Linde Profit Jumps 14 Percent on Demand for Medical Gases

Linde AG, the German industrial gases company that bought U.S. respiratory-therapy provider Lincare last year, reported a 14 percent rise in second-quarter profit on growing demand for health-care offerings.

Operating profit climbed to 1.01 billion euros ($1.3 billion) from 885 million euros a year earlier, the Munich-based company said today in a statement. That matched the 1 billion-euro estimate of 16 analysts surveyed by Bloomberg. Revenue increased 11 percent to 4.2 billion euros.

Linde is pushing into new markets to reduce reliance on more cyclical products such as supplying oxygen and other gases to welders and steel plants. The $3.8 billion acquisition of Clearwater, Florida-based Lincare doubled Linde’s North America gas sales, while it also bought the former home-care business of Air Products & Chemicals Inc. in January 2012.

“Although the economic tailwind has subsided somewhat, we have continued to achieve profitable growth,” Chief Executive Officer Wolfgang Reitzle said. “The expansion of our health-care operations in particular made the greatest contribution here.”

Linde shares jumped as much as 2.8 percent, the most since May 6, and were trading 1.8 percent higher at 145.6 euros by 9:22 a.m. in Frankfurt. The stock has gained 10 percent this year, valuing the company at 27 billion euros.

Reiterated 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. Reitzle is set to step down in May 2014.

Operating profit in the gases division jumped 14 percent to 973 million euros. Healthcare provided the most growth in that segment in the first half, with adjusted revenue climbing 7.8 percent to 1.5 billion euros. Quarterly profit at the engineering division increased 5.1 percent to 82 million euros.

“The margin actually went up in Asia Pacific, where they had a bit of a margin issue over the last couple of quarters due to heavy investment,” John Klein, a London-based analyst at Berenberg who recommends buying Linde shares, said by phone. “Generally I think they are solid results.”

Air Liquide SA said today that first-half net income declined 4.1 percent to 752 million euros amid a 50 million-euro restructuring charge linked to job cuts in Europe. The Paris-based competitor’s Chief Executive Officer Benoit Potier will unveil a new strategy in December to tackle global challenges.

Linde’s Americas profit gained 49 percent to 270 million euros, while revenue growth there was 59 percent. Europe, the Middle East and Africa remained the biggest contributor to the bottom line, with profit climbing 4.9 percent to 446 million euros.

Linde CEO Reitzle is also pursuing savings intended to cut as much as 900 million euros in costs.

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