In the second quarter of 2013, the technology company The Linde Group built on its solid business performance in the first quarter of the year.
In the six months ended 30 June 2013, it once again achieved increases in group revenue and group operating profit. “We have held our own quite well in the first half of the year, in an environment which is proving challenging to everyone,” commented Professor Dr Wolfgang Reitzle, Chief Executive Officer of Linde AG, on the interim report.
“Although the economic tailwind has subsided somewhat, we have continued to achieve profitable growth. The expansion of our Healthcare operations in particular made the greatest contribution here.”
Linde is equipped for the rest of the financial year and confirms its outlook. “We want to achieve a higher level of Group revenue in 2013 than in 2012 and to generate Group operating profit in the current year of at least €4bn,” explained CEO Reitzle. The group also believes that it remains on track to achieve its medium-term targets: Linde is still seeking to generate group operating profit of at least €5bn in the 2016 financial year. Return on capital employed (ROCE) should be around 14% in the same year.
In the first half of 2013, group revenue rose by 10.5% to €8.207bn, compared with €7.425bn in the first half of 2012. Exchange rate effects had an impact on revenue trends. During the reporting period, some currencies (especially those in emerging economies, the British pound and the Australian dollar) lost value against the euro. After adjusting for these exchange rate effects, the increase in revenue was 12.7%. US homecare company Lincare, acquired by Linde in August 2012, contributed revenue of €792m to the growth of the group.
Linde was able to reinforce its profitability at a high level and increased its group operating profit by 13.6% to €1.966bn (2012: €1.731bn). As a result, the group operating margin rose to 24.0% (2012: 23.3%).
Profit for the period increased in the first half of 2013 by 11.4% to €715m (2012: €642m). After adjusting for non-controlling interests, profit for the period attributable to Linde AG shareholders was €660m (2012: €586m). This gives earnings per share of €3.56 (2012: €3.42).
Linde achieved 14.5% revenue growth in the Gases Division in the six months to 30 June 2013 to €7.021bn, when compared with revenue of €6.131bn in the first half of 2012. During the reporting period, the Lincare business contributed €792m to the total revenue of the Gases Division. On a comparable basis (i.e. after adjusting for exchange rate effects, changes in the price of natural gas and the effect of the Lincare acquisition on the consolidation), the increase in revenue was 3.6 percent. Within the Gases Division, Lincare is included in the Americas segment and the Healthcare product area.
Linde’s Gases Division saw a 14.1% increase in operating profit to €1.915bn (2012: €1.679bn). This gives an operating margin of 27.3% (2012: 27.4%).
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 2.4% in the first half of 2013 to €3.046bn (2012: €2.974bn). On a comparable basis, the increase in revenue was 4.4%. Operating profit improved by 3.8% to €876m (2012: €844m). The operating margin therefore rose to 28.8% (2012: 28.4%).
In the Asia/Pacific segment, revenue rose by 2.3% in the six months to 30 June 2013 to €1.897bn (2012: €1.855bn).
In the Americas segment, Linde generated revenue growth in the first half of 2013 of 58.1% to €2.137bn (2012: €1.352bn).
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, following the acquisitions made by the Group in the course of 2012. Here, Linde generated revenue in the first half of 2013 of €1.529bn, more than double the figure achieved in the first half of 2012 of €664m. After adjusting for exchange rate effects and the effect of the Lincare acquisition on the consolidation, revenue growth in the Healthcare product area was 7.8%.
In the cylinder gas product area, revenue generated in the six months to 30 June 2013 was €2.053bn. On a comparable basis, this was 0.6% higher than the figure for the first half of 2012 of €2.040bn. In the liquefied gases product area, Linde achieved an increase in revenue in the first half of 2013 of 1.5% on a comparable basis to €1.659bn (2012: €1.634bn). In the on-site business (where Linde supplies gases on site to major customers), revenue rose on a comparable basis by 5.8% to €1.780bn (2012: €1.682bn).
Gases Division - Outlook Recent economic forecasts indicate that the rate of growth in the global gases market in 2013 will be similar to the rate seen in 2012. Linde remains committed to its original target in the gases business of outperforming the market and continuing to increase productivity.
In its on-site business, Linde has a healthy project pipeline, which will contribute to increases in revenue and earnings over the remaining part of the 2013 financial year. The group expects its liquefied gases and cylinder gas product areas to perform in line with macroeconomic trends. In the Healthcare product area, Linde is expecting to achieve significant increases in revenue and earnings as a result of the acquisitions it has concluded, especially that of Lincare.
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.