Linde Quarterly Profit Rises on Weaker Euro, Reorganization

  • Euro's decline compensated for shrinking engineering business
  • Linde has been restructuring operations in Brazil, Australia

Linde AG’s third-quarter profit rose as the world’s largest industrial gas supplier benefited from the effects of a weaker euro and a reorganizing of operations in the southern hemisphere. 

Operating profit advanced to 1.03 billion euros ($1.14 billion) in the three months through September from 1 billion euros a year earlier, the Munich-based company said in an e-mailed statement on Wednesday. That was slightly less than the average estimate of analysts in a Bloomberg survey. Revenue increased 3.3 percent to 4.5 billion euros.

“Currency gave us a tailwind, though the positive effect was weaker than in previous quarters,” Chief Executive Officer Wolfgang Buechele said on a conference call with journalists. “We have largely completed the customer focus restructuring program that we announced last year.”

The shares reversed earlier declines and were trading 1.6 percent higher at 157.15 euros at 11:44 a.m. in Frankfurt. That values the company at 29 billion euros.

Linde has been reorganizing its operations in Brazil, South Africa and Australia this year after Buechele was forced to cut profit goals twice inside his first fourteen months in the job. Restructuring costs totaled 192 million euros in the first nine months of the year. Those expenses are higher than analysts had predicted by this stage, meaning that fourth-quarter earnings could exceed expectations, DZ Bank analyst Peter Spengler wrote in a note to clients.

Expected Worse

“While estimates missed consensus, it seems that some market participants had expected even worse results as Linde is market leader for gases in China,” where industrial investment has slowed, Hamburg-based Warburg Research analyst Eggert Kuls said by e-mail.

Without the euro’s 12 percent decline against the dollar in the year through September, both Linde’s profit and revenue would have declined almost 3 percent in the quarter. Sales at the gases unit increased even without the impact of the euro, while revenue declined 19 percent at the engineering division when excluding currency effects.

After the oil price nearly halved in the past year, some customers have delayed investments in new facilities, stunting Linde’s engineering operations. Linde says that division is an important facilitator to secure new business for the gases unit, which generates 85 percent of revenue and almost all the profit.

Linde confirmed its full-year revenue goal of between 17.9 billion euros and 18.5 billion euros, and profit of between 4.1 billion euros and 4.3 billion euros. Buechele cut the sales target in July, having already said in October last year that slowing global economic growth meant the company wouldn’t meet its mid-term earnings target for 2016.

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