The Linde Group has delivered increases in both group revenue and operating profit in its 2016 financial results released today, hampered only by the lower contribution from its Engineering Division and adverse exchange rate effects.

The impact of exchange rate effects took its toll on the group’s Gases Division, as did changes in the price of natural gas, but its core business still demonstrated solid underlying performance in 2016, with stronger showings in the North America and Asia-Pacific markets (on a comparable basis) in particular.

Here, gasworld looks at the breakdown of those results as announced by Linde.

Varying business trends

Revenue in the Gases Division fell in the 2016 financial year by 1.8% to €14.89bn (2015: €15.16bn). After adjusting for exchange rate effects and changes in the price of natural gas, revenue increased by 1.4%.

Meanwhile operating profit in the Gases Division rose by 1.4% to €4.21bn (2015: €4.15bn), giving an operating margin of 28.3% (2015: 27.4%).

Varying business trends were to be seen in the individual segments in the Gases Division, depending on prevailing economic conditions.


In the Americas segment, which will undoubtedly soon be under scrutiny as a result of Linde’s pending merger of equals with fellow Tier One player Praxair, Inc., revenue rose by 0.9% to €5.23bn (2015: €5.18bn). On a comparable basis, the increase in revenue was 2.7%. Operating profit increased by 1.6% in the 2016 financial year to €1.31bn (2015: €1.29bn). Operating margin rose to 25.2% (2015: 25%).

Praxair-Linde merger: Impact in South America

A variety of effects in different directions had an impact on revenue and earnings trends. In the Healthcare business in North America, for example, price reductions as a result of government tenders came into force at the beginning of 2016, an effect Linde described as ‘intensified’ after 1st July 2016. Some of these price reductions were then postponed in December 2016 to the beginning of January 2017; this meant results were better than expected in the fourth quarter of 2016.

The adverse impact of these price reductions was countered by the acquisition of the American HomePatient, Inc., a company which specialises in respiratory therapies, and by the increase in the number of patients cared for by Linde. In addition, Linde sold two Lincare subsidiaries in the third quarter of 2016. As expected, this had an adverse impact on revenue in the Healthcare product area.

In North America, the on-site business performed particularly well. In South America, economic conditions in 2016 remained subdued.

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In the EMEA segment (Europe, Middle East, Africa), revenue in the 2016 financial year was €5.73bn – 4.6% below the figure for 2015 of €6.01bn. Here too, adverse exchange rate effects need to be taken into account, Linde explained; on a comparable basis, revenue was at a similar level to that seen in the prior year.

Operating profit in the EMEA region improved slightly to €1.8bn (2015: €1.79bn). Efficiency improvement measures in the UK and Scandinavia, which formed part of the LIFT programme, started to generate cost savings. Income from changes to pension plans and profits on the disposal of non-current assets also contributed to the slight increase in operating profit. Operating margin rose to 31.5% (2015: 29.8%).

What is Linde’s LIFT programme?

Positive trends were to be seen in the EMEA segment in the Healthcare product area, which offers a range of medical gases and medical services. In the Middle East, Eastern Europe and Scandinavia, Linde also continued to grow.

On the other hand, conditions were challenging in the British steel sector and in South Africa.

Steel: Structural challenges continue


In the Asia-Pacific segment, revenue fell in 2016 by 1.2% to €4.1bn, mainly as a result of adverse exchange rate effects (2015: €4.15bn). On a comparable basis, revenue increased by 1.8%.

Operating profit rose in the financial year by 2.%to €1.08bn (2015: €1.06bn); operating margin was 26.4% (2015: 25.6%).

All product areas in the Asia/Pacific segment saw positive trends, especially in South & East Asia and in China. In the South Pacific, the prevailing weak economic environment in manufacturing and declining investment in the mining industry had an adverse impact on growth. Linde is still applying the structural and organisational measures it had introduced in this region in order to continue to improve profitability.


Looking ahead, Linde is seeking to achieve Gases Division revenue in the 2017 financial year – after adjusting for exchange rate effects – up to 3% higher than in 2016, although the company cautioned that the challenging market environment could yet result in a decrease of up to 2%.

Operating profit in the Gases Division is expected to be similar to that achieved in 2016 or, in a high growth scenario, to increase by up to 6%.