The technology company The Linde Group achieved a slight increase in group revenue in the first quarter of 2014 when compared with the first quarter of 2013.
Group operating profit was not quite as high as the figure achieved in the prior-year quarter. “We have made a rather modest start to the new financial year,” said Professor Dr. Wolfgang Reitzle, Chief Executive Officer of Linde AG. “Economic growth is still anything but strong. Exchange rate effects also continued to have an adverse impact on our business performance.”
Linde believes that it is still on track for the full year 2014 and confirms its previous outlook: “After adjusting for exchange rate effects, we expect to achieve solid growth in revenue and a moderate improvement in group operating profit in the current financial year,” declared CEO Reitzle.
In the first quarter of 2014, Linde achieved a slight increase in group revenue of 1.5% to €4.045bn, when compared to the figure for the first quarter of 2013 of €3.985bn. Exchange rate effects significantly slowed growth. After adjusting for these effects (which equate to revenue of €215m), the increase in revenue was 7.3%.
Against a background of unfavourable exchange rate fluctuations, Linde achieved revenue in the Gases Division in the three months to 31 March 2014 of €3.367bn, which was not quite as high as the figure achieved in the three months to 31 March 2013 of €3.448bn. If these exchange rate fluctuations had not occurred, Linde would have achieved a 3.9% increase in revenue. On a comparable basis (after adjusting in addition for fluctuations in the price of natural gas), Linde would have achieved a 3.1% increase in revenue in the Gases Division. Revenue trends have also, as expected, been adversely affected by price adjustments and by supply contracts in the Healthcare business being put out again to tender. Revenue in the Gases Division would have increased by 4.1% if an adjustment were also made for these factors.
In the first quarter of 2014, operating profit in the Gases Division fell by 3.1% to €913m (2013: €942m). Exchange rate fluctuations also had an adverse impact here. If these exchange rate movements had not occurred, Linde would have achieved a 2.2% increase in operating profit in the Gases Division. The operating margin remained fairly stable in the reporting period at 27.1% (2013: 27.3%).
Business trends in the individual segments of the Gases Division varied in each case, depending on prevailing economic conditions.
Gases Division - Outlook
Recent economic forecasts indicate that the global gases market will grow at a slightly faster pace in 2014 than was the case in 2013. 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 make a contribution to revenue and earnings in the 2014 financial year and an even more significant contribution to revenue and earnings in subsequent years. The group is forecasting that its liquefied gases and cylinder gas product areas will perform in line with macroeconomic trends. In the Healthcare product area, solid growth is expected.
Against this background, Linde expects to achieve (after adjusting for exchange rate effects) a moderate increase in revenue and operating profit in the Gases Division in 2014 when compared with the 2013 financial year.
Linde expects to achieve solid revenue growth in the Engineering Division in 2014 compared with 2013. The group anticipates that it will achieve an operating margin of around 10%.