DGAP-News: Linde AG / Key word(s): Final Results
Linde AG: Linde achieves growth in a difficult market environment and
increases its dividend
16.03.2015 / 07:30
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Press release
Linde achieves growth in a difficult market environment and increases its
dividend
- 2014 financial year:
- Group revenue up 4.5 percent after adjusting for exchange rate
effects to EUR 17.047 bn
- Group operating profit of EUR 3.920 bn, up 1.0 percent after
adjusting for exchange rate effects
- Operating cash flow increases by 5.0 percent to EUR 3.301 bn
- 5.0 percent increase in proposed dividend to EUR 3.15 per share
- All divisions make a positive contribution to the business success
of The Linde Group
- Group outlook for 2015:
- Group revenue should increase to between EUR 18.2 bn and EUR 19.0
bn
- Group operating profit of between EUR 4.1 bn and EUR 4.3 bn
expected
Munich, 16 March 2015 - The technology company The Linde Group has
continued to see positive trends in the 2014 financial year, achieving
increases in both Group operating profit and Group revenue after adjusting
for exchange rate effects. Operating cash flow exceeded the high figure
achieved in 20132.
"Despite unfavourable conditions and adverse exchange rate effects, we have
delivered a good performance in the past financial year," said Dr Wolfgang
Büchele, Chief Executive Officer of Linde AG. "We achieved growth in
revenue and earnings, after adjusting for exchange rate effects, and once
again an increase in operating cash flow. We are therefore in the
gratifying position of being able to maintain our dividend policy which is
geared towards continuity," explained Büchele. The Executive Board and
Supervisory Board will propose a resolution at the Annual General Meeting
that a dividend of EUR 3.15 per share be paid. This is an increase of 5.0
percent compared with the prior-year dividend of EUR 3.00.
"We are currently implementing a wide range of measures which will enable
us to build on our strengths and to continue to enhance our long-term
profitability. Our focus here is on our customers and on our core business.
We have a clear view of our targets and are well on the way towards
achieving them," continued Büchele. In the 2015 financial year, the Group
expects to generate Group revenue of between EUR 18.2 bn and EUR 19.0 bn,
depending on economic trends and exchange rate movements. Linde anticipates
that it will achieve an increase in Group operating profit (after adjusting
for non-recurring items) to between EUR 4.1 bn and EUR 4.3 bn.
Positive business trends in 2014
Linde achieved a 2.4 percent increase in Group revenue in the 2014
financial year to EUR 17.047 bn (2013: EUR 16.655 bn). Revenue trends were
significantly affected by adverse exchange rate fluctuations, especially in
the first nine months of the year. After adjusting for the negative impact
of currency fluctuations, equivalent to revenue of EUR 346 m, the increase
in Group revenue for the 2014 financial year was 4.5 percent.
The exchange rate effects also had an unfavourable impact on Group
operating profit. Linde achieved Group operating profit of EUR 3.920 bn,
which was not quite as high as the prior-year figure of EUR 3.966 bn.
Without these distortions, which reduced earnings in the 2014 financial
year by EUR 83 m, Linde would have achieved an increase in Group operating
profit of 1.0 percent. The Group operating margin for 2014 was 23.0 percent
(2013: 23.8 percent). As far as the margin is concerned, it should be noted
that, as expected, the Engineering Division contributed more to Group
revenue in the 2014 financial year than in 2013. The engineering business
has a lower margin than the Group's gases operations.
Linde achieved earnings per share in the 2014 financial year of EUR 5.94
(2013: EUR 7.10). This figure was adversely affected by non-recurring items
in the second half of 2014. Non-recurring items comprised mainly impairment
losses in the Gases Division. They also included costs in respect of
additional efficiency improvement measures. Earnings per share before
non-recurring items rose to EUR 7.13 (2013: EUR 7.10).
After adjusting for the payment of EUR 300 m made in 2014 to provide
additional external funding for the pension plans in Germany, operating
cash flow rose by 5.0 percent to EUR 3.301 bn (2013: EUR 3.144 bn).
Return on capital employed was 9.5 percent in 2014 (2013: 9.7 percent). The
decrease in ROCE was mainly due to the increase in capital employed at 31
December 2014 as a result of exchange rate effects.
Growth in all segments in the Gases Division on a comparable basis
In the Gases Division, Linde generated revenue in the 2014 financial year
of EUR 13.982 bn, a similar figure to that achieved in 2013 (EUR 13.971
bn). Unfavourable exchange rate effects need to be taken into account when
making a comparison with the prior year. If an adjustment were to be made
for these effects, Linde would have achieved a 2.7 percent increase in
revenue.
The operating profit of the Gases Division in 2014 was EUR 3.835 bn, almost
the same as the prior-year figure of EUR 3.846 bn. Unfavourable exchange
rate effects also need to be considered when looking at earnings trends in
the Gases Division. Without these distortions, which had an impact on
earnings of EUR 86 m, Linde would have achieved a 2.0 percent increase in
operating profit in this division. At 27.4 percent, the operating margin
remained virtually identical to the operating margin achieved in 2013 of
27.5 percent.
Business trends in the individual segments in the Gases Division varied in
each case, depending on prevailing economic conditions.
In the EMEA segment (Europe, Middle East, Africa), Linde generated revenue
in the 2014 financial year of EUR 5.980 bn (2013: EUR 6.090 bn). On a
comparable basis, this was equivalent to an increase of 0.1 percent.
Operating profit improved slightly during the financial year, by 1.1
percent to EUR 1.778 bn (2013: EUR 1.759 bn). The operating margin rose to
29.7 percent (2013: 28.9 percent).
Business trends varied in the individual sub-regions of the EMEA segment.
The prevailing unfavourable economic conditions in the eurozone resulted in
correspondingly modest demand in the various product areas in the
Continental & Northern Europe region. Business performance in this region
was boosted by the start-up of new plants. In the UK and in Eastern Europe,
Linde achieved above-average growth, especially in the on-site business. On
the whole, however, the market environment in Eastern Europe in 2014 was
characterised by an economic slowdown. In the Middle East, on the other
hand, the economy remained robust.
In the Asia/Pacific segment, Linde generated revenue of EUR 3.812 bn in the
2014 financial year (2013: EUR 3.767 bn). On a comparable basis, the Group
achieved 4.7 percent growth in revenue in this segment. Operating profit in
the Asia/Pacific segment in 2014 of EUR 1.010 bn was slightly higher than
the figure for 2013 of EUR 1.005 bn. The operating margin was 26.5 percent
(2013: 26.7 percent).
Within the segment, the most positive trend (growth of 9.7 percent on a
comparable basis) was to be seen in the Greater China region. Here, Linde
achieved volume increases in all product areas. The Group also generated
revenue growth in the South & East Asia region, whereas the market in the
South Pacific region was characterised by declining volumes. Here, the
prevailing weak economic environment in manufacturing industry also had an
adverse impact on growth.
In the Americas segment, Linde was able to achieve an increase in revenue
in the 2014 financial year to EUR 4.314 bn (2013: EUR 4.231 bn). On a
comparable basis, revenue growth here was 4.6 percent. At EUR 1.047 bn,
operating profit was slightly lower than the prior-year figure of EUR 1.082
bn. The operating margin fell to 24.3 percent (2013: 25.6 percent).
Linde achieved solid growth in North America in 2014, especially in the
cylinder gas and liquefied gases product areas. Higher natural gas prices
in North America had an adverse impact on the margin, while inflation in
some of the countries of South America had an adverse impact on the
earnings trend. This environment also hampered Linde's business performance
in the South America region, particularly in the cylinder gas and liquefied
gases product areas.
An above-average performance was to be seen in the Healthcare business in
the Americas segment, especially from the operations of the subsidiary
Lincare. Since its acquisition of Lincare in 2012, Linde has become a
globally leading gases healthcare company specialising along an integrated
respiratory care path. The Group is leveraging its international platform
to expand its respiratory therapies and clinical care services worldwide.
Linde has defined its strategy in the Healthcare segment as providing a
similar range of products and services in all regions of the world,
achieving synergies and making further improvements in its sales and cost
structures.
Gases Division - Outlook
Recent economic forecasts indicate that the global gases market will grow
at a slightly faster pace in 2015 than was the case in 2014. 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 2015 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, stable business trends are expected.
Depending on sector-specific trends and exchange rate movements, Linde is
seeking to achieve revenue in the Gases Division in the 2015 financial year
of between EUR 14.9 bn and EUR 15.4 bn and operating profit of between EUR
4.05 bn and EUR 4.25 bn.
High order backlog in the Engineering Division
Linde's international engineering project business had a successful year in
2014. Revenue and earnings trends reflected the progress made on individual
projects. Revenue in the Engineering Division increased by 7.9 percent to
EUR 3.106 bn (2013: EUR 2.879 bn). Operating profit of EUR 300 m was not
quite as high as the figure for 2013 of EUR 319 m. The operating margin was
9.7 percent (2013: 11.1 percent), which is well above the industry average
and equal to the target Linde had set itself for the 2014 financial year of
around 10 percent.
Order intake in 2014 was EUR 3.206 bn (2013: EUR 3.911 bn). The
exceptionally high figure for order intake in 2013 included a major
contract to build a large ethylene plant for ExxonMobil in Houston, Texas,
USA. More than half of the new orders came from Europe. Around 25 percent
of the order intake came from North America and just over 10 percent from
Asia.
As a result of good trends in order intake, the order backlog in the
Engineering Division continued to grow. At 31 December 2014, it stood at
EUR 4.672 bn (2013: EUR 4.504 bn).
Engineering Division - Outlook
The market environment in the international large-scale plant construction
business in 2015 will be much more volatile than in previous years, mainly
as a result of the fall in the oil price. Nevertheless, the Group is well
positioned in the olefin plant, natural gas plant, air separation plant and
hydrogen and synthesis gas plant product areas and also has a high order
backlog.
Linde assumes that it will be able to generate revenue in the Engineering
Division in the 2015 financial year of between EUR 3.0 bn and EUR 3.3 bn,
with an operating margin of around 8 percent.
"The market environment will continue to be challenging for the foreseeable
future, which makes it all the more important for us to pave the way now
for profitable growth in the future. With the rigorous implementation of
our global Customer Focus Initiative, we will change our structures and
significantly accelerate our processes. To achieve this, we are working
hard every day on streamlining our organisational procedures, optimising
our portfolio and investing in profitable growth areas," concluded Büchele.
Note: The 2014 Annual Report of The Linde Group is available on the
Internet at:
http://annual-report.linde.com/financial-report-2014
To coincide with the publication of the financial statements, a webcast for
analysts will take place today at 2pm German time in English with Dr
Wolfgang Büchele, CEO of Linde AG, and Georg Denoke, CFO of Linde AG.
Journalists will have the opportunity to watch the webcast by following
this link:
http://event.mescdn.com/linde/webcast-20150316
Information about sustainability at Linde can be found in the Corporate
Responsibility Report, which is being published this year for the first
time on the same date as the Annual Report: www.linde.com/cr-report
In the 2014 financial year, The Linde Group generated revenue of EUR 17.047
bn, making it the largest gases and engineering company in the world with
approximately 65,500 employees working in more than 100 countries
worldwide. The strategy of The Linde Group is geared towards long-term
profitable growth and focuses on the expansion of its international
business with forward-looking products and services. Linde acts responsibly
towards its shareholders, business partners, employees, society and the
environment - in every one of its business areas, regions and locations
across the globe. The company is committed to technologies and products
that unite the goals of customer value and sustainable development.
For more information, see The Linde Group online at www.linde.com
Further information:
<pre>
Media Investor Relations
Ulrich Porwollik Dr Dominik Heger
Phone +49.89.35757-1311 Phone +49.89.35757-1334
Matthias Dachwald Bernard Wang
Phone +49.89.35757-1333 Phone +49.89.35757-1328
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16.03.2015 Dissemination of a Corporate News, transmitted by DGAP - a
service of EQS Group AG.
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Language: English
Company: Linde AG
KlosterhofstraÃe 1
80331 München
Germany
Phone: +49.89.35757-01
Fax: +49.89.35757-1075
E-mail: info@linde.com
Internet: www.linde.de
ISIN: DE0006483001
WKN: 648300
Indices: DAX
Listed: Regulated Market in Berlin, Dusseldorf, Frankfurt (Prime
Standard), Hamburg, Munich, Stuttgart; Regulated
Unofficial Market in Hanover; Terminbörse EUREX; SIX
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333301 16.03.2015
DGAP-News: Linde AG: Linde achieves growth in a difficult market environment and increases its dividend
| Source: EQS Group AG