The Linde Group is continuing to see figures rising, and expects to see its business performance in the second half of 2009 to be better than the first half.
The company continued the positive trend of the second quarter in a market environment which remained difficult, achieving further increases in profitability in the months July to September in comparison with the previous quarter.
In the third quarter, group operating profit rose by 12.5% compared to the second quarter, while the operating margin increased significantly to 22.5%, in the second quarter it was 20.4%.The operating margin also continued to improve if a comparison is made between the first nine months of 2009 and the same period in 2008.
$quot;The positive trends we were seeing at the end of the second quarter have continued to strengthen,$quot; said Professor Dr Wolfgang Reitzle, Chief Executive Officer of Linde AG.
$quot;The measures we have taken to achieve sustainable increases in productivity are having an ever greater impact. What's more, demand in our gases business is beginning to pick up again slowly.”
He added, “However, one thing's clear: in the 2009 financial year, we will not be able to match the level of sales and earnings achieved in the record year 2008. Nevertheless, based on our current figures, we expect our business performance in the second half of 2009 to be better than in the first half of the year.$quot;
Against the background of the global economic crisis, group sales fell by 11.5% in the first nine months of 2009 to €8.313bn, compared with the record figure achieved in the first three quarters of 2008 of €9.392bn.
Group operating profit for the nine months to 30th September 2009 was €1.741bn, 8.8% below the previous year figure of €1.910bn.
After adjusting for restructuring costs arising from the High Performance Organisation (HPO) programme, the fall in group operating profit for Linde was only 4.7%.
On the basis of HPO, the integrated programme for process optimisation and increased productivity, the aim of the group is to achieve gross cost savings of between €650m and €800m in the financial years from 2009 to 2012 and to continue to improve its competitiveness irrespective of the economic situation.
Earnings before taxes on income (EBT) were €611m, a decrease of €185m or 23.2% when compared with the previous year figure of €796m.
Group earnings after tax at 30th September 2009 were €456m, in 2008 they were €593m.
After taking minority interests into account, earnings attributable to Linde AG shareholders were €417m, in 2008 they were €552m, giving earnings per share of €2.47, in 2008 they were €3.29.
In the Gases Division, the recovery trend indicated in the second quarter of 2009 continued into the third quarter.
Sales and operating profit again rose when compared to the period April to June. Operating profit for the third quarter was €625m, exactly the same as the figure for the previous year period.
However, when the figures for the whole reporting period January to September are compared, there was a downward trend.
Sales in the Gases Division for the nine months to 30th September 2009 were €6.629bn, 7.4% lower than the figure for the previous year period of €7.157bn.
On a comparable basis, i.e. after adjusting for exchange rate effects and also taking into account changes in the price of natural gas and changes to Group structure, the fall in sales was 6.4%.
The operating profit of the Gases Division for the first nine months of 2009 was €1.763bn, only 3.1% under the comparable previous year figure of €1.819bn.
This Linde Group said that this demonstrates that the Gases Division has been able to limit the decline in earnings in a difficult market environment and achieve an improvement in the operating margin from 25.4% in 2008 to the current figure of thereby 26.6%.
In the Western Europe operating segment, sales trends in the third quarter continued to be adversely affected, as in the first half of 2009, by the substantial weakening of the British pound. As a result of this currency fluctuation, sales for the nine months to 30th September 2009 fell by 10.5% to €2.801bn.
The operating margin in Western Europe was 27.9%, exceeding the high figure of 27.3% achieved in the previous year period, demonstrating the positive impact of the HPO programme.
The market environment in Western Europe saw a further period of stabilisation, although there were no signs as yet of a widespread market recovery.
In the Americas operating segment, Linde achieved sales in the nine months to 30th September 2009 of €1.485bn, 10.1% below the figure for the first nine months of 2008 of €1.652bn.
On a comparable basis, sales were 8.3% lower than in the previous year period. Operating profit fell from €320m to €316m, a much smaller drop of only 1.3%.
In the Asia & Eastern Europe operating segment, sales in the nine months to 30th September 2009 were €1.343bn, 8% below the figure for the previous year period of €1.459bn. On a comparable basis, the fall in sales was 6.4%.
Operating profit, on the other hand, of €415m was almost as high as the figure for the nine months to 30th September 2008 of €417m.
In the South Pacific & Africa operating segment, Linde also achieved an increase in sales in the first nine months of the year, of 8.6% to €1.052bn, compared to €969m in 2008.
The consolidation for the first time of the Australian LPG business Elgas more than offset adverse movements in the exchange rate of the Australian dollar. On a comparable basis, sales in the first nine months declined by 6.1%.
Operating profit increased by 9.6% to €250m, in 2008 it was €228m, a faster rate of increase than that of sales. The operating margin rose accordingly from 23.5% to 23.8%.
In the individual product areas of the Gases Division, business trends were also affected by global economic conditions, which remained challenging. In comparison with the first half of the year, however, the trend here was positive in the third quarter.
On a comparable basis, Linde's sales in the liquefied gases business fell by 8.7%to €1.636bn, sales in 2008 were €1.791bn.
In the cylinder gas business, there was a decline in sales of 9.1% to €2.713bn, in 2008 sales were €2.984bn.
Sales of €1.513bn in the on-site (tonnage) business, where the company supplies industrial gases from plants situated on the user's site, were 4.2% below the figure for the previous year period of €1.579bn.
Meanwhile, the Healthcare product area once again proved very robust. Here, sales rose by 5.6% to €767m, compared to €726m in 2008.
The group said that continuing uncertainty in the market environment has not caused it to change in any way its original target for the gases business.
Linde wants to grow at a more rapid pace than the market and to continue to increase its productivity.
Given the current tendency towards economic recovery and based on positive trends in the third quarter, The Linde Group expects business performance in the Gases Division to be better in the second half of 2009 than in the first six months of the year. This will, however, not suffice to ensure that sales and earnings for the full year 2009 will reach the levels achieved in 2008.