SOURCE: Linde AG

May 09, 2008 01:43 ET

1st quarter 2008: A solid start for The Linde Group in the new financial year

MUNICH, GERMANY--(Marketwire - May 9, 2008) -


- 7.5 percent increase in sales to 2.917 billion euro after adjusting for exchange rate effects; reported sales growth of 2.0 percent

- 11.1 percent increase in operating profit to 602 million euro after adjusting for exchange rate effects; reported operating profit* up 5.8 percent

- Adjusted earnings per share up 20.6 percent to 1.29 euro

- Outlook for 2008 unchanged: Sales expected to increase and earnings expected to rise at a faster rate than sales

- Medium-term target for 2010 confirmed, i.e. operating profit of more than 3 billion euro and ROCE (return on capital employed) of at least 13 percent

Munich, 9 May 2008 - In the first quarter of the 2008 financial year, the technology group The Linde Group achieved an increase in sales of 7.5 percent, after adjusting for exchange rate effects, to 2.917 billion euro, and an increase in operating profit, after adjusting for exchange rate effects, of 11.1 percent to 602 million euro. Operating profit therefore increased at a faster rate than sales. The operating margin at Group level rose by 70 basis points to 20.6 percent. Synergies arising from the acquisition of BOC contributed to this positive trend.

"We have seen a solid start to the new financial year and are therefore confident about the remaining part of the year", said Professor Dr Wolfgang Reitzle, the Chief Executive Officer of Linde AG. "We confirm our short-term and medium-term forecasts. We continue to assume that Group sales will increase in the current financial year and that earnings will increase at a faster rate than sales. By 2010, we are seeking to achieve a Group operating earnings of more than 3 billion euro. We want to achieve a return on capital employed, our key performance indicator, of at least 13 percent by 2010."

If exchange rate effects are not taken into account, the increase in Group sales in the first quarter was 2.0 percent, given sales in first quarter of 2007 of 2.860 billion euro. On the same basis, Group operating profit* rose 5.8 percent from the comparable figure in 2007 of 569 million euro.

Earnings before taxes on income (EBT) at the end of March were 239 million euro (2007: 647 million euro). However, this decrease is mainly due to the fact that the figure for the first three months of 2007 included a book profit of 510 million euro on the sale of businesses.

Earnings after tax at the end of the first quarter were 172 million euro (2007: 458 million euro). Earnings attributable to Linde AG shareholders were 160 million euro (2007: 445 million euro), giving earnings per share of 0.96 euro (2007: 2.76 euro). Here too, the book profit on the sale of businesses should be taken into account when comparing the figure with that from the prior year. On an adjusted basis, i.e. after adjusting for the effect of the book profit on the sale of businesses and the effect of the purchase price allocation in the course of the BOC acquisition, earnings per share increased from 1.07 euro at the end of the first quarter in 2007 to 1.29 euro at 31 March 2008.

Gases Division

In a global market environment which continued to be stable, the Gases Division achieved an 8.0 percent increase in sales in the first quarter, after adjusting for exchange rate effects, to 2.301 billion euro. If changes in the price of natural gas and changes to Group structure are also taken into account, the rate of sales growth was 7.5 percent. If all these factors are ignored, sales increased by 2.3 percent from 2.249 billion euro at 31 March 2007.

The Linde Group's participation in joint ventures gave rise to an increase in sales of 12.9 percent, after adjusting for exchange rate effects, to 139 million euro. This sales growth demonstrates that the joint venture business model is an important part of our strategy, especially in the Asian region. These sales are not included in Group sales, in accordance with Linde's accounting rules.

The operating profit of the Gases Division rose 10.7 percent, after adjusting for exchange rate effects, to 586 million euro. On reported basis the increase in operating profit in the Gases Division was 5.4 percent (2007: 556 million euro). The operating margin improved from 24.7 percent to 25.5 percent.

All the operating segments contributed to the overall positive business performance of the Gases Division.

After adjusting for exchange rate effects, changes in the price of natural gas and changes to Group structure, the Western Europe operating segment achieved a 5.6 percent increase in sales in the first quarter to 1.030 billion euro. If these factors are not taken into account, the increase was 4.7 percent (2007: 984 million euro). Operating profit rose by 3.7 percent to 283 million euro (2007: 273 million euro).

The market environment was especially stable in our core markets. In the UK, the Healthcare (medical gases) and cylinder gases product segments performed particularly well, while growth in Germany was broadly-based.

In the Americas operating segment, the Gases Division achieved an 8.0 percent increase in sales, on an adjusted basis, in the first quarter of 2008. If exchange rate effects, changes in the price of natural gas and changes to Group structure are not taken into account, sales in this segment of 528 million euro were significantly lower than the prior year figure of 680 million euro. The decrease in sales was due not only to adverse exchange rate movements, but also to changes in Group structure. The prior year sales figures included the US cylinder gas business, which has since been sold, the American INO medical gases business and the eight air separation plants which Linde had to sell as a result of the conditions imposed by the competition authorities. Given these factors, the operating profit in this segment of 104 million euro was lower than the figure for the comparable prior year period of 128 million euro.

In the Asia & Eastern Europe operating segment, which saw an increase in sales to 464 million euro in the first quarter of 2008, the adjusted rate of sales growth was 9.7 percent. The unadjusted rate of growth was 48.2 percent, based on a prior year figure of 313 million euro. It should be noted that the former joint ventures in Malaysia, Hong Kong and Taiwan were included in the consolidation for the first time in 2008. Operating profit also improved dramatically, by 47.2 percent to 131 million euro (2007: 89 million euro).

In the South Pacific & Africa operating segment, the Gases Division achieved a 10.3 percent increase in sales on a comparable basis to 297 million euro. On reported basis the increase over the prior year figure of 289 million euro was 2.8 percent. Operating profit rose in this segment by 3.0 percent to 68 million euro (2007: 66 million euro).

There were also increases in the individual product area in the Gases Division. On a comparable basis, i.e. after adjusting for exchange rate effects, changes in the price of natural gas and changes to Group structure, the tonnage or on-site business grew 7.0 percent to 578 million euro (2007: 540 million euro). Sales in the bulk business rose 6.2 percent to 569 million euro (2007: 536 million euro) and in the cylinder gas business by 8.0 percent to 910 million euro (2007: 843 million euro). The Healthcare or medical gases business achieved a 9.9 percent increase over the comparable prior year quarter to 244 million euro (2007: 222 million euro).

Gases Division - Outlook

Linde expects average annual growth of around 7 percent in 2008 and in subsequent years in the global gases industry. The short-term and medium-term targets remain the same. Linde wants its Gases Division to grow at a more rapid pace than the market and to increase its earnings at a faster rate than sales.

Engineering Division

The Engineering Division has continued to perform well in the first quarter of 2008, achieving an 8.8 percent increase in sales by the end of March 2008 to 542 million euro (2007: 498 million euro). Operating profit was up on the figure for the comparable prior year period by 6.8 percent to 47 million euro (2007: 44 million euro). The operating margin was 8.7 percent (2007: 8.8 percent), once again a very good figure. The 8 percent target is well above the market average.

Order intake for the Engineering Division in the first quarter was 406 million euro (2007: 968 million euro). It should be noted here that a major contract received by Linde in the first quarter of 2007 to build an ethylene plant in Abu Dhabi (United Arab Emirates) made a significant difference to the prior year figure. The order backlog at the end of the first quarter was 4.152 billion euro (31 December 2007: 4.391 billion euro).

The successful performance of the Engineering Division was boosted by the continuing high level of demand in the four major product segments (olefin plants, natural gas plants, air separation plants, hydrogen and synthesis gas plants).

Engineering Division - Outlook

The global situation for international plant construction business remains good. Against this background, Linde expects an increase in sales in the Engineering Division in the coming years of 8 to 10 percent per annum on the basis of a high order backlog and the anticipated processing of orders.

* EBITDA before non-recurring items, including share of net income from associates and joint ventures.


N.B.: To coincide with the publication of our quarterly report, a teleconference for analysts will take place today at 2pm (German time) in English with Georg Denoke, CFO and member of the Linde AG Executive Board. Journalists will have the opportunity to listen to the conference live by dialling +49 (0)69 589 99 0509. Please tell the operator your name and the name of your company.

Following the teleconference, you will be able to hear a recording of the event by calling +49 (0)30 726 167 224. Please give the following reference number: 793698.


The Linde Group is a world-leading gases and engineering company with more than 50,000 employees working in around 100 countries worldwide. In the 2007 financial year, it achieved sales of 12.3 billion euro. The strategy of The Linde Group is geared towards sustainable earnings-based growth and focuses on the expansion of its international business with forward-looking products and services. Linde acts responsibly towards its shareholders, business partners, employees, society and the environment - in every one of its business areas, regions and locations across the globe. Linde is committed to technologies and products that unite the goals of customer value and sustainable development.

For more information, please see The Linde Group online at
http://www.linde.com

Further information:

Press                        Investor Relations
Uwe Wolfinger                Thomas Eisenlohr
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