Measures taken by The Linde Group are having an effect, and the CEO believes the company will experience a better business development in the second half of 2009, compared to the first.

At group level, the operating margin was 20.2% in the first six months of the year, compared to 20.1% in the same period of 2008. Adjusted for one-off restructuring costs of €67m, the operating margin was 21.4%.

In the course of the global economic crisis, group sales fell by 12.5% in the first half of 2009 to €5.476bn, compared with the record figure achieved in the first half of 2008 of €6.256bn.

Group operating profit for the six months to 30 June 2009 was €1.104bn, 12.2% below the previous year figure of €1.258bn.

Taking into account restructuring costs arising from the accelerated implementation of the High Performance Organisation (HPO) programme, the fall in group operating profit for Linde was only 6.9%.

With HPO, the integrated programme for process optimisation and increased productivity, the group is seeking to achieve 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 €365m, a decline of €179m (-32.9%) compared to the first half of 2008 (€544m). After deducting restructuring costs of €67m and the gains on disposal of businesses of €59m achieved in the first half of 2008 this decline was only €53m (-10.9%).

Earnings after tax at 30 June 2009 were €274m (2008: €402m). After taking minority interests into account, earnings attributable to Linde AG shareholders were €248m (2008: €375m), giving earnings per share (EPS) of €1.47 (2008: €2.24).

Account should be taken here too, when comparing the figures for the first six months of 2009 and 2008, of the one-off restructuring costs charged in 2009 and the gains on the disposal of businesses recognised in 2008.

On an adjusted basis, i.e. after adjusting for the effect of the purchase price allocation in the course of the BOC acquisition and the profits on disposal achieved in the previous year, earnings per share in the first half of 2009 stood at €2.06 (2008: €2.72). The restructuring costs recognised in the first half of 2009 have not been adjusted for in this calculation.

$quot;The measures we have taken to achieve sustainable improvements in productivity are having an effect,$quot; said Professor Dr Wolfgang Reitzle, Chief Executive Officer of Linde AG.

$quot;At the same time, in our gases business we are beginning to see occasional signs of a slight recovery in demand. However, future global economic developments are beset with uncertainty and the crisis is not yet over.”

“Against this background, we will be unable to achieve in the 2009 financial year the same level of sales and earnings achieved in 2008, a record year. However, provided that the economic recovery stabilises, we expect a better business development in the second half year of 2009 than in the first six month.$quot;

In the gases division, Linde was able to achieve slight increases in sales and earnings in the second quarter compared to the first quarter of 2009. However, if the figures for the first six months of 2009 are compared with those for the first six months of 2008, there was an overall decline.

Sales in the gases division for the six months to 30 June 2009 were €4.350bn, which was 7.6% lower than the figure for the comparable previous year period of €4.709bn, despite an increase of 1.7% over the first quarter of 2009.

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 in group structure, the fall in sales was 6.7%.

The operating profit of the gases division increased by over 8% in the second quarter compared to the first three months of the year. However, when the figures are compared for the first six months of 2009 and 2008, operating profit for 2009 at €1.138bn was 4.7% below the previous-year figure of €1.194bn.

The gases division succeeded in limiting the reduction in earnings in a difficult market environment, improving its operating margin from 25.4% in 2008 to 26.2% in 2009.

In the Western Europe operating segment, business continued to be adversely affected by the substantial loss in value of the British pound, as in the first quarter. Against this background, sales in the first half of 2009 were €1.849bn, 11.2% below the figure for the previous year period of €2.083bn.

In most regions of Western Europe, including the company’s three major sales markets, the UK, Germany and Scandinavia, volumes in the tonnage (on-site), liquefied gases and cylinder gas product areas declined significantly in comparison with the previous year period.

In the Americas operating segment, the group achieved sales in the first six months of 2009 of €993m, 8.2% below the figure for the first six months of 2008 of €1.082bn. Linde was, however, able to achieve a slight increase in operating profit of 1.9% to €210m, compared to the figure for the first half of 2008 of €206m.

In the Asia and Eastern Europe operating segment, sales in the first six months of 2009 were €877m, 7.2% below the figure for the previous year period of €945m.

Operating profit of €266m was almost as high as the figure for the first half of 2008 of €269m, there was a significant increase in the operating margin as a result, from 28.5%to 30.3%.

In comparison with the first quarter of 2009, the group saw the clearest signs of an economic recovery in the Asia & Eastern Europe operating segment. This trend was demonstrated, for example, by higher capacity utilisation of its tonnage plants and by the awarding of new projects. The group also continued to reinforce its leading market position in this region as a result of the start-up of new plants.

In the South Pacific & Africa operating segment, the group was able to continue to increase sales in the first six months of the current year - by 5.4% to €666m (2008: €632m). It was able to more than offset adverse movements in the exchange rates of the Australian dollar and South African rand as a result of the consolidation for the first time of the Australian LPG business, Elgas.

Business trends in the individual product areas of the Gases Division were affected by the continuing challenging global economic environment. On a comparable basis, sales in the first six months of the year in the bulk business fell by 9.1%, sales in the on-site (tonnage) business were 5.4% below the figure for the previous year period, and in the cylinder gas business, sales fell by 9%. The Healthcare product area once again proved immune to the economic crisis; sales rose 5.6%.

The continuing uncertainty in the market environment for the gases business has not caused the group to change in any way its original target for the gases business.

In a press release it said it wantsw to grow at a more rapid pace than the market and to continue to increase its productivity.

Given the current trends towards economic recovery, it is expecting a better business performance in the gases division in the second half of 2009 than in the first six months of the year. The group noted however that this positive development will, however, not be sufficient to ensure that sales and earnings for the full year 2009 will reach the levels achieved in 2008.