In the midst of “challenging” market environments, industrial gas giant The Linde Group announced 2016 half-year financial results that fall “in line with expectations,” despite revealing equivocal results across its individual business units.

Down across all business segments except in its Americas segment, overall group revenue totalled €8.56bn ($9.4bn) – a decrease of 5.3% compared to 2015’s half-year earnings – but after adjusting for exchange rates effects stemming from currency translation, the fall in revenue settled at 1.6%.

Operating profit also took a hit – down by 4.1% to €2.01bn ($2.2bn) – but remained relatively similar to the first six months of 2015 after adjusting for exchange rate effects.

The economic environment is continuing to present us with challenges. To meet those, we are actively driving efficiency measures

On the contrary, operating cash flow experienced positive trends in the half of 2016, rising 3.2% above the figure achieved in the prior-year period totalling €1.63bn ($1.79bn).

Dr. Wolfgang Büchele, CEO of Linde AG, confirmed that results were as expected for the Tier One corporation, “We have a solid first half-year behind us, completely in line with our forecast. However, the economic environment is continuing to present us with challenges. To meet those, we are actively driving efficiency measures.”

Segments in detail

Linde’s revenue in its Gases Division for the first half of 2016 was €7.32bn ($8bn), 3% lower than the prior year. Despite this, revenue increased by 2.1% on a comparable basis. In this business unit, its operating margin saw a slight increase from 27.7% to 28%, which the company attributes to lower prices for natural gas.

Its Europe, Middle East, Africa (EMEA) segment also saw a drop in first-half revenue, generating €2.86bn ($3.14bn) compared to €3bn ($3.3bn) the year prior. Operating profit in the unit was €889m ($977m), a decrease of 2.8% compared to 2015’s first-half results. The company stressed, “It should be noted that further costs were incurred for efficiency measures in the first half of 2016. These costs were offset by income from changes to pension plans and profits on the disposal of non-current assets.”

Revenue in Linde’s Asia/Pacific segment was also down, showing a 5.3% loss to total €1.97bn ($2.2bn), however revenue did increase by 1.5% on a comparable basis. Linde explained, “There were positive revenue growth trends in Asia. In the South Pacific region, on the other hand, the prevailing weak economic environment in manufacturing and declining investment in the mining industry had an adverse effect on growth.” The corporation emphasised that, “Linde has already begun implementing appropriate structural and organisational measures to reduce costs.”

Working together merger and acquisition United States

Its Americas business unit was the saving grace for Linde’s 2016 half-year financials, underpinned by the acquisition of American HomePatient which has been consolidated in this segment since 1st February 2016. On the back of this, revenue increased by 1% to €2.58bn ($2.8bn), and after adjusting for exchange rates and changes in natural gas prices, revenue growth was 5.3%.

The company revealed that order intake in its Engineering Division was more or less synonymous to the first half of 2015 at €718m ($789m) but that its order backlog as of 30th June 2016 was €4.09bn ($4.4bn) – a decrease of 9.8% compared to the order backlog at 31st December 2015. However, revenue “fell as expected,” dropping by 19.7% to €1.08bn ($1.2bn) with the company stating, “Due to the persistently low price of oil, slack demand continues to be evident in the plant construction sector.” Nevertheless, Linde’s operating margin was 8.2%, continuing to be above the industry average.

Outlook for the Tier One player’s 2016 full-year financials, which should be released in March 2017, sends equally mixed messages with a press release citing, “The group is expecting to achieve an increase in revenue and earnings in the 2016 financial year of 4% after adjusting for exchange rate effects, although the challenging market environment could result in a decrease of up to 3%.”