The Linde Group achieved an 11% increase in sales in the nine months to 30th September 2008, maintaining its strong growth rate and performances since the restructuring of the German group.
After adjusting for exchange rate effects, sales increased to €9.392bn and a 12.9% increase in operating profit saw this rise to €1.910bn.
Compared with the prior year period, operating margin at group level improved by 50 basis points to 20.3%.
Perhaps more significantly, it appears that the impact of the ongoing global financial crisis is yet to hit Linde – just as Air Liquide had last week seemed to escape the credit crunch too.
Professor Dr Wolfgang Reitzle, CEO of Linde AG, reflected positively, “Our steady business performance is the result of the successful restructuring of our group.”
“The economic crisis has not yet had an impact on us. We are still on track.”
Linde reaffirmed its forecast and continues to assume that group sales will increase in the current financial year 2008, with earnings also forecast to increase at a faster rate than sales.
“To meet our medium-term targets despite the expected economic downturn, we have already launched a new programme for sustainable process optimisation and productivity improvement. In the next four years, starting in 2009, this integrated programme will result in a reduction in gross cost of between €650-800m,” explained Reitzle.
Earnings before taxes on income (EBT) at 30th September 2008 were €796m, lower than the figure for the prior year period of €1.109bn. This decrease is largely attributed to the fact that the figure for the first nine months of 2007 included a book profit of €574m from the disposal of businesses.
Earnings after tax in the first nine months of the year were €593m, compared to 2007 figures of €764m.
The company’s Gases Division performed comfortably during the period as it achieved an 11% increase in sales (after adjusting for exchange rate effects) to reach €7.157bn.
If changes in the price of natural gas and changes to group structure are also taken into account, the rate of sales growth was around 8.7%.
Operating profit of the Gases Division rose 11.8%, an increase which was again greater than the increase in sales, while the operating margin also improved once again.
In the traditionally healthy Western Europe gases market, Linde recorded a 5.9% increase in sales in the nine months to 30th September (after adjusting for various factors) to attain €3.131bn.
Operating profit rose 4.7% to €854m compared to €816m in 2007, with the main contributors to this development regarded as volume increases and upward price trends in the cylinder gas business, in particular specialty gases, in the important markets of Germany and the UK.
Meanwhile in the Americas region, the group achieved a 6.9% increase in sales in the first nine months of 2008 on a comparable basis. In the Asia & Eastern Europe operating segment, Linde achieved an increase in sales on a comparable basis of 12.4% to total €1.459bn while on the basis of reported figures, the rate of growth was even higher at 27.4% compared with the prior year figure of €1.145 bn.
In the South Pacific & Africa operating segment, the Gases Division achieved a 12.7% increase in sales to €969m with operating profit in the segment of €228m, 2.7% above the figure for the prior year period of €222m.
In terms of business trends, sales in bulk business rose 6.2% to reach €1.761bn and sales in the cylinder gas product area increased by a sturdy 11.6% to €2.843bn. Tonnage or on-site business sales increased by 6.9% to a steady €1.818bn, but in the company’s healthcare segment, labelled by Linde as its ‘promising medical gases business’, an increase of 8.2% saw sales reach €735m.
Linde expects the international gases business to ‘remain a relatively stable and lucrative market’ for the rest of the year and indeed, in the years to coming. The group still anticipates that the rate of growth in its gases division will be around twice as high as the rate of growth in gross domestic product worldwide.
Medium-term targets were confirmed and the expectation remains that the company will outperform the market and increase earnings at a faster rate than sales.
As revealed in The Linde Group Interview of the Month with gasworld earlier this year, the company sees itself benefiting from a ‘leading market position’ in the emerging markets and the strong synergies between both its Gases and Engineering divisions.
In closing, the group once again recorded a dynamic business performance from its Engineering Division, which achieved a 12.4% increase in sales in the first nine months of the year to total €2.063bn.
Operating profit of €183m also saw double-digit growth of 14.4%.
The positive business performance in the division was said to be boosted by the continuing high level of demand in the four main product segments: olefin plants, natural gas plants, air separation plants, and hydrogen and synthesis gas plants.