Linde Profit Misses Estimates as European Steel Demand Slows

Linde AG (LIN), tied with Air Liquide SA (AI) as the world’s biggest industrial gas company by sales, reported fourth-quarter profit that missed analyst estimates as slowing demand in Europe stunted growth.

Earnings before interest, tax, depreciation and amortization rose 14 percent to 967 million euros ($1.3 billion), the Munich-based company said today in a statement. Analysts had predicted 976 million euros. Linde proposed an annual dividend of 2.70 euros a share.

Linde has doubled its North America gases sales with the $3.8 billion purchase of Lincare in August and the acquisition of Air Products & Chemicals Inc. (APD)’s home care business in January. Chief Executive Officer Wolfgang Reitzle said in October he will seek further savings in purchasing, information technology and the cylinder and liquefied gas supply chain.

“We have been able to hold our own, although the climate has worsened in the course of the year,” Chief Executive Officer Wolfgang Reitzle said in the statement. “Even though conditions are unlikely to improve, we are sticking to our targets.”

Rival Air Liquide said last month that fluctuating global market conditions may mean it reviews its target of boosting sales by 8 percent to 10 percent through 2015. The development of cheap shale gas in North America, and of coal in China, as well as an “upheaval” in nuclear energy, may force the Paris- based company to follow customers such as steelmakers and chemical producers that are shifting production to low-cost regions, its Chief Executive Officer Benoit Potier said.

Linde’s quarterly sales increased 18 percent to 4.22 billion euros, in line with estimates. Net income gained 8.8 percent to 346 million euros, beating the 333 million-euro estimate of the Bloomberg survey. It reiterated a target of 4 billion euros in operating profit this year, while seeking between 750 million euros and 900 million euros in further savings by 2016.

Return on capital employed will be at least 14 percent from that year, with Ebitda of at least 5 billion euros. Linde said today.

The plan will be completed by the successor to CEO Reitzle, who said March 3 he will not seek to extend his contract beyond May 2014. The search for a successor has been whittled down to two external candidates, Supervisory Board Chairman Manfred Schneider said at the same time.

An estimated 7.67 trillion cubic feet of U.S. natural gas was extracted using fracking in the U.S. last year. That’s 17 times more than a decade earlier, according to the Energy Information Administration, which forecast production will reach 13.6 trillion cubic feet in 2035, accounting for 49 percent of gas output.

To contact the reporter on this story: Alex Webb in Munich at awebb25@bloomberg.net

To contact the editor responsible for this story: Simon Thiel at sthiel1@bloomberg.net