The decision of The Linde Group to call and redeem a €400m subordinated bond at its first call date perhaps reflects the stark difference in the interest rates and financial climates of 2003 and 2013.

It definitely reflects the solid financial position that the group finds itself in, reinforced by the news this week that group revenue and profitability have again shown double-digit increases in first quarter 2013.

Revenue rose by 10.3% to €3.985bn, compared with €3.614bn in the first three months of 2012, while Linde was also able to continue to reinforce its profitability at a high level and increase group operating profit by 12.6% to €953m (2012: €846m).

As a result, the group’s operating margin rose to 23.9%.

So how and where were these results achieved?

Lincare impact

One of the first points that Linde makes is the positive impact of US homecare company Lincare, acquired last year in a deal estimated to be worth up to $4.6bn. Revenue generated by Lincare in the reporting period was €397m.

The effect of the Lincare business is perhaps most noticeable in the group’s Gases Division, which achieved 14.8% revenue growth in the three months to 31st March 2013, rising from €3.004bn in first quarter 2012 to €3.448bn in first quarter 2013.

This equates to a rise in revenues of around €444m – with Lincare contributing vastly to this sum (€397m). In fact, as Linde itself explains, on a comparable basis (excluding exchange rate, natural gas price effects and the consolidation effect of Lincare), the increase in revenue was 3.7%.

Such figures also appear to reflect the growing significance of the healthcare product area for the gases community. A comparison of the various product areas in the Gases Division reveals that, as expected, the fastest rate of growth was in the Healthcare business; Linde generated revenue in first quarter of 2013 of €764m, more than double the figure achieved in first quarter of 2012 of €310m.

In the cylinder gas product area, revenue generated held steady at €997m, while in the liquefied gases product area, Linde achieved a slight increase in revenue in the first quarter of 2013, on a comparable basis, of 0.7% to reach €812m. In the on-site business, revenues rose on a comparable basis by 5.0% to €875m.

By region

The strategy of The Linde Group is geared towards long-term profitable growth and focuses on the expansion of its international business with forward-looking products and services.

With this in mind, Linde will likely have been buoyed by its business expansion in South & East Asia in the quarter.

Linde achieved its greatest business expansion in South & East Asia. In the cylinder gas and liquefied gases product areas, the group saw volume increases in most of the countries in the region, while Linde also generated significant revenue growth in the Greater China region. In the South Pacific region, on the other hand, the market was characterised by declining volumes – especially in the technical accessories and equipment business.

business stats merger finance

These peaks and troughs summed up activity across the globe, as business trends in the individual segments in the Gases Division varied in each case, depending on prevailing economic conditions.

In the EMEA segment (Europe, Middle East, Africa), revenue rose by 2.5% to €1.497bn (2012: €1.460 bn) and was strengthened in particular by the contribution made by the Continental European homecare operations acquired from Air Products in April 2012. But business trends in the EMEA segment were adversely affected by the prevailing unfavourable economic conditions in the eurozone. While an economic slowdown was also seen in Eastern Europe, the economy in the Middle East remained robust.

In the Asia/Pacific segment, revenue rose by 3.3% to €926m (2012: €896m).

In the Americas segment, Linde saw first quarter revenue growth of 56.8% to €1.054bn, though this is again where the impact of Florida-based Lincare skews the picture somewhat. Excluding exchange rate and natural gas price effects, and the consolidation effect of Lincare, the increase in revenue in this segment was actually 2.2%.

Among other positive trends in the Americas, however, there were positive trends in the liquefied gases product area in North America, while growth in South America was boosted in particular by increases in revenue in Venezuela and Argentina.

On-site revenues Q1 2013


A healthy project pipeline in the on-site business, a solid group financial position, and the expected performance of both the liquefied gases and cylinder gases businesses in line with macroeconomic trends leave Linde confident in its outlook.

Furthermore, the impact of the healthcare sector, which is expected to achieve further significant increases in the future, offers confidence ahead.

Against this background, Linde continues to expect that revenue generated by the Gases Division in the 2013 financial year will be higher than that achieved in 2012 – and that operating profit will increase in the current year.

Linde 2013 outlook

In the group’s Engineering Division, where first quarter 2013 was characterised by a substantial number of significant new orders, a relatively stable market environment is expected in the international large-scale plant construction business in the remaining part of 2013 and the high order backlog creates a basis for a solid business performance over the next two years.

Linde believes it is well-positioned in the international market for olefin plants, natural gas plants, air separation plants and hydrogen and synthesis gas plants and will derive lasting benefit in particular from investment in two structural growth areas: energy and the environment.