the Americas at plus 5% on a calm basis. large industry sales in the americas were again led by strong activity in the us this increase was driven by contribution from new project startup and on pups along size high demand across our gulf coast pipeline network especially from both chemical and refining customers in reaction to the development in the middle east in merchants sales were driven by an increased pricing effect at plus 6.7 percent volume were slightly take whatever up slightly excluding impacts of the global helium shortage solid bulk gas activity was supported by a pickup in liquid argon notable for the space industry while construction benefited from ongoing momentum in data center buildouts healthcare growth in the america has continued high level and finally electronics so strong progression of advanced materials and specialty materials offset by by lower equipment and installation cells. Cells in MEA have grown, supported by continued positive health care activity and an improved IM. In large industry, customer demand remained low, driven by weak co-gen cells and low activity in the Middle East, partially upset by growing hydrogen cells to support robust activity in refining. Within merchants, our pricing action increased to plus 3.1%, demonstrating our ability to proactivity counter-growing inflationary pressures. Volumes were slightly up, excluding the impact of the global helium shortage. Finally, healthcare delivered sustained growth at plus 4%, supported by solid medical gases pricing and home healthcare activities. Activity in Asia now was boosted by a surge in electronics, further amplified by our DIGR gas acquisition. In large industry, the activity remained mixed with hydrogen cells growth in Korea, not fully offsetting low activity in the regions. Q2 merchant sales grow at plus 2.1 percent or plus 3.4 percent when you exclude the helium and weeds. Pricing demonstrated the positive sequential trend improving from negative 0.4 percent in the first quarter to positive plus 1.4 percent in Q2. Notably, sales growth in China increased and in Q2 propelled by strong demand across on-site packaged gas and bulk gases by performance across the rest of Asia remained more mixed. In electronics, we deliver strong momentum, and this performance was driven by a very strong behemoth for carrier gases and advanced materials, alongside the roll-off of prior year equipment and installations compilers. Turning now to page 12, I would like to give a quick update on our early kills operation in the Middle East. As you know, the region, of course, remains volatile, however, our local team is safe and doing an outstanding job to supply our customers, and our assets remain fully intact and operational. The global helium supply chain remains a point of attention. Production on Qatar has restarted at limited capacity, and we are utilizing road transport for helium isocontainer, which helps ease global supply pressure. Of course, we are continuing to keep and adapting to a fast-changing environment. Future results have demonstrated, again, the resilience of the supply chain. We are effectively managing the situation to minimize the impact on both our customers and our financials. As for the potential outcomes, the last few months have proven us right, and we expect the coming months to confirm this trend even more strongly. I would recommend on our Q2 activity by business line. I am on page 13. We are seeing an acceleration in merchant at plus 4%, with pricing strengthening to plus 5. Five, the negative data is volume, which were attributed to the helium shortage, excluding this impact, merchant volume increase, notably in construction and utility sector in the Americas, bolstered by digital infrastructure and data center development, technology in Asia, and pharmaceutical in Europe. In large industry, the record high volume in the U.S. are offsetting low-coget in Europe and sub-demand in the Middle East, while activity in Asia remain mixed. Turning to page 14, following the roll-off of challenging prior-year equipment and installation comp year-over-year, growth in our electronic business has accelerated to plus 10% in Q2. The key drivers of this performance include, of course, carrier gas startup and drop-up, mainly in China and Taiwan, alongside broad-based momentum in advanced materials. Top-line results were boosted by one of South Korean customers pulling Q3 order forward, following the successful legal and IT manager of the company, DIGR Gas and Air Liquide Korea. But even normalized for this, the underlying electronics, of course, is very robust, at first 8%, a truly excellent operational performance. Finally, healthcare remained a consistent contributor to our growth this quarter. Performance in medical gazes was anchored by our premium value-based commercial model in home health care, so it sustained growth in our patient-based success, to offset the impact of strategic divestiture completed in Europe, impacting the period. Now moving on margin discussion, page 15. As François highlighted earlier, our transformation initiatives are yielding structural benefits on our margin improvement levels of delivery. In the first half of the year at the group level, we deliver a plus 110 basis point expansion, excluding energy pass-through, as well as the PPI impact of the IGR gas acquisition. Keeping the PPI impact, the improvements remain very strong at plus 100 BIPs. Adelianz, by our result, will remain intensely focused on cost discipline, with personal costs down minus 1.6%, purchase minus 1.5%, and other expenses up plus 3% on a published basis. Depreciation was up plus 3%, reflecting the startup of our new production unit. let us now review our ongoing margin improvement plan execution in more detail first turning to pricing in merchant persistent inflationary pressure continue to drive our pricing action with q2 pricing reaching plus five percent our primary focus is on cost discipline and actively managing the price to cost price to drive further margin expansion second efficiency reached a record high 299 million euros representing a plus four percent increase over the elevated baseline of last year. Those substantial gains were driven by the seamless execution of group transformation initiatives globally. Third, we continue to pursue active portfolio management. As a reminder, closing DIG airgas early in Q1 gives us the full year of benefits. Integration is moving fast, creating even more value than we expect. Beyond this, we are pursuing disciplined bolt-on acquisition to drive local density while actively pruning our portfolio to ensure capital goes where it yields the highest return. Moving on to review our P&L in more detail, I am on page 17. Non-recurring operating income and expense accounting for minus €123 million in the first half of 2026, mainly due to costs related to the acquisition of DIGR gas in South Korea and restructuring costs linked to our transformation plan. Net financial cost stood at 210 million euros for the first half of 2026. This includes a net debt cost of 114 million, up 27% compared to the first half of 2025. This increase is very much primarily driven by the financing structure put in place for the AGR acquisition in South Korea. This impact was partially offset by a reduction of the factoring cost with almost the end of factoring program in H1. Our effective tax rates stand at 26.4%, higher than the 25% in H1 2025, mainly because of non-deductible cost linked to the DIG acquisition. net profit is up plus 1.2 percent as published and plus 6.5 percent when you exclude the currency impact the recurring net profit group shares to that 1.9 billion euro up plus 4.4 percent as published and a very strong plus 10 percent on a constant currency basis on page 18 now our robust cash flow generation and strong balance sheet allowed us to finance dividend capex and also the DIG acquisition, our net debt is at $13.9 billion end of June 2026, marking a plus $5.5 billion increase for December 2025. Following the financing of the DIG acquisition, the payment of $2.2 billion in dividends in May, $1.8 billion of industrial investment, and the halting of the factoring programs, our gearing has thus increased to 45% adjusted for the dividend payment seasonality effect. It is indeed worth mentioning that our working capital recommend increased by 1.4 billion in the first half of 2026, compared to year-end 2025, but it is key to note that excluding factoring, the underlying operational increase was held at just 0.4 billion euros. Indeed, our decision to out factoring program in H1 for cost-effectiveness naturally added more than 1 billion euros to trade receivables. Next, let us now turn to page 19, recurring return on capital on cost to that 11%, which is quite stable compared to the first half of 2025, despite the dilutive impact of the acceleration in investment. Moving to page 20, we will now review our main investment KPI, we are at an all-time signed industrial industrial industrial sorry investment decision in h1 2026 at 2.9 billion euros up plus 26 percent year over year these decisions include above 1 billion euros of electronic carrier gases that francois discussed earlier as well as major large industry projects in u.s steel and chemicals our investment backlog which an unprecedented 6 billion euro an increase of plus 30 percent year over year very much and well balanced across electronics and large industry with strong regional and project diversity while upcoming q4 startup will naturally draw down our backlog a strong pipeline of new dealers will help to replenish it giving us a strong and high visibility in our mid-term works our 12-month portfolio investment opportunity reached 4.8 billion euros plus 17% higher year over year at the end of June 2026 despite a record 2.9 billion euro investment decision during the first half that are of course moving into the backlog that demonstrates the strong momentum we're seeing in new project development the pipeline remain highly diversified comprising nearly 80 distinct projects electronic has now emerged as the primary driver accounting for approximately 50 percent of the portfolio the total portfolio of opportunities also including opportunities this time beyond 12 months is stable and exceeds 10 billion euro so on page 21 concluding the financial review we confirm again our guidance for 2026 and 2027 and accumulating as a plus 560 BIPs margin improvement over a six-year period. Thank you very much for your attention and I guess we'll now begin the Q&A session.
Operator
Thank you. If you would like to ask a question, you will need to press star one and one on your telephone and wait for your name to be announced. And to withdraw your question, please press star on one and one again. Please stand by while we compile the Q&A roster. Thank you. We will now take our first question. And this is from Alex Sloan from Barclays. Please go ahead.
Yeah. Hi, morning. Thanks for taking the questions. Two from me, please. Firstly, around Helium, so industrial merchant delivered improved Q2 growth, really helped by pricing and China recovery you've called out. I mean, that looks like it's despite a kind of a low single digit helium-related volume headwind in Europe and the Americas. In your expectation for the H2 group growth to be similar or slightly better than H1, are you assuming a similar drag from helium availability? And should we be concerned this becomes a limiting factor on electronics growth? Are we still some ways off that given storage? And I guess more broadly, just thinking about your similar or slightly better comment on that second half outlook, would Q2 delivery adjusted for the order phasing in electronics be a broadly sustainable run rate for H2 expectations? Thank you.
Thank you very much, Alex, and good morning. So the first question on helium. As you know very well, I mean, the Qatar source was quite a significant source of helium globally for all the industry. On top of that, what we have seen in Kudu is some restriction coming from Russia for, I mean, the products which was going to China especially, and some restrictions also coming out of China. So the market was getting more tense, I would say. On the positive news is that the production from Qatar has restarted at a reduced rate, but we have been able to secure some volume from this source. So that's, again, very positive news. our expectation is that this will continue and we limit basically the impact of helium on our cells for the second part of the year we have of course to be extremely cautious about the outlook for this part because we see that the situation is quite fluid even if what we see and what we hear is quite positive as we speak. I mean, the helium production is still working and again should contribute. That's, of course, on top of our existing infrastructure with the cavern that we are using very successfully and also the multiple other sources that we have today and that we have activated again to limit overall the helium impact for the second part of the year speaking of the impact on on electronics customer I think that was part of your question overall we manage the supply of our electronics customer for helium as you know we have a long-term contract and we have the capabilities to supply their requirements. So we have committed and we have been able to deliver the volume. So it's in no means a limitation to the business we are doing with the electronics for Helium, but also for the rest of the portfolio. So again, strong resilience of the group in spite of the adverse condition that we do expect to improve. For the electronics itself, you have seen that clearly there was an acceleration in the second quarter. This is the result of two things. The first one is we see less and less the impact of the very high ENI equipment and installation cells that we had in the previous quarters, which was to some extent masking the organic growth of electronics. That's one. The second part is the fact that electronics is picking up, and it's picking up because of the contribution of the investment that we have done previously for carrier gases, and it's clearly, I mean, delivering. And also, and that's very positive news, the very strong cells that we have been enjoying for the advanced material, you know, the procreatory molecules of the liquid, which is clearly picking up in the second quarter. So we see that some customers are catching up a little bit with advanced purchase. So there may be a little bit of this effect on the advanced material, but all in all, we do expect electronics to remain in the range of 8%, maybe 9% for the rest of the year. So again, very strong electronics. It's good news, and I think it's a good sign also that the investment and the position of the group is delivering.
Operator
Thank you. We'll now take the next question. This is from Alejandro Vigil from Santander. Please go ahead.
Yes, good morning. Thank you for taking my questions. The first one is about your OPEX plan deficiencies. You have achieved 300 million in the first half. You can elaborate about the outlook for the coming quarters, particularly in EMEA. probably the growth profile of these businesses this division is is lower than than the other divisions and and the second question is about the net debt and you know just playing this factoring in the first half um which are your expectations for the for the full year in terms of net debt in the evolution of net debt in the in the second half of the year please thank you hello good morning and thank you very much for your two questions jérôme uh please can you answer uh the two of course thank you very much and also we'll go through uh your two questions of course so as related to the to the efficiency in your right the efficiency has been very strong in
q in h1 and to nearly 300 million it's first four percent versus last year basically you know this transformation is multi multiple you know we are continuing our transformation you know of the company as we have been doing in the last years and when you look at the different buckets you know there is basically three different buckets that explain this acceleration of those efficiencies first there is an operational efficiencies you know we are accelerating on the transformation of the industrial operation the creation of the of the group the industrial operation direction is helping accelerating into the process and to the global utilization we have multiple project ongoing using more and more artificial intelligence to make your assets more effective so we are doing that and we are entertaining a very good return as for now and this of course we continue because we are very much at the right time doing and accelerating on that the first bucket the second bucket is of course procurement procurement is delivering uh is uh and it's continuing you know we have a global procurement organization which has totally shifted in terms of gear in terms of accelerating although those products of program with a strong acceleration in the in the deliveries and the last point is the cost structuring impact and the pex efficiencies that also a part of this of this of these efficiencies. I would say we continue to precipitate in the second part of the year, of course. Now, to come back on the factoring, so you're right, there is a factoring in fact which expends a little bit more than 1 billion, slightly less than 1.1 billion in the net depth, I would say, next evolution during the first half year. This, you know, this factoring program comes from a long time at the period of the air gas acquisition nearly 10 years ago it was an optimization program at that time but it's not anymore you know you know when we we saw the the the impact of the of the data uh cost that we pay for factoring the receivables compared to our net debt cost which is today at close to three percent clearly did not making sense to continue uh it was lack of optimization and when you see already the impact during the first part of the year you see that the cost of the debt has decreased by minus six seven percent when you exclude of course the one-off impact of the ergaz integration the one-off cost that we have but when you exclude that and compare life for life compared to last year we have a minus seven percent of decrease in cost of financing which is purely the impact of moving and to to get out of this factor so this is very good and very strong optimization that our balance sheets can permit so we have decided to do that was purely making sense on the cost effectiveness standpoint now the impact on h2 is uh is quite easy you know we have in the first part of the year uh i would say start those programs so you will have also the impact in the second part of the year but the major part has been there we're just finally finalizing maybe a few hundreds of factoring remaining, but the biggest part has been already accounted for in the balance sheet in the first part of the year. That's it.
Thank you very much, Gérôme.
Operator
Thank you. We'll now take our next question. This is from John Campbell, Bank of America. Please go ahead.
Speaker 2
Yeah, hi. Good morning. Two quick questions, if I can. So, if I look at your first half margin improvements, you know, you've delivered definitely on your 100 basis point target. And this is perhaps with an unusually strong performance in the Americas, you've delivered over 200 basis points year and year. And I think you qualified that stating that it had some help from some sort of favorable exceptional item. It'd be very helpful if you could elaborate on what exactly was that item and perhaps what was the quantum. Second quick question. You've unveiled three major electronics projects basically in July alone. I guess the natural question is how do you feel about the pipeline of future opportunities? I guess the implication from your 12-month opportunity set is you actually see sort of a larger opportunity than you said in Q1, but perhaps maybe elaborate on the regions where you see these biggest opportunities. And then maybe a very quick one as well.
Should we consider maybe that the gas intensity of these new semiconductors is structurally higher so that should that support electronics volumes thank you thank you very much Jen for those very good question margin Jerome and then we talk about the electronics project yeah thank you very much John again for your your question so margin in America has increased significantly you're right plus 200 beats versus H125 it's really energy so basically we have a two or three big items first merchant largely large industry and healthcare activity contributed to the margin improvement for efficiencies and price increase particularly in im and on the also efficiency also generate generating in electronics and a large industry benefited also some some some some some specific item that helped so that's Explaining very much the bulk of these increases, as you said, is very significant in the Americas.
Thank you very much. So, John, you're asking how do we feel about the electronics project. I would say very good. Very, very good, actually, because we have a very strong position, a very strong footprint, and an offer which is recognized, trusted by the leading customers. So we had, in fact, I mean, signed 1.5 times all what we signed in 2025 for electronics already in the first part of the year. So very good momentum. You are asking region by region. Maybe we will start with the U.S. And I will ask Adam to say a few comments on what he sees in the U.S. on electronics projects. And I'll come back to the rest of the world.
Yes, thank you, Francois. And John, thanks for the question. So we've had a very productive quarter in the U.S. in terms of new project signings across the board, but particularly in electronics. As you've noted, we've signed three big new contracts for carrier gases, and we see that momentum continuing. So we have very active, ongoing discussions with all of the major players in terms of expansions or new projects going on in the U.S. And I feel like we're continuing to win our fair share of those projects. And we see that continuing as the AI trends continue to go forward and expansions are continuing in the same way. The last point I would make is in terms of gas intensity. You're right. The gas intensity is higher when you look at these new fabs that are supporting advanced chips for high bandwidth memory or for the logic needed for AI. And this is just a benefit, I would say, from the technology portfolio that we have, the efficient nitrogen generators that we have, and across the entire fleet of what we do for carrier gas supply.
Thank you very much, Adam. For the rest of the world, it's mostly Asia, where we are also very well positioned. So if we go through some of the key countries, we see, again, a very strong momentum. I would say Japan is waking up to some extent. We see that there is a very strong support from the government and the key players investment there. We are the only global international gas company to be there. We had some successful signings there, and there may be more to come. Taiwan is, of course, extremely dynamic. concentrating a lot of investment for the most advanced chips especially and there again we are well positioned korea of course thanks to the dig acquisition now we are well positioned to meet the needs of the leading memory players especially you have seen a tremendous tremendous announcement by the key players with several new campuses, mega campuses being announced. You have seen that we have been successful in securing some of the existing business, and there is an acceleration in the requirement, really a race for speed in this area. And finally, China, where we have a number one position also for the electronics. which is very, very dynamic in terms of needs for the semiconductor industry with a good development. So when we combine all that, we see that there's a lot of green lights in this. Thanks to our business model and what our customers are telling us, we are quite confident that this will continue for some time. again, meeting the needs of the digital world in general, and more specifically, the needs of AI clearly. So good momentum and very good position of the group.
Speaker 2
Thank you. That's very helpful.
Operator
Thank you. As a reminder, if you would like to ask a question, please press star one and one on your keypad and wait for your name to be announced. The next question comes from Chetan Udeshi from JP Morgan. Please go ahead.
Yeah, hi. Thanks for taking my questions. I had to, you know, Francois, you talked about electronic growth continuing at the rate of maybe 8%, 9% in H2. And I'm just curious because when I look at the semiconductor capex increase that we are seeing this year and forecasted for next year, it's something to 25%. Like what limits fairly key from seeing that level of growth in your electronics business because I think Adam was referring to increasing content for gases in newer generation chips. I would have thought, you know, you should be growing at least in line with the CapEx growth is not even higher. So why are we not seeing, of course, 8-9% growth is not bad, but I'm just curious why can't we see something similar to 25% growth that we see the capex spending on semis today and probably also most likely next year based on the forecast. The second question, I was just intrigued by the very sort of, you know, high difference between the pricing increase in America in Q1, which was almost 7%, so IQ2 in Merchant, whereas Europe was just around 3%. It seems volume momentum is not much different between the two regions. Both are slightly excluding helium. Just curious, what explains that big gap in terms of pricing in America versus Europe and how sustainable that is, you think, overall?
Thank you very much, Shetan. So maybe we'll talk about the pricing first and I will ask Adam to speak about what we see in the US and Emily, what we see in Europe in terms of pricing and then I'll come back to your interesting question on electronics for sure.
Adam. Yes, thank you Francois and thanks Chetan. So when you look at pricing, and we've talked about this in other quarters, I really believe that what we have in early key is a very strong methodology, tools, systems, incentives in place to drive pricing in the right way. And what we want to do is take, obviously, into consideration the inflationary impacts that we see and make sure that what we are able to do is accretive to our margins. And I believe that this is across the board. This is not just a U.S. approach. It's really a group-wide approach that Erlequid has systematically put in place. And so, obviously, the impacts of tariffs and the like, inflation can be somewhat regional in nature, and I think that also drives a difference in terms of the price impacts that exist one region to the next. So definitely have a strong momentum in pricing in industrial merchant and in healthcare as well in the U.S., and I think it really just speaks to those tools and processes in place to continue that going forward, and I would expect that to continue in the same way in the future.
Thank you, Adam. And of course, it relates also to the inflation level and the cost increase, which maybe is higher in the U.S. than in Europe. Emilia, what do you think?
Yes, absolutely. Good morning, everyone. Pricing in Europe, I would say, in merchants and megats is strong and has stepped up sequentially. So, we've been proactive in increasing prices in anticipation of any cost increase due to the Middle East crisis and due to inflation and inflationary pressure in general. And overall, pricing was ahead of the cost curve, leading to a good path through, which is what we want. So, we've accelerated in Q2 in pricing in Europe. You know, we have all the right formulas in bulk to reflect the energy piece. We know they are effective. In PG, also, we know the drill. We reacted fast, increasing the pricing to face the inflation, and it's different from one geography to the next. So overall, say for Europe, we continue to have a very good dynamic in pricing management.
Thank you very much. So to come back to your question, Shetan, on why don't we see in the last quarter the growth of the electronics business similar to the growth of the capex in electronics being 25%. I think the main reason is we are not talking about the same thing at the same time, okay? So what is being captured with the capex of the electronics in the semiconductor industry is investment in new fab. As a matter of fact, our growth in terms of investment for the new fab is not 25 percent is 146 percent for the first semester because that's really what we invest more for this business so we are much ahead of the industry and that's also showing how successful we are in gaining market share and how well we are positioned so that's what we see today And what we need to look at is how much we invest. Today, 40% of our backlog is electronics. Almost 50% of our portfolio of projects in the next project that we can sign in the next three months is electronics. So that's really what we see. What we report in the quarter are the current sales, which reflect basically the production of the current fab. So it's normal. it's it's following the trend it's growing but at the pace of the new investment so the new investment that we are doing here will contribute in two three four years depending on the size so be a little bit patient you will see this I mean exponentially growing as the the capex that we are putting on the ground is delivering product for the customer I hope it's clear It's just a lag between when your projects are signed and when you actually start to commence delivery. Yeah, again, I maybe repeat what I say. Here you are talking about investment of the customer. Our investment is much higher. So, of course, you need to see the plant online to see the sales. You'll get more about this on the CMD.
Speaker 1
So maybe we'll do one more time over that. thank you thank you very much ethan thanks a lot have a good day next please thank you next question is from jean-luc from from ciccib go ahead good morning my question relates to hydrogen my understanding is refiners in europe would like to build more green hydrogen and you are building new capacity like Normandy, can you update us on the regulations and the EU regulations and the translation in French laws? Are they fast enough to start rapidly with production or are they still lagging behind the industry?
Good morning, Jean-Luc. Thank you very much for your question. I think Emilie, who is a specialist of the European regulation on hydrogen, can probably give you some answer. Emilie, please.
Okay. Well, good morning, Jean-Luc. So, in terms of the need for green hydrogen in Europe, we continue to see a good momentum. So, you mentioned our electrolyzer in Normandy. So in terms of what is in the backlog, in terms of electrolyzers, it's a project under execution and everything is going as per the plan. Remember, our electrolyzer in Normandy will start up this year and is fully loaded. So in terms of regulation, things are moving. You know, RET3 regulation in Europe is being transposed step by step in all the different countries. Of course, this is key as the mandates defined by the regulation being transposed in the different countries is what triggers such an interest for green hydrogen from our refiners and our customers. And overall, I would say, again, going as per the plan, we have several in execution, and we are really clearly the number one player in green hydrogen in Europe, with also our strong technological partnership with Siemens Energy to manufacture those Venn electrolyzers.
Thank you very much, Emilie. And overall, we see that the regulation is going in the right direction. There are more actually refiner on sites being converted to low carbon hydrogen. So again, I think the leadership position that we have taken in Europe is paying off. So thank you very much, Emilie. Next question, please.
Operator
And as a reminder to ask a question, you can press star one and one on your keypad we'll now take the next question this is from james hooper from bernstein please go ahead hi good morning and thank you for taking my questions um first question is is around the backlog are we approaching peak backlog at the moment in the management report you you called startups so far in 2026 relatively limited um so i guess from q4 with normandy and others that you'd expect some of these projects to start coming out but are you expecting win rates therefore elsewhere in the business to cover for some of these outflows and then secondly also on projects um we've seen the press and others show some very very large numbers in the about semiconductor investments that you've that you've referenced um francois but but the early key projects that you signed have been kind of low hundred millions of capex is is this is this do you think these size of projects is going to increase over time or is there anything strategically where you prefer executing on smaller projects i think some of the press have linked your competitors to much larger electronics contracts, for example. Thank you.
James, good morning, and thank you very much for your two good questions. Regarding the backlog, I think, as you pointed out, I mean, the project come and goes. So there are some significant projects that will come out in Q3 and Q4, so that will decrease the backlog. But all in all, given, I mean, the pace of the new project, we do expect this to remain more or less flat. We have to be careful with the backlog from one quarter to another one, which is very important, is to look at the pipeline of the project. I think the key message is very, very strong today, probably the highest in the history of the group. So we are not worried about, I would say, quarter by quarter variation of the backlog. Again, very strong trend and good pipeline of projects to design soon. Regarding what you mentioned about the electronic, I think It's a very good point. You see that in what we showed, there are several projects which are what we would call today a mid-size, large-size project. It's not the extra large projects. First, we like it very much in terms of the diversification of the opportunities and the risk, the global footprint, the synergy we can find. The selectivity we can use on those different projects and the fact that we can also support our customer wherever they are. So we like the portfolio of projects. Again, I think in the current environment, it's probably making a project more resilient and probably to some extent also more profitable. This being said, we see that there is an acceleration of the very, very large projects. so we may in the future position ourselves on some of those very large projects again if they make sense if they are strategic for us if we can find the right profitability one thing that i did not mention of course is that in this environment this gives us the opportunity to pick what we consider the the best project where we can create most of the value for the group and and for reality. So we do expect some larger projects even to come online, and maybe we will pick up some of those. Thank you.
Operator
Thank you very much. Thank you. We have no further questions at this time, so I will now hand back to the CEO for closing remarks. Thank you.
All right. Thank you very much i think this concludes our session today thank you very much for all your questions i would like maybe to uh to wrap up uh with some some words uh we i believe clearly delivered another very strong performance uh in this first half while and i think it's very important positioning ourselves for future growth through a key project wins in spite of the environment we clearly stay the course. Thank you again for your attention. I look forward to seeing all of you at our Virtual Capital Markets Day on October 5th. In the meantime, I wish all of you an enjoyable summer break, if you take one.
