News reaches us from Munich of a solid first quarter for The Linde Group, as the company recorded increases in both sales and operating profit, with the latter now reaching €602m.

In the first quarter of the 2008 financial year, Linde achieved an increase in sales of 7.5% and an increase in operating profit, after adjusting for exchange rate effects, of 11.1% to €602m. Operating profit therefore increased at a faster rate than sales, with the operating margin at group level rising by 70 basis points to 20.6%. Synergies arising from the acquisition of BOC are believed to have contributed to this positive trend.

Discussing the bright beginning to the year, CEO Dr Wolfgang Reitzle said, “We have seen a solid start to the new financial year and are therefore confident about the remaining part of the year. We confirm 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 a 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,” he added.

Earnings before taxes on income (EBT) at the end of March were €239m, however this decrease is mainly due to the fact that the figure for the first three months of 2007 included a book profit of €510m on the sale of businesses.

Earnings after tax at the end of the first quarter were €172m compared with €458m in 2007, with earnings attributable to Linde AG shareholders standing at €160m, giving earnings per share of €0.96.

In a global market environment which continued to be stable, the group’s Gases Division achieved an 8% increase in sales in the first quarter, after adjusting for exchange rate effects, to €2.301bn. If changes in the price of natural gas and changes to group structure are also taken into account, the rate of sales growth was 7.5%, while if all these factors are ignored, sales increased by 2.3% from €2.249bn at 31st March 2007.

The Linde Group’s participation in joint ventures gave rise to an increase in sales of 12.9% with such sales growth demonstrating that the joint venture business model is an important part of its strategy, especially in the Asian region. These sales are not included in group sales, in accordance with Linde’s accounting rules.

The operating profit of the Gases Division rose 10.7%, after adjusting for exchange rate effects, to €586m. All the operating segments contributed to the overall positive business performance of the Gases Division.

Linde expects average annual growth of around 7% in 2008 and in subsequent years in the global gases industry. The short-term and medium-term targets remain the same. Linde wants its Gases Division to grow at a more rapid pace than the market and to increase its earnings at a faster rate than sales.

The market environment was especially stable in core markets. In the UK, the Healthcare (medical gases) and cylinder gases product segments performed particularly well, while growth in Germany was broadly-based.

In the Asia & Eastern Europe operating segment, which saw an increase in sales to €464m in the first quarter of 2008, the adjusted rate of sales growth was 9.7%. The unadjusted rate of growth was 48.2%, based on a prior year figure of €313m. Operating profit also improved dramatically, by 47.2% to €131m. In the South Pacific & Africa operating segment, the Gases Division achieved a 10.3% increase in sales on a comparable basis to €297m. Operating profit rose in this segment by 3% to €68m.