In the first quarter of 2015, the technology company The Linde Group benefited significantly from the weakness of the euro, which led to increases in its group revenue and operating profit.
“In some regions of the world, industrial production was much lower in the first few months of the year than we had expected. However, this was more than offset by positive exchange rate effects,” said Dr. Wolfgang Büchele, Chief Executive Officer of Linde AG.
“As anticipated, the low price of oil has resulted in a cautious investment climate in large-scale plant construction,” explained Büchele.
Depending on future economic trends and exchange rate movements, Linde continues to expect to achieve group revenue of between €18.2bn and €19.0bn in the full year 2015. It anticipates that it will achieve an increase in group operating profit (after adjusting for non-recurring items) in 2015 to between €4.1bn and €4.3bn.
In the first quarter of 2015, group revenue rose by 8.7% to €4.398bn, when compared with the figure for the first quarter of 2014 of €4.045bn. Operating profit increased by 9% to €1.010bn (2014: €927m). Positive exchange rate movements were the most significant factor contributing to the increase. After adjusting for exchange rate effects, group revenue was 0.8% below the figure for the prior-year period. Group operating profit fell by 1.2%.
The group operating margin for the first three months of 2015 was 23%, which was slightly higher than the figure of 22.9% for the first three months of 2014.
In Linde’s Gases Division there was significant growth in the Americas while growth remains weak in EMEA. Elsewhere, order backlog in the Engineering Division remains high. The order backlog at 31 March 2015 remained high at €4.468bn (31 December 2014: €4.672bn).
Due to the current low price of oil and the resultant faltering demand in plant construction, order intake in the first three months of 2015 was, however, just €280m (2014: €701m). Just under half of the total order intake in the first quarter of 2015 came from the Asia/Pacific region. Just over a third of the order intake came from Europe and around 17% from North America. 50% of new orders related to the natural gas plant product area or the hydrogen and synthesis gas plant product area. The rest of the order intake was spread relatively evenly over the remaining types of plant.
“The current market environment is characterised by modest trends in industrial production and a cautious approach to major projects. Given this environment, we’ll be taking further steps to gear our organisation towards profitable growth in order to reinforce our strong competitive position in the global market,” stated Büchele. “Our focus will be on our customers and on two areas which will help us to generate growth: innovation and digitalisation.”