Linde Profit Beats Estimates as Lincare Takeover Boosts Sales

Linde AG (LIN), the German company competing with Air Liquide SA to be the world’s biggest industrial gas producer, reported first quarter profit that beat analyst estimates as acquisitions made last year increased revenue.

Operating profit climbed 13 percent to 953 million euros ($1.3 billion), the Munich-based company said today in a statement. That exceeded the 935 million-euro average estimate of eight analysts surveyed by Bloomberg. Revenue increased 10 percent to 3.99 billion euros.

“Despite less than favorable conditions, especially in the mature markets, we have continued to achieve profitable growth,” Chief Executive Officer Wolfgang Reitzle said in the statement. “Our newly acquired operations in the health-care product area made the most significant contribution here.”

The $3.8 billion acquisition of Clearwater, Florida-based Lincare in August doubled North America gases sales, and Linde also bought the former home-care business of Air Products & Chemicals Inc. (APD) in January 2012. Reitzle is meanwhile pursuing savings intended to cut as much as 900 million euros in costs and boost earnings by almost half by 2016.

“The numbers are clearly better than expected, and the background is the gases sector,” said Eggert Kuls, a Hamburg- based Warburg Research analyst who recommends buying Linde shares.

Profit Target

Linde reiterated this year’s target of at least 4 billion euros in operating profit, which the company defines as earnings before interest, taxes, depreciation and amortization, and is seeking a return on capital employed of about 14 percent in 2016. CEO Reitzle is set to step down in May 2014.

Lincare contributed 397 million euros in sales in the quarter, helping boost revenue in the gases division by 15 percent, while profit in the segment increased by the same percentage to 942 million euros. Excluding Lincare, currency shifts and natural gas price effects, the division’s revenue grew 3.7 percent. Profit at the engineering division fell to 66 million euros from 73 million euros a year earlier.

Air Liquide SA (AI) has reported sales that missed analyst estimates in the first quarter, falling 2.1 percent to 3.7 billion euros, with the Paris-based company citing currency effects and natural gas prices.

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

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