Air Liquide eyes role in Asia market consolidation

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TOKYO, Oct 11 (Reuters) French industrial gases maker Air Liquide SA will play a key role in an expected consolidation of the fragmented but fast-growing Asian market, the company's chief executive said on Thursday.

Benoit Potier also told Reuters in an interview that the company's business has not been hit by fallout from the U.S.

subprime loan crisis and stood by its forecast of double-digit net profit growth this year.

Air Liquide may use acquisitions to help it expand in Asia, where demand is growing strongly but the markets are overcrowded by hundreds of small or mid-sized players without the scale or technology to survive, Potier said.

''They won't probably survive because they don't have the technology and you have hundreds if not thousands of them,'' Potier said. ''We expect to see the Asian market being further consolidated in the future and we will be a key player.'' Air Liquide supplies hydrogen, oxygen, helium and other gases to a wide array of industries. Hydrogen, for example, is used by refineries to desulfurise fuels as well as in the production of electronics such as semiconductors and flat panel TVs.

It spent 590 million euros earlier this year to buy the remaining 45 percent stake in Japan Air Gases from Linde AG, aiming to bolster its position in Japan, where it ranks third behind Taiyo Nippon Sanso and Air Water Inc.

Potier said the Japanese gas market was ripe for further consolidation, even though the three top players account for about 80 percent of the market. Air Liquide may also look to tie up with a Japanese partner, he said.

''We see our future in Japan as a combination of organic growth... some acquisitions and probably some partnerships,'' Potier said at an earlier news conference.

Asia accounted for about 20 percent of Air Liquide's group sales in 2006, but is expected to generate half of its growth over the medium term, helped by rapidly expanding demand in China and India.

Potier said its business has not been hurt by economic fallout from the U.S. subprime loan crisis, and that growing demand for cleaner energy sources was providing a tailwind for the gas industry.

Air Liquide's growth platforms include hydrogen, which helps refiners cut the sulphur content in fuels to comply with U.S. and European environmental laws.

It is due to announce third-quarter earnings on Oct. 25. The company posted first-half net profit growth of 16 percent.

''If there is an impact, which is not guaranteed, it might just come now in the last (fourth) quarter. But we don't expect to see a significant impact outside of the U.S. And in the U.S.

it won't really affect... our sales,'' he said.

REUTERS SR GC1859

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