The Linde Group has revealed healthy sales growth for the first six months of 2008, with the group’s gases division performing particularly well and a reaffirmed forecast for the remaining year ahead.

The company achieved sales growth of 12.9% after adjusting for exchange rate effects to €6.256bn and a 15.4% increase in operating profit, after adjusting for exchange rate effects, to €1.258bn.

In terms of its outlook for 2008, Linde confirmed it expects sales to increase and earnings to rise at a faster rate than sales, while its medium-term target for 2010 has also been reaffirmed – to achieve operating profit of more than €3bn and ROCE (return on capital employed) of at least 13%.

Operating margin at group level rose by 40 basis points to 20.1%, compared with the figure for the six months to 30th June 2007.

“In economically difficult times, we can clearly see the benefits of our robust business model and the advantages of our global orientation. We have improved our profitability even further,” said Professor Dr Wolfgang Reitzle, Chief Executive Officer of Linde AG.

“Our international gases and engineering business remains stable, so we have every reason to be confident about the future. We are therefore reaffirming 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 group operating earnings of more than €3bn. We want to achieve a return on capital employed, our key performance indicator, of at least 13% by 2010,” Reitzle added.

Gases growth
In a relatively stable global market environment, the group’s Gases Division achieved a 10.1% increase in sales in the first six months of the year, after adjusting for exchange rate effects, to €4.709bn. If changes in the price of natural gas and changes to group structure are also taken into account, the rate of sales growth was 8.5%.

The operating profit of the Gases Division rose 12.7% to €1.194bn, an increase which was again greater than the increase in sales. The operating margin improved once again to 25.4% and Linde noted that it was able to more than compensate for cost increases, as a result of continual improvements in efficiency, pricing adjustments and cost synergies arising from the acquisition of BOC.

In the Western Europe operating segment, Linde achieved a 6.4% increase in sales in the first half of 2008 to €2.083bn, while it was able to benefit from a positive market environment, especially in Northern Europe, Germany and Italy. In the UK, the cylinder gas and Healthcare (medical gases) product segments performed particularly well.

In the Americas operating segment, the Gases Division achieved a 9.2% increase in sales in the first six months of 2008 on a comparable basis, while in the Asia & Eastern Europe operating segment the division achieved an increase in sales on a comparable basis of 10.4% to reach €945m. The group noted that in the reporting period some of the former joint ventures in Malaysia, Hong Kong and Taiwan were included in sales for the first time.

In the South Pacific & Africa operating segment, on a comparable basis, the Gases Division achieved a 14.5% increase in sales to €632m.

With regards to industries and applications, Linde highlighted how changes in the price of natural gas and group structure affected performance, with the tonnage or on-site business growing 6.5% to total €1.183bn. Sales in the bulk business rose 6.4% to €1.149bn and in the cylinder gas business by 11.1% to €1.890bn and in the product area Healthcare, achieved an 8.2% increase over the comparable prior year period to €487m.

Rapid pace ahead
Building on this solid platform for progression, Linde declared that it expects average annual growth of around 7% in both 2008 and subsequent years in the global gases industry with its short-term and medium-term targets remaining the same.

Anticipations are for the Gases Division to grow at a more rapid pace than the market and to increase its earnings at a faster rate than sales. Expected to contribute to this is a high rate of growth in the emerging markets and growth synergies between the gases and engineering business Linde is vigorously pursuing.