With group revenue up 8.7% to €12.468bn, and group operating profit up 11.8% to €2.996bn, The Linde Group has announced it’s third quarter business performance.
The group described the growth, in the nine months ending September 30th, as a “steady performance.”
“We have fared quite well, although economic trends have been anything but dynamic and exchange rates have increasingly moved against us, especially in the third quarter,” commented Professor Dr Wolfgang Reitzle, Chief Executive Officer of Linde AG, on the interim report. “The fact that we have been able to increase our revenue and earnings even in these conditions and that we have maintained a high level of profitability says a great deal about our business model and our set-up.”
Linde is the second European company to state that exchange rates had hampered business performance – with the other company being Air Liquide when it announced business performance last week.
Against a background of unfavourable exchange rate effects, Linde is now seeking to achieve group operating profit in the full year 2013 of around €4bn. Until now, the group’s target had been a figure for group operating profit of at least €4bn. Linde continues to assume that it will achieve a higher level of group revenue in the current year 2013 than in 2012.
For the 2016 financial year, the group has set itself the target of generating group operating profit of at least €5bn. Return on capital employed (ROCE) in the same year should be around 14%. These medium-term targets are founded on the assumption that there will not be any significant shifts in exchange rates compared with those prevailing at the year-end when the medium-term outlook was formulated. If exchange rates over the coming years remain at similar levels to those which have applied recently, this would reduce group operating profit by around €250m in 2016 and might also have an adverse impact on return on capital employed.
In the nine months to 30 September 2013, group revenue rose by 8.7% to €12.468bn, compared with €11.469bn in the first nine months of 2012. During the reporting period, exchange rate effects increasingly had an adverse impact on revenue trends. In particular, the Australian dollar and the US dollar, the British pound and currencies in the emerging economies fell sharply against the euro. After adjusting for these effects (corresponding to revenue of €407m), the increase in revenue was 12.7%. US homecare company Lincare, acquired by Linde in August 2012, contributed €1.176bn to group revenue.
Linde was able to reinforce its profitability at a high level and increased its group operating profit by 11.8% to €2.996bn (2012: €2.680bn). As a result, the group operating margin rose to 24% (2012: 23.4%). One item contributing to the earnings trend was income of €57m resulting from a dividend payment made by a company in North America in which Linde holds an investment. On the other hand, it should be noted that there were adverse currency fluctuations during the reporting period. The effect of these distortions was to reduce earnings by €88m. Without the distortions, Linde would have achieved a 15.6% increase in group operating profit.