DGAP-News: Linde AG: First half of 2013: Linde continues its steady business
performance and confirms its outlook
DGAP-News: Linde AG / Key word(s): Half Year Results
Linde AG: First half of 2013: Linde continues its steady business
performance and confirms its outlook
30.07.2013 / 07:30
First half of 2013:
Linde continues its steady business performance and confirms its outlook
- Group revenue up 10.5 percent to EUR 8.207 bn
- Group operating profit1 increases by 13.6 percent to EUR 1.966 bn
- Group operating margin rises to 24.0 percent (2012: 23.3 percent)
- Short-term and medium-term Group outlook confirmed:
- 2013: Increase in revenue; operating profit of at least EUR 4 bn
- 2016: Operating profit of at least EUR 5 bn; ROCE2 of around 14
Munich, 30 July 2013 - In the second quarter of 2013, the technology
company The Linde Group built on its solid business performance in the
first quarter of the year. In the six months ended 30 June 2013, it once
again achieved increases in Group revenue and Group operating profit. 'We
have held our own quite well in the first half of the year, in an
environment which is proving challenging to everyone,' commented Professor
Dr Wolfgang Reitzle, Chief Executive Officer of Linde AG, on the interim
report. 'Although the economic tailwind has subsided somewhat, we have
continued to achieve profitable growth. The expansion of our Healthcare
operations in particular made the greatest contribution here.'
Linde is equipped for the rest of the financial year and confirms its
outlook. 'We want to achieve a higher level of Group revenue in 2013 than
in 2012 and to generate Group operating profit in the current year of at
least EUR 4 bn,' explained CEO Reitzle. The Group also believes that it
remains on track to achieve its medium-term targets: Linde is still seeking
to generate Group operating profit of at least EUR 5 bn in the 2016
financial year. Return on capital employed (ROCE) should be around 14
percent in the same year.
In the first half of 2013, Group revenue rose by 10.5 percent to EUR 8.207
bn, compared with EUR 7.425 bn in the first half of 2012. Exchange rate
effects had an impact on revenue trends. During the reporting period, some
currencies (especially those in emerging economies, the British pound and
the Australian dollar) lost value against the euro. After adjusting for
these exchange rate effects, the increase in revenue was 12.7 percent. US
homecare company Lincare, acquired by Linde in August 2012, contributed
revenue of EUR 792 m to the growth of the Group.
Linde was able to reinforce its profitability at a high level and increased
its Group operating profit by 13.6 percent to EUR 1.966 bn (2012: EUR 1.731
bn). As a result, the Group operating margin rose to 24.0 percent (2012:
Profit for the period increased in the first half of 2013 by 11.4 percent
to EUR 715 m (2012: EUR 642 m). After adjusting for non-controlling
interests, profit for the period attributable to Linde AG shareholders was
EUR 660 m (2012: EUR 586 m). This gives earnings per share of EUR 3.56
(2012: EUR 3.42).
Linde achieved 14.5 percent revenue growth in the Gases Division in the six
months to 30 June 2013 to EUR 7.021 bn, when compared with revenue of EUR
6.131 bn in the first half of 2012. During the reporting period, the
Lincare business contributed EUR 792 m to the total revenue of the Gases
Division. On a comparable basis (i.e. after adjusting for exchange rate
effects, changes in the price of natural gas and the effect of the Lincare
acquisition on the consolidation), the increase in revenue was 3.6 percent.
Within the Gases Division, Lincare is included in the Americas segment and
the Healthcare product area.
Linde's Gases Division saw a 14.1 percent increase in operating profit to
EUR 1.915 bn (2012: EUR 1.679 bn). This gives an operating margin of 27.3
percent (2012: 27.4 percent).
Business trends in the individual segments in the Gases Division varied in
each case, depending on prevailing economic conditions.
In the EMEA segment (Europe, Middle East, Africa), revenue rose by 2.4
percent in the first half of 2013 to EUR 3.046 bn (2012: EUR 2.974 bn). On
a comparable basis, the increase in revenue was 4.4 percent. Operating
profit improved by 3.8 percent to EUR 876 m (2012: EUR 844 m). The
operating margin therefore rose to 28.8 percent (2012: 28.4 percent).
Business in the EMEA region was strengthened in particular as a result of
the contribution made by the Continental European homecare operations
acquired by Linde from Air Products in April 2012.
Business trends in the EMEA segment were adversely affected by the
prevailing unfavourable economic conditions in the eurozone. Demand in the
liquefied gases and cylinder gas product areas was accordingly modest.
However, positive trends were to be seen in the on-site business throughout
the EMEA region.
The market environment in Eastern Europe (with the exception of Russia) was
characterised by a slowdown in economic activity. The economy in the Middle
East on the other hand remained robust.
In the Asia/Pacific segment, revenue rose by 2.3 percent in the six months
to 30 June 2013 to EUR 1.897 bn (2012: EUR 1.855 bn). On a comparable
basis, the increase in revenue was 4.4 percent. In particular, growth in
the first half of the year was adversely affected by the weaker economic
environment in manufacturing industry as well as in the mining industry in
the South Pacific region. Operating profit was up 2.7 percent to EUR 497 m
(2012: EUR 484 m). This resulted in an operating margin of 26.2 percent
(2012: 26.1 percent).
Within the Asia/Pacific segment, the most positive trends were to be seen
in the business in the South & East Asia region, where there was
double-digit growth. Linde achieved volume increases here in all product
areas, especially in the on-site business. Linde also generated further
revenue growth in the Greater China region, whereas the market in the South
Pacific region was characterised by declining volumes.
In the Americas segment, Linde generated revenue growth in the first half
of 2013 of 58.1 percent to EUR 2.137 bn (2012: EUR 1.352 bn). This
significant increase was due above all to the contribution made by US
homecare company Lincare. Lincare operates solely in North America and
contributed revenue of EUR 792 m in the first six months of 2013 to the
total revenue of the Americas segment. On a comparable basis (i.e. after
adjusting for exchange rate effects, changes in the price of natural gas
and the effect of the Lincare acquisition on the consolidation), the
increase in revenue in the Americas segment was 2.3 percent. Operating
profit rose by 54.4 percent to EUR 542 m (2012: EUR 351 m), mainly as a
result of the Lincare business. The operating margin was 25.4 percent
(2012: 26.0 percent).
In North America, there were positive trends in Linde's electronic gases
business and the Group also achieved growth in its on-site business. Linde
was able to continue to strengthen its business in South America,
generating increased revenue in Venezuela and Argentina in particular.
Compared with its performance in these countries, growth in business was
much more modest in Brazil.
A comparison of the various product areas in the Gases Division reveals
that, as expected, the fastest rate of growth was in the Healthcare
business, following the acquisitions made by the Group in the course of
2012. Here, Linde generated revenue in the first half of 2013 of EUR 1.529
bn, more than double the figure achieved in the first half of 2012 of EUR
664 m. After adjusting for exchange rate effects and the effect of the
Lincare acquisition on the consolidation, revenue growth in the Healthcare
product area was 7.8 percent.
In the cylinder gas product area, revenue generated in the six months to 30
June 2013 was EUR 2.053 bn. On a comparable basis, this was 0.6 percent
higher than the figure for the first half of 2012 of EUR 2.040 bn. In the
liquefied gases product area, Linde achieved an increase in revenue in the
first half of 2013 of 1.5 percent on a comparable basis to EUR 1.659 bn
(2012: EUR 1.634 bn). In the on-site business (where Linde supplies gases
on site to major customers), revenue rose on a comparable basis by 5.8
percent to EUR 1.780 bn (2012: EUR 1.682 bn).
Gases Division - Outlook
Recent economic forecasts indicate that the rate of growth in the global
gases market in 2013 will be similar to the rate seen in 2012. Linde
remains committed to its original target in the gases business of
outperforming the market and continuing to increase productivity.
In its on-site business, Linde has a healthy project pipeline, which will
contribute to increases in revenue and earnings over the remaining part of
the 2013 financial year. The Group expects its liquefied gases and cylinder
gas product areas to perform in line with macroeconomic trends. In the
Healthcare product area, Linde is expecting to achieve significant
increases in revenue and earnings as a result of the acquisitions it has
concluded, especially that of Lincare.
Against this background, Linde continues to expect that revenue generated
by the Gases Division in the 2013 financial year will be higher than that
achieved in 2012 and that operating profit will increase in the current
In the Engineering Division, the dynamic trend in orders which
characterised the first quarter of 2013 continued in the second quarter. In
the period from April to June 2013, Linde was also awarded a number of
major projects. As a result, there was a significant increase in order
intake in the first half of 2013 to EUR 2.808 bn. This was almost twice the
figure for new orders in the first half of 2012 of EUR 1.432 bn. Revenue
and earnings reflected the expected progress made in individual plant
construction projects. There was a slight rise in revenue in the first half
of 2013 of 1.5 percent to EUR 1.248 bn (2012: EUR 1.229 bn), while
operating profit for the same period was EUR 148 m (2012: EUR 151 m). The
operating margin once again reached a very high level (11.9 percent in the
first half of 2013, 12.3 percent in the first half of 2012).
As a result of projects won during the reporting period, Linde was able to
continue to strengthen its position as a leading gases and engineering
company especially in the growth markets of Russia and Asia. In a joint
venture with chemical company JSC KuibyshevAzot, Linde will build and
operate a large ammonia plant on the Togliatti site in Russia. Investment
in this project will total around EUR 275 m. Under a long-term on-site
agreement, Linde will supply gases to the petrochemical company SIBUR in
Dzerzhinsk, Russia. To do so, it will build and operate two new air
separation plants. Investment in this project is around EUR 70 m. Back in
the first quarter of 2013, Linde was awarded a major contract by Reliance
Industries Ltd. (RIL) to build six air separation plants for the production
of gaseous oxygen at the Jamnagar refinery and petrochemical site in India.
Under the terms of the contract, which is worth around EUR 450 m, Linde
will also supply two synthesis gas purification units.
Given the very positive trend in order intake, the order backlog in the
Engineering Division rose to a record high of EUR 5.189 bn at 30 June 2013
(31 December 2012: EUR 3.700 bn).
Engineering Division - Outlook
A relatively stable market environment is expected in the international
large-scale plant construction business in the remaining part of 2013. The
high order backlog creates a good basis for a solid business performance in
the Engineering Division over the next two years. Linde continues to expect
to generate the same level of revenue in its plant construction business in
the 2013 financial year as in 2012 and anticipates that it will achieve an
operating margin in the 2013 financial year of at least 10 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 investment in
two structural growth areas: energy and the environment.
To coincide with the publication of the half-yearly financial report, a
webcast for analysts will take place today at 2pm German time in English
with Georg Denoke, CFO of Linde AG. Journalists will have the opportunity
to watch the webcast by following this link:
The Linde Group is a world leading gases and engineering company with
around 62,000 employees in more than 100 countries worldwide. In the 2012
financial year, Linde generated revenue of EUR 15.280 bn. The strategy of
the 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. Linde is committed
to technologies and products that unite the goals of customer value and
For more information, see The Linde Group online at www.linde.com
Media Investor Relations
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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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