Nov. 2 (Bloomberg) -- Linde AG, the world’s second-biggest maker of industrial gases, reported the smallest drop in quarterly profit in a year and signaled business is picking up as cost cuts take hold and clients resume orders.

Net income fell 4.5 percent to 169 million euros ($249 million), beating analysts’ estimates of 156.5 million euros in a Bloomberg survey, Munich-based Linde said today. Sales fell 9.5 percent to 2.84 billion euros, the fourth consecutive decline in quarterly revenue.

“Demand in our gases business is beginning to pick up again slowly,” Chief Executive Officer Wolfgang Reitzle said in the statement. “The measures we have taken to achieve increases in productivity are having an ever greater impact.”

Industrial gas producers have suffered from steelmakers cutting output, hurting demand for gases used in smelting. Linde, which reduced its workforce by about 3,600 since the start of the year, reiterated today that it won’t reach last year’s earnings and sales. Sales at the gases unit, the largest division, will be higher next year than in 2009, Reitzle said.

Linde rose as much as 1.42 euros, or 2 percent, to 72.81 euros, and traded at 72.37 euros as of 12:47 p.m. in Frankfurt. The stock has gained 11 percent in a year.

France’s Air Liquide SA, Linde’s larger competitor, said last month third-quarter sales dropped 8.2 percent, hurt by weaker demand from large industrial clients.

Linde in May said it planned to cut 3,000 jobs this year. The workforce this year has dropped to about 48,300 as of Sept. 30. Reitzle said the bulk of job cuts has been completed.

“It seems that cost reductions are already efficiently working out,” equity analyst Peter Spengler wrote in a note to clients. He recommends shareholders buy Linde shares.

To contact the reporter on this story: Richard Weiss in Frankfurt at rweiss5@bloomberg.net.

Last Updated: November 2, 2009 06:56 EST