The Linde Group achieved a 10.0% increase in revenue on the basis of reported figures in the first six months of 2015 to €9.036bn, compared with revenue of €8.212bn in the first six months of 2014.
After adjusting for exchange rate effects, operating profit rose by 0.4%. The group operating margin increased from 23.1% in the first half of 2014 to 23.3% in the first half of 2015. The exceptionally positive trend in operating cash flow continued.
After a modest start to the financial year in the first three months of 2015, Linde once again achieved increases in both group revenue and group operating profit in the second quarter after adjusting for exchange rate effects. For the three months ended 30 June 2015, group revenue rose by 0.7% after adjusting for exchange rate effects, while group operating profit rose by 1.8%. In both cases, the comparison is with the figures for the second quarter of 2014.
Gases Division: Growth improves in the second quarter
During the reporting period, Linde continued to achieve growth in revenue in the Gases Division. Whereas revenue growth in the first quarter of 2015 was just 1.0% on a comparable basis (after adjusting for exchange rate effects and changes in the price of natural gas), Linde was able to achieve revenue growth of 1.9% in the first half of 2015. One of the reasons for this increase was the contribution to revenue of €36 m made by an LPG business in Australia acquired by Linde in February 2015. On the basis of reported figures, revenue in the first half of 2015 rose by 10.7% to €7.554bn (2014: €6.825bn).
Revenue was adversely affected not only by the relatively weak macro-economic environment, but also by current low energy costs and the expiry of on-site contracts. Operating profit rose by 12.2% to €2.091bn (2014: €1.863bn). The operating margin in the first six months of 2015 rose to 27.7% (2014: 27.3%).
Linde has revised up its revenue forecast in the Gases Division from between €14.9bn and €15.4bn to between €15.1bn and €15.5bn mainly as a result of current trends in exchange rates. Linde is now seeking to achieve operating profit in the Gases Division of between €4.1bn and €4.3bn, compared with its previous forecast for operating profit of between €4.05bn and €4.25bn. In each case, achievement of the targets is dependent on ongoing trends in industrial production and on exchange rates.
Order backlog in the Engineering Division remains high
The order backlog in the Engineering Division at 30 June 2015 remained high at €4.191bn (31 December 2014: €4.672bn).
As a result of prevailing mood of restraint worldwide towards investment in plant construction, order intake in the six months to 30 June 2015 was €724m (2014: €1.058bn). The order intake in the first half of 2015 was evenly spread across the Asia/Pacific, Europe and North America regions, with a third of orders in each region. Around half of new orders are related to natural gas, hydrogen and synthesis gas plants.
Revenue in the Engineering Division fell in the first half of 2015 by 4.7% to €1.351bn (2014: €1.418bn). Operating profit was €114m, which was not as high as the figure for the prior-year period of €141m. The operating margin in the first six months of 2015 was 8.4% (2014: 9.9%). The operating margin continues to be above the industry average and matches the target Linde set itself for the current financial year.
Forecast: Order intake in Linde’s Engineering Division in the first half of 2015 was significantly lower than expected as a result of the persistently low price of oil and the resultant faltering demand in plant construction. The revenue forecast in the Engineering Division for the 2015 financial year has therefore been revised down.
Linde is now seeking to generate revenue of between €2.5bn and €2.7bn, compared with its previous forecast of between €3.0bn and €3.3bn. Linde continues to expect to achieve an operating margin of around 8%.
“Continuing weak demand will remain the main challenge for us in the second half of 2015. This makes it all the more important now that we continue to act to strengthen our competitive situation,” said Linde’s Wolfgang Büchele, the CEO and President.