January to March 2012: Linde continues to achieve profitable growth
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Linde AG /
January to March 2012: Linde continues to achieve profitable growth
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* Group revenue up 5.4 percent to EUR 3.505 bn
* Group operating profit[1] increases by 6.2 percent to EUR 808 m
* Group operating margin rises to 23.1 percent (2011: 22.9 percent)
* Short-term and medium-term Group outlook confirmed:
* 2012: Increase in revenue and operating profit expected
* 2014: Targets for operating profit[1] of at least EUR 4 bn and ROCE[2]
of at least 14 percent
Munich, 4 May 2012 - The technology company The Linde Group continued to see
profitable growth in the first quarter of 2012, with increases in Group revenue
and Group operating profit. "We have made a good start to the new financial year
and are confident of meeting our targets," said Professor Dr Wolfgang Reitzle,
Chief Executive Officer of Linde AG. "Even if global economic trends are not as
dynamic in 2012 as in 2011, we continue to assume that we will achieve increases
in Group revenue and Group operating profit when compared with the prior year."
Linde believes that it is also on track for the coming years. "We stand for
continuity and reliability and are pleased to confirm our medium-term targets,"
declared CEO Reitzle. "In the 2014 financial year, we will be aiming to generate
Group operating profit of at least EUR 4 bn and ROCE (return on capital
employed) of at least 14 percent."
In the first quarter of 2012, Group revenue rose by 5.4 percent to EUR 3.505 bn,
compared with EUR 3.325 bn for the first three months of 2011. After adjusting
for exchange rate effects, the increase in revenue was 3.1 percent. Linde
increased Group operating profit by 6.2 percent to EUR 808 m (2011: EUR 761 m),
partly as a result of the rigorous implementation of its HPO (High Performance
Organisation) programme, a holistic concept for sustainable process optimisation
and productivity gains. The Group operating margin rose by 20 basis points as a
result, to 23.1 percent (2011: 22.9 percent).
Profit for the period increased slightly in the first quarter of 2012, by 1.7
percent to EUR 308 m (2011: EUR 303 m). It should be noted here that positive
one-off items contributed to the high figure for the first quarter of 2011.
Profit attributable to Linde AG shareholders was EUR 287 m (2011: EUR 284 m).
This gives earnings per share of EUR 1.68 (2011: EUR 1.67). On an adjusted
basis, i.e. after adjusting for the effects of the purchase price allocation
from the BOC acquisition, earnings per share stood at EUR 1.89 (2011: EUR 1.88).
Gases Division
The slight increase in economic output in the first quarter of 2012 compared
with the first quarter of 2011 also fuelled demand for gases worldwide. Linde
was able to benefit from this positive trend in all product areas. The Group has
a global footprint and a strong market position especially in the emerging
economies.
Revenue in the Gases Division in the first three months of 2012 grew 7.3 percent
to EUR 2.855 bn, compared with a figure of EUR 2.662 bn for the prior-year
period. On a comparable basis, i.e. after adjusting for exchange rate effects
and changes in the price of natural gas, the increase in revenue was 4.1
percent. Linde's Gases Division achieved a 7.8 percent increase in operating
profit to EUR 784 m (2011: EUR 727 m). One of the factors which had a positive
impact on this upward trend was the continuing implementation of Linde's HPO
measures. The operating margin rose to 27.5 percent, exceeding the high figure
achieved in the first three months of 2011 of 27.3 percent.
Business trends in the individual segments in the Gases Division make it clear
that the pace of economic recovery still varies from region to region. In the
first three months of 2012, the highest growth rates were once again to be seen
in the emerging economies. Robust trends were also visible in North America,
whereas the increase in demand in Western Europe was relatively modest.
In the EMEA segment (Europe, Middle East, Africa), Linde achieved revenue growth
of 3.7 percent in the first quarter of 2012 to EUR 1.445 bn (2011: EUR 1.393
bn). On a comparable basis, the growth in revenue was 3.3 percent. Operating
profit increased by 4.8 percent to EUR 414 m (2011: EUR 395 m). This resulted in
an operating margin of 28.7 percent (2011: 28.4 percent). Here too, the
continuous implementation of the various productivity improvement and process
standardisation initiatives under the HPO programme contributed to the positive
trend.
In Saudi Arabia, the Group entered into a major contract during the reporting
period with Sadara Petrochemical Company (Sadara) for the supply of gases on
site. Linde will invest USD 380 m to provide Sadara with long-term supplies of
carbon monoxide, hydrogen and ammonia on the Jubail site, at one of the largest
chemical complexes in the world (see also the information given about the
Engineering Division below).
In the Asia/Pacific segment, Linde achieved revenue growth of 14.3 percent in
the first three months of 2012 to EUR 808 m (2011: EUR 707 m). On a comparable
basis, the increase in revenue was 4.8 percent. Growth in the first quarter was
adversely impacted by stagnating demand in the market for electronic gases.
Revenue trends during the reporting period were also affected by plant stoppages
in South and East Asia.
Operating profit was up 11.2 percent to EUR 218 m (2011: EUR 196 m). This
resulted in an operating margin of 27.0 percent (2011: 27.7 percent). When
comparing the operating margin for the first three months of 2012 with that for
the first three months of 2011, factors to be taken into account are the pass-
through of increases in the price of natural gas and the up-front investment
required to grow the business and employ new staff in the rapidly expanding
Asian market, especially in China. To sustain high levels of profitability,
Linde is also continuing with the rigorous implementation of its HPO concept in
the Asia/Pacific segment.
In the Americas segment, Linde achieved revenue growth of 7.8 percent in the
first three months of 2012 to EUR 625 m (2011: EUR 580 m). On a comparable
basis, the increase in revenue was 5.9 percent. Linde was able to increase
operating profit in this region at a faster rate than revenue, by 11.8 percent
to EUR 152 m (2011: EUR 136 m). Factors contributing to the rise in earnings
were higher capacity utilisation of plants and the progress made by Linde in the
implementation of HPO. At 24.3 percent, the operating margin significantly
exceeded the figure for the first three months of 2011 of 23.4 percent by 90
basis points.
All the product areas contributed to the positive trends overall in the Gases
Division. Linde achieved its highest rate of growth in the liquefied gases
business. Revenue in this product area rose on a comparable basis by 6.4 percent
to EUR 811 m at 31 March 2012 (2011: EUR 762 m). The Group also achieved
increases in revenue in its cylinder gas business and on-site business (where
Linde supplies gases on site to major customers). In the cylinder gas product
area, revenue rose to EUR 1.022 bn, 3.0 percent higher on a comparable basis
than the figure for the first quarter of 2011 of EUR 992 m. The on-site business
also achieved revenue growth of 3.0 percent on a comparable basis, with revenue
rising to EUR 712 m (2011: EUR 691 m). The Healthcare product area, which
supplies medical gases and provides related maintenance and advisory services,
continued to give a robust performance, with revenue increasing by 4.0 percent
on a comparable basis to EUR 310 m (2011: EUR 298 m).
Gases Division - Outlook
Linde remains committed to its original target for the gases business of growing
at a faster pace than the market and continuing to increase productivity. In the
on-site business, Linde has a healthy project pipeline, which will continue to
make a substantial contribution to revenue and earnings trends for the rest of
the 2012 financial year and especially in subsequent years. The Group expects
its liquefied gases and cylinder gas business to perform in line with
macroeconomic trends. In the Healthcare product area, Linde is anticipating
continuing steady growth. Additional momentum will be generated here by the
acquisition of Air Products' Continental European homecare business.
Against this background, Linde continues to expect that revenue generated by the
Gases Division in the 2012 financial year will exceed revenue generated in 2011
and that operating profit will improve.
Engineering Division
In the first quarter of 2012, the Engineering Division achieved a 1.7 percent
increase in revenue to EUR 601 m (2011: EUR 591 m). The successful execution of
a number of individual projects meant that Linde was able to increase operating
profit at a faster rate than revenue, by 17.7 percent to EUR 73 m (2011: EUR 62
m). The operating margin rose to 12.1 percent (2011: 10.5 percent), again
significantly exceeding the medium-term target of 8 percent.
Order intake was EUR 759 m in the quarter ended 31 March 2012, 70.9 percent
above the figure for the first quarter of 2011 of EUR 444 m. The main reason for
this increase was a major contract in Saudi Arabia acquired by Linde's
Engineering Division in the first quarter from the Group's Gases Division. The
USD 380 m order is for the turnkey construction of a HyCO plant plus an ammonia
plant with a large storage tank. Linde will use the new plants to provide long-
term supplies of industrial gases to Sadara Petrochemical Company (Sadara) in
Jubail.
Order intake was characterised not only by this substantial project, but also,
as in previous quarters, by a number of small and medium-sized new orders. Given
the positive trend in orders, the order backlog in the Engineering Division grew
in the course of the first quarter of 2012. At 31 March 2012, it had risen to
EUR 3.695 bn (31 December 2011: EUR 3.600 bn).
Engineering Division - Outlook
The high order backlog creates a good basis for a solid business performance in
the Engineering Division over the next two years. Linde expects to generate the
same level of revenue in its plant construction business in the 2012 financial
year as in 2011. Linde is still anticipating that it will achieve an operating
margin in the current financial year 2012 of at least 10 percent. In the medium
term, the target for the operating margin remains at 8 percent.
Linde is well-positioned in the international market for olefin plants, natural
gas plants, air separation plants and hydrogen and synthesis gas plants, and
will derive lasting benefit in particular from two structural growth areas:
energy and the environment.
To coincide with the publication of the quarterly financial statements, a
teleconference for analysts will take place today at 8am German time (due to the
Annual General Meeting commencing at 10am) in English with Georg Denoke, CFO of
Linde AG. Journalists will have the opportunity to listen to the conference live
by dialling +49.69.589.99-0509. Please tell the operator your name and the name
of your company.
The Linde Group is a world-leading gases and engineering company with around
50,500 employees in more than 100 countries worldwide. In the 2011 financial
year, it generated revenue of EUR 13.787 bn. The strategy of The Linde Group is
geared towards long-term profitable growth and focuses on the expansion of its
international business with forward-looking products and services. Linde acts
responsibly towards its shareholders, business partners, employees, society and
the environment - in every one of its business areas, regions and locations
across the globe. The Group is committed to technologies and products that unite
the goals of customer value and sustainable development.
[1] Operating profit: EBITDA including share of profit or loss from associates
and joint ventures.
[2] Return on capital employed based on the definition given on page 46 of the
2011 Financial Report.
For more information, see The Linde Group online at http://www.linde.com.
Further information:
Media Investor Relations
Uwe Wolfinger Dr Dominik Heger
Telephone: +49.89.35757-1320 Telephone: +49.89.35757-1334
Matthias Dachwald Lisa Tilmann
Telephone: +49.89.35757-1333 Telephone: +49.89.35757-1328
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Source: Linde AG via Thomson Reuters ONE
[HUG#1608792]
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