OREANDA-NEWS. In the second quarter of 2013, the technology company The Linde Group built on its solid business performance in the first quarter of the year. In the six months ended 30 June 2013, it once again achieved increases in Group revenue and Group operating profit. "We have held our own quite well in the first half of the year, in an environment which is proving challenging to everyone," commented Professor Dr Wolfgang Reitzle, Chief Executive Officer of Linde AG, on the interim report. "Although the economic tailwind has subsided somewhat, we have continued to achieve profitable growth. The expansion of our Healthcare operations in particular made the greatest contribution here."

Linde is equipped for the rest of the financial year and confirms its outlook. "We want to achieve a higher level of Group revenue in 2013 than in 2012 and to generate Group operating profit in the current year of at least EUR 4 bn," explained CEO Reitzle. The Group also believes that it remains on track to achieve its medium-term targets: Linde is still seeking to generate Group operating profit of at least EUR 5 bn in the 2016 financial year. Return on capital employed (ROCE) should be around 14 percent in the same year.

In the first half of 2013, Group revenue rose by 10.5 percent to EUR 8.207 bn, compared with EUR 7.425 bn in the first half of 2012. Exchange rate effects had an impact on revenue trends. During the reporting period, some currencies (especially those in emerging economies, the British pound and the Australian dollar) lost value against the euro. After adjusting for these exchange rate effects, the increase in revenue was 12.7 percent. US homecare company Lincare, acquired by Linde in August 2012, contributed revenue of EUR 792 m to the growth of the Group.

Linde was able to reinforce its profitability at a high level and increased its Group operating profit by 13.6 percent to EUR 1.966 bn (2012: EUR 1.731 bn). As a result, the Group operating margin rose to 24.0 percent (2012: 23.3 percent).

Profit for the period increased in the first half of 2013 by 11.4 percent to EUR 715 m (2012: EUR 642 m). After adjusting for non-controlling interests, profit for the period attributable to Linde AG shareholders was EUR 660 m (2012: EUR 586 m). This gives earnings per share of EUR 3.56 (2012: EUR 3.42).


Gases Division

Linde achieved 14.5 percent revenue growth in the Gases Division in the six months to 30 June 2013 to EUR 7.021 bn, when compared with revenue of EUR 6.131 bn in the first half of 2012. During the reporting period, the Lincare business contributed EUR 792 m to the total revenue of the Gases Division. On a comparable basis (i.e. after adjusting for exchange rate effects, changes in the price of natural gas and the effect of the Lincare acquisition on the consolidation), the increase in revenue was 3.6 percent. Within the Gases Division, Lincare is included in the Americas segment and the Healthcare product area.

Linde's Gases Division saw a 14.1 percent increase in operating profit to EUR 1.915 bn (2012: EUR 1.679 bn). This gives an operating margin of 27.3 percent (2012: 27.4 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), revenue rose by 2.4 percent in the first half of 2013 to EUR 3.046 bn (2012: EUR 2.974 bn). On a comparable basis, the increase in revenue was 4.4 percent. Operating profit improved by 3.8 percent to EUR 876 m (2012: EUR 844 m). The operating margin therefore rose to 28.8 percent (2012: 28.4 percent).

Business in the EMEA region was strengthened in particular as a result of the contribution made by the Continental European homecare operations acquired by Linde from Air Products in April 2012.

Business trends in the EMEA segment were adversely affected by the prevailing unfavourable economic conditions in the eurozone. Demand in the liquefied gases and cylinder gas product areas was accordingly modest. However, positive trends were to be seen in the on-site business throughout the EMEA region.

The market environment in Eastern Europe (with the exception of Russia) was characterised by a slowdown in economic activity. The economy in the Middle East on the other hand remained robust.

In the Asia/Pacific segment, revenue rose by 2.3 percent in the six months to 30 June 2013 to EUR 1.897 bn (2012: EUR 1.855 bn). On a comparable basis, the increase in revenue was 4.4 percent. In particular, growth in the first half of the year was adversely affected by the weaker economic environment in manufacturing industry as well as in the mining industry in the South Pacific region. Operating profit was up 2.7 percent to EUR 497 m (2012: EUR 484 m). This resulted in an operating margin of 26.2 percent (2012: 26.1 percent).

Within the Asia/Pacific segment, the most positive trends were to be seen in the business in the South & East Asia region, where there was double-digit growth. Linde achieved volume increases here in all product areas, especially in the on-site business. Linde also generated further revenue growth in the Greater China region, whereas the market in the South Pacific region was characterised by declining volumes.

In the Americas segment, Linde generated revenue growth in the first half of 2013 of 58.1 percent to EUR 2.137 bn (2012: EUR 1.352 bn). This significant increase was due above all to the contribution made by US homecare company Lincare. Lincare operates solely in North America and contributed revenue of EUR 792 m in the first six months of 2013 to the total revenue of the Americas segment. On a comparable basis (i.e. after adjusting for exchange rate effects, changes in the price of natural gas and the effect of the Lincare acquisition on the consolidation), the increase in revenue in the Americas segment was 2.3 percent. Operating profit rose by 54.4 percent to EUR 542 m (2012: EUR 351 m), mainly as a result of the Lincare business. The operating margin was 25.4 percent (2012: 26.0 percent).

In North America, there were positive trends in Linde's electronic gases business and the Group also achieved growth in its on-site business. Linde was able to continue to strengthen its business in South America, generating increased revenue in Venezuela and Argentina in particular. Compared with its performance in these countries, growth in business was much more modest in Brazil.

A comparison of the various product areas in the Gases Division reveals that, as expected, the fastest rate of growth was in the Healthcare business, following the acquisitions made by the Group in the course of 2012. Here, Linde generated revenue in the first half of 2013 of EUR 1.529 bn, more than double the figure achieved in the first half of 2012 of EUR 664 m. After adjusting for exchange rate effects and the effect of the Lincare acquisition on the consolidation, revenue growth in the Healthcare product area was 7.8 percent.

In the cylinder gas product area, revenue generated in the six months to 30 June 2013 was EUR 2.053 bn. On a comparable basis, this was 0.6 percent higher than the figure for the first half of 2012 of EUR 2.040 bn. In the liquefied gases product area, Linde achieved an increase in revenue in the first half of 2013 of 1.5 percent on a comparable basis to EUR 1.659 bn (2012: EUR 1.634 bn). In the on-site business (where Linde supplies gases on site to major customers), revenue rose on a comparable basis by 5.8 percent to EUR 1.780 bn (2012: EUR 1.682 bn).