Linde today (28th April) reported its first quarter (Q1) 2022 financial results, highlighting sales of $8.2bn and operating profit of $1.5bn, both representing a 13% growth versus the prior year quarter.

Sanjiv Lamba, CEO of Linde, said the group had “delivered another strong quarter”, as it reported considerable growth in all geographical regions, as well as its engineering business.

The industrial gas giant attributed to sales growth to a 9% underlying sales increase, including a 6% price attainment and 3% higher volumes, mostly from the manufacturing, chemicals and energy end markets.

Adjusted operating profit of $1.9bn was up 13% versus the prior year, led by higher pricing, strong volumes and continued productivity across all segments. Excluding the effects of cost pass-through, adjusted operating margins expanded 130 basis points versus the prior year.

Q1 operating cash flow of $2bn more than covered capital expenditures of $649m, resulting in free cash flow of $1.3bn. The quarter also saw Linde return $2.3bn to shareholders through dividends and stock repurchases, net of issuances.

Reflecting on the financials, Lamba said, “Linde employees delivered another strong quarter of quality financial results with return on capital reaching a new record of 18.9% and operating margins expanding 130 basis points excluding cost-pass through.”

“In addition, EPS grew 18% to an all-time high of $2.93. The business model continues to deliver in any environment, demonstrating resiliency during economic downturns and significant growth during the recovery.”

“Looking ahead, the geopolitical and macro environment has become more uncertain, but I have confidence the company will continue to deliver on commitments to shareholders.” 

Results by segment

Americas sales of $3.2bn grew 14% versus the prior year quarter, and 3% sequentially. Compared with Q1 2021, underlying sales increased 10%, driven by 5% higher pricing and 5% higher volume.

Sequentially, underlying sales grew 3%, with pricing up 2% and volumes growing 1%.

Operating profit of $904m was 27.9% of sales, 10 basis points higher when exclusive the effect of cost pass-through.

Asia Pacific sales of $1.6bn were 12% above prior year and 1% sequentially. Compared to the prior year, underlying sales grew 10%, driven by 4% price attainment and 6% volume growth, primarily in the electronics, chemicals and energy end markets.

Sequentially, higher pricing of 1% was offset by seasonally lower volumes.

Operating profile of $399m was 24.9% of sales, 50 basis points above prior year or 140 basis points higher when excluding the effects of cost pass-through.

Europe, Middle East and Africa sales of $2.1bn were up 19% versus prior year and grew 4% sequentially. Compared with Q1 2021, underlying sales grew 11%, led by higher pricing.

Sequentially, underlying sales grew 2% with 5% pricing, partially offset by lower volumes.

Operating profit of $503m was 23.4% of sales, 170 basis points below prior year or 170 basis points higher when excluding the effects of cost pass-through.

Linde Engineering sales were $728m, 8% above prior year, and operating profit was $143m of 19.6% of sales. Order intake for Q1 was $645m and third-party sale of equipment backlog was $2.2bn.

Outlook

Looking at what’s to come in Q2, Linde expected adjusted diluted earnings per share in the range of $2.90 to $3.00, up 7% to 11% versus prior-year quarter. This guidance assumes flat currency sequentially and a headwind of 3% year-over-year.

For the full year 2022, Linde expects adjusted diluted earnings per share to be in the range of $11.65 to $11.90, up 9% to 11% versus prior year or 11% to 13% excluding currency headwind.

This guidance range excludes contribution from Russian earnings by the second half of 2022 as the company continues to scale back Russian operations and wind down engineering projects affected by sanctions.

Full-year capital expenditures are expected to be in the range of $3bn to $3.4bn to support maintenance and growth requirements including the $3.5bn contractual sale of gas project backlog.