Linde Fourth-Quarter Profit Misses Estimates on Euro’s Gain

Linde AG (LIN), the world’s largest industrial-gas producer, reported fourth-quarter operating profit that missed analyst estimates as a rising euro held back sales growth.

Earnings before interest, taxes, depreciation and amortization fell 3.6 percent to 970 million euros ($1.35 billion), Munich-based Linde said today in a statement. The average of eight analyst estimates in a survey compiled by Bloomberg was 992.3 million euros. Sales slipped 4.1 percent to 4.2 billion euros.

“Conditions have been unfavorable and exchange rate effects have had an adverse impact on our growth,” Chief Executive Officer Wolfgang Reitzle said in the statement. “After adjusting for exchange rate effects, we are expecting solid growth in group revenue in the 2014 financial year. We anticipate that we will achieve a moderate improvement in group operating profit.”

Reitzle, 65, will retire in May, ending an 11-year term in which he focused a once-diversified company on industrial gases, tripling the share price in the process. The CEO has pushed the 135-year-old manufacturer into new segments such as health care to reduce reliance on more cyclical markets such as oxygen for welding and steelmaking. Kemira Oyj (KRA1V) CEO Wolfgang Buechele will succeed Reitzle.

Acquisitions under Reitzle included the purchases in 2012 of Clearwater, Florida-based household oxygen and respiratory-therapy provider Lincare and the former home-care business of Allentown, Pennsylvania-based Air Products & Chemicals Inc.

Linde proposed paying a 3-euro dividend.

Target Threat

Full-year operating profit rose 7.6 percent to 3.97 billion euros, compared with the “around” 4 billion euros that Linde forecast in October, when it reduced the prediction because of the euro’s gains against the U.S. and Australian dollars, the U.K. pound and currencies in emerging markets.

The company reiterated a target today of boosting profit to at least 5 billion euros by 2016, based on exchange rates at the end of 2012. If the “unfavorable” exchange rates at the end of 2013 continue to apply, operating profit would be reduced by about 400 million euros, Linde said today.

In the gases division, whose 933 million euros in fourth quarter profit represented 96 percent of the company total, saw profit decline 13 percent in the Americas region, compared with a 0.7 percent increase in Europe, the Middle East and Africa, and a 2 percent climb in the Asia Pacific region.

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

To contact the editors responsible for this story: Simon Thiel at sthiel1@bloomberg.net Tom Lavell, Andrew Noel

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