The Linde Group. Compelling Perspectives - November 2018
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
The Linde Group. Compelling Perspectives. November 2018
Disclaimer
Forward-looking Statements
This communication contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking
statements are based on our beliefs and assumptions on the basis of factors currently known to us. These forward-looking statements are identified by terms
and phrases such as: anticipate, believe, intend, estimate, expect, continue, should, could, may, plan, project, predict, will, potential, forecast, and similar
expressions. These forward-looking statements include, but are not limited to, statements regarding benefits of the business combination, integration plans and
expected synergies, and anticipated future growth, financial and operating performance and results. Forward-looking statements involve risks and uncertainties
that may cause actual results to be materially different from the results predicted or expected. No assurance can be given that these forward-looking statements
will prove accurate and correct, or that projected or anticipated future results will be achieved. Factors that could cause actual results to differ materially from
those indicated in any forward-looking statement include, but are not limited to: regulatory or other limitations imposed as a result of the business combination;
the ability to successfully integrate the Praxair and Linde businesses; the risk that the consummation of the business combination could have adverse effects on
the market price of Linde’s or Linde plc’s shares or the ability of the companies to retain customers, retain or hire key personnel, maintain relationships with their
respective suppliers and customers, and on their operating results and businesses generally; the risk that Linde plc may be unable to achieve expected synergies
or that it may take longer or be more costly than expected to achieve those synergies; state, provincial, federal and foreign legislative and regulatory initiatives
that affect cost and investment recovery, have an effect on rate structure, and affect the speed at and degree to which competition enters the industrial gas,
engineering and healthcare industries; outcomes of litigation and regulatory investigations, proceedings or inquiries; the timing and extent of changes in
commodity prices, interest rates and foreign currency exchange rates; general economic conditions, including the risk of a prolonged economic slowdown or
decline, or the risk of delay in a recovery, which can affect the long-term demand for industrial gas, engineering and healthcare and related services; potential
effects arising from terrorist attacks and any consequential or other hostilities; changes in environmental, safety and other laws and regulations; the
development of alternative energy resources; results and costs of financing efforts, including the ability to obtain financing on favorable terms, which can be
affected by various factors, including credit ratings and general market and economic conditions; increases in the cost of goods and services required to
complete capital projects; the effects of accounting pronouncements issued periodically by accounting standard-setting bodies; conditions of the debt and
capital markets; market acceptance of and continued demand for the companies’ products and services; changes in tax laws, regulations or interpretations that
could increase Praxair’s, Linde’s or Linde plc’s consolidated tax liabilities; and such other factors as are set forth in Linde’s annual and interim financial reports
made publicly available and Praxair’s and Linde plc’s public filings made with the SEC from time to time, including but not limited to those described under the
heading “Risk Factors” in Linde plc’s European Listing Prospectus, published on October 24, 2018, and Item 8.01 of Linde plc’s Current Report filed with the SEC
on October 31, 2018, which is available via the SEC’s Web site at www.sec.gov. The foregoing list of risk factors is not exhaustive. In light of these risks,
uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time
than Linde, Praxair or Linde plc has described. All such factors are difficult to predict and beyond our control. All forward-looking statements included in this
document are based upon information available to Linde, Praxair and Linde plc on the date hereof, and each of Linde, Praxair and Linde plc disclaims and does
not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as
required by law.
2
Agenda
1. Operational performance 9M 2018
2. Outlook
Appendix
3 3
Group | Revenue and operating profit by division
Strong margin expansion in both Gases and Engineering
Revenue Operating profit
[EUR m] [EUR m]
+4.8% +9.0%
13,281 13,050
23.9% 3,169 3,301 25.3%
-1.7% +4.2%
+4.5% +6.5%
11,244 10,908
-3.0%
28.5% 3,207 +1.7%
3,260 29.9%
1,809 +11.2% 2,011 8.4% +34.9% 10.2%
152 205
+228 +131 -164
-190
9M 2017 9M 2018 9M 2017 9M 2018
Gases Engineering Other/Cons. Gases Engineering Other/Cons.
Gases Gases
Comparable growth of 4.2 percent driven by organic growth 140bps margin improvement aided by growth, cost reduction
and portfolio optimisation
Engineering Engineering
Revenue development in line with expected project progress 180bps margin improvement due to higher earnings from
individual projects and improved capacity utilisation
4
Operating profit margin Reported growth Growth excluding currency and IFRS 15
Gases Division | Revenue by product area
Solid comparable growth in all product areas
Comparable growth*
[EUR m]
Comments / Additional effects
+4.9%**
+4.2% Healthcare
10,466 10,908
Continued improvement in Lincare
business supported by volume
Healthcare 2,380 +2.3% 2,435 growth and Interim Final Rule
On-site
Growth driven by start-ups and
On-site 2,538 2,645 decaptivations but restrained by
+4.2%
planned turnarounds and
unplanned outage in the Americas
Bulk
Bulk 2,762 +7.0% 2,955
Sustained solid development in all
geographies from higher volumes
and pricing activities
Cylinder 2,786 +3.1% 2,873 Cylinder
Positive underlying momentum in
all operating segments despite
9M 2017 9M 2018 negative effects from portfolio
optimisation
*Excluding currency, natural gas price effects and the first-time application effect of IFRS 15.
**Comparable growth adjusted for portfolio optimisation.
5
Gases Division | Revenue by operating segment
Comparable growth and margin expansion in all geographies
EMEA ASIA/PACIFIC AMERICAS
[EUR m] [EUR m] [EUR m]
Revenue Revenue Revenue
4,386 4,410
+0.5%
3,273 3,719 3,437
3,212 -7.6%
+3.9%
-1.9%
+4.4%
+5.1%
9M 2017 9M 2018 9M 2017 9M 2018 9M 2017 9M 2018
Operating Profit Operating Profit Operating Profit
1,383 1,393
+0.7%
914 930 910 937
+1.8% +3.0%
31.5% 31.6% 27.9% 29.0% 24.5% 27.3%
9M 2017 9M 2018 9M 2017 9M 2018 9M 2017 9M 2018
Reported growth Comparable growth: excluding currency, natural gas price effects and the first-time application effect of IFRS 15
Operating profit margin 6
Engineering Division | Key figures
Strong margin improvement by 180bp
Revenue Order intake Order backlog
[EUR m] [EUR m] [EUR m]
1,809 2,011
+11.2%
4,988
4,178
9M 2017 9M 2018 +19.4%
Operating profit 2,943
[EUR m]
1,969
205 +49.5%
152
8.4% +34.9% 10.2%
9M 2017 9M 2018 9M 2017 9M 2018 31/12/2017 30/09/2018
— Revenue development in line with expected project progress
— Margin improvement due to higher earnings from individual projects and improved capacity utilisation
— Further order intake received from PJSC Nischnekamskneftekhim (NKNK) for olefin plant in Nischnekamsk, Republic of Tatarstan,
Russian Federation and Praxair to supply hydrogen plant on its U.S. Gulf Coast hydrogen system
Reported growth Operating profit margin
7
Agenda
1. Operational performance 9M 2018
2. Outlook
Appendix
8 8Outlook 2018
Expect Group & Gases revenue & earnings at top end of range
2018
Group
Revenue ±0 to +4% versus 2017 adjusted for FX and IFRS 15
Operating profit ±0 to +5% versus 2017 adjusted for FX
ROCE Around 10 percent
Gases Division
Revenue ±0 to +4% versus 2017 adjusted for FX and IFRS 15
Operating profit ±0 to +5% versus 2017 adjusted for FX
Engineering Division
Revenue Around EUR 2.6 billion
Operating margin Around 10 percent
Please see definitions of key financial figures in the appendix.
9Agenda
1. Operational performance 9M 2018
2. Outlook
Appendix
10 10Group | Potential currency impact
Potential impact on revenue and operating profit in 2018
Group revenue adjusted for FX*
[EUR m]
17,113
-260
-44 -29 -19 -17 -7 16,603
-17 -15 -12 -10 -10 -8 -7 -55
2017 USD AUD CNY BRL TWD GBP ARS INR NZD CHF NOK SEK SAR Others 2017
adj. for
FX*
Group operating profit adjusted for FX*
[EUR m]
4,213
-54
-12 -1 4,087
-10 -5 -7 -4 -3 0 -4 -2 -3 -3 -19
2017 USD AUD CNY BRL TWD GBP ARS INR NZD CHF NOK SEK SAR Others 2017
adj.
Avg. rate for FX*
1.13 1.47 7.63 3.61 34.4 0.877 18.8 73.6 1.59 1.11 9.33 9.64 4.24
2017
2017 adj.
1.20 1.54 7.81 3.97 35.6 0.888 22.3 76.6 1.69 1.17 9.85 9.84 4.49
for FX*
All figures from continuing operations.
11
*Based on spot rates as of 31 December 2017.Gases Division | Potential currency impact
Potential impact on revenue and operating profit in 2018
Gases revenue adjusted for FX*
[EUR m]
14,988
-244
-44 -27 -19 -17 -7 14,506
-11 -15 -12 -10 -7 -8 -7 -55
2017 USD AUD CNY BRL TWD GBP ARS INR NZD CHF NOK SEK SAR Others 2017
adj. for
FX*
Gases operating profit adjusted for FX*
[EUR m]
4,268
-59
-1 4,138
-12 -10 -5 -7 -4 -3 -2 -4 -2 -3 -3 -16
2017 USD AUD CNY BRL TWD GBP ARS INR NZD CHF NOK SEK SAR Others 2017
adj.
Avg. rate for FX*
1.13 1.47 7.63 3.61 34.4 0.877 18.8 73.6 1.59 1.11 9.33 9.64 4.24
2017
2017 adj.
1.20 1.54 7.81 3.97 35.6 0.888 22.3 76.6 1.69 1.17 9.85 9.84 4.49
for FX*
All figures from continuing operations.
12
*Based on spot rates as of 31 December 2017.Gases Division | Integrated Gases Model
Highest value/molecule ratio in Cylinder
Pipeline
On-site
EUR Pipeline
Gas Production Plant
4.0bn e.g. Air Separation
Unit (ASU) > 1.000
On-site supply customers
~15%
of volume
Bulk
EUR
3.8bn
Transport of
> 20.000
~1% liquefied gas
customers
of volume
Value creation
Cylinder
EUR
3.9bn
> 2 Million
Filling sites Retailer customers
Based on FY 2017 revenues.
13Gases Division | Revenue split
Highly diversified customer base with contracted business
Revenue split of product areas by industry Revenue split by industry
Healthcare: 22% On-site: 27% Healthcare
16% — Hospital care, intermediate
care, homecare
6% — Structural growth from
growing and ageing
population
21%
On-site
— 15-year take-or-pay contracts
13% with base facility fees
— Indexation and pass-through
of energy and feedstock costs
18% — Strong customer portfolio
Bulk
5%
— Multi-year contracts
7% — Tank rentals
7% — Driven by application
Cylinder: 26% Bulk: 25% 7% know-how
Homecare Chemistry & Energy Manufacturing Food & Beverages Other Cylinder
Hospital care Metallurgy & Glass Retail Electronics — Includes Specialty Gases
— Cylinder rentals
Healthcare Primary industries Secondary industries — Driven by application
know-how
Based on FY 2017 revenues.
14Gases Division | Operating segments
Linde in EMEA
EMEA Revenue split by region
14% Central Europe
30% Afrika & UK
15% Middle East & Eastern Europe
Southern Europe
Northern Eurpe
Linde presence 18%
23%
No Linde presence
Revenue split by product area Revenue split by industry
Chemistry & Energy
16% 16% 20% Metallurgy & Glass
23% On-site Manufacturing
Bulk 5%
Food & Beverages
Cylinder 4%
3% 15% Electronics
Healthcare Retail
36% 9%
25% Others
28% Healthcare
— Established clusters in Northern Europe, Continental Europe and the UK
— Growing presence in Middle East & Eastern Europe and longstanding leading position in Africa
Based on FY 2017 revenues.
15Gases Division | Operating segments
Linde in APAC
APAC Revenue split by region
East Asia
24%
South Pacific
South Asia & ASEAN
48%
29%
Linde presence
No Linde presence
Revenue split by product area Revenue split by industry
Chemistry & Energy
5% 5%
8% Metallurgy & Glass
23%
On-site Manufacturing
7%
28% 38% Bulk Food & Beverages
Cylinder Electronics
Healthcare 16%
18% Retail
4% Others
29% 19% Healthcare
— Strong position in major industrial clusters in Asia/Pacific
— Solid track record of revenue growth built on a diverse portfolio of leading customers
Based on FY 2017 revenues.
16Gases Division | Operating segments
Linde in the Americas
Americas Revenue split by region
12% North America
South America
Linde presence
No Linde presence 88%
Revenue split by product area Revenue split by industry
Chemistry & Energy
Metallurgy & Glass
21% 21%
On-site Manufacturing
Bulk Food & Beverages
44% 44%
Cylinder 6%
Electronics
Healthcare 5% Retail
23%
3% 6% Others
4% Healthcare
12% 11%
— Established footprint in major industrial clusters in North and South America
— Leader in US respiratory Homecare market
Based on FY 2017 revenues.
17Gases Division | Quality growth
Integrated offering – example Ningbo
China 3 ASUs GAN pipeline
JV with ZRCC GOX pipeline
GHY pipeline
Zhenhai
East Free
Ningbo Trade Zone
South Free Beilun
Trade Zone
Fully integrated cluster
3 ASUs and
— 8 ASUs and 1 HyCo plants linked by ~140 km
filling station
pipeline network
— Production of GOX, GAN, GHY, LOX, LIN and LAR HyCO plants
— Total ASU capacity: 280,000 Nm3/h and filling station
— HyCo capacity: 2,600 Nm3/h
— Several filling stations within the cluster
— Serving On-site (Wanhua, Ningbo Steel and Sinopec
ZRCC) as well as Bulk and Cylinder customers 2 ASUs and
— Supplying different industries within the cluster, filling station
Daxie
e.g. steel, chemicals, electronics
18Gases Division | Quality growth
Applications play an increasing role in Merchant business
Share of Merchant revenue driven Broad portfolio of applications
by tailored applications and solutions in various industries [Example applications]
World China Chemistry & Energy
PLASTINUM ® Gas Injection Moulding
~ 40% — Gas- or water injection moulding is used to build hollow
plastic parts e.g. handles
— By using CO2 instead of nitrogen or water the productivity
~ 30% and process reliability can be considerably increased
Metallurgy & Glass
REBOX®
~16% — Oxygen technology to maximise efficiency and flexibility in
steel reheating furnaces
— Increased productivity, reduced fuel consumption and up to
30% less NOx emissions
~ 1%
Manufacturing
2010 2017 2010 2017
LINDOFLAMM®
— Pre & postheating welding technology with pioneering
Advantages of application and special burners technology
— Increased productivity, lower cost and improved quality
solutions approach standards
— Providing customer solutions creates higher
Food & Beverage
value than pure molecule supply
CRYOLINE® Range
— Higher customer loyalty — Product family of cryogenic freezers
— Transferability of solutions and know-how — Best in-class proprietary technology and hygienic design
across industries and geographies — Global rental program available
19Gases Division | Lincare
Industry leader with balanced business & payor mix
Leading Industry Position Business Mix Payor Mix
Lincare Lincare Oxygen
& AHOM Therapy
36% Medicare 38%
Apria
Medicaid 13%
Rotech Sleep Apnea 28%
AHOM
Private
Insurance
28%
Specialty Services 17%
Local
companies
Infusion &
Enteral
10%
Direct 21%
Other 9%
2011 2017 2017 2017
Source: Linde data 20Integrated Gases & Engineering model
Synergies built on strong Engineering foundation
Gases Engineering
Division Division
2017 Sales: EUR 15.0bn Risk balancing Customer 2017 Sales: EUR 2.4bn
— Capture business — Early awareness
either as plant sales or of new projects
outsourcing contracts — Strong customer
Optimised CAPEX and Technology leadership
— Awareness of relationships geared towards
OPEX for own assets
decaptivation
leveraging expertise
opportunities
into Gases business
Strong competitive
Synergies
position Four technology fields
Operations Innovation
— Long track record (Air Separation |
— Improvement of
of executing applications and
Hydrogen & Syngas |
large-scale projects Natural Gas |
Solution provider solutions
— High cost
for the customer — Insights into Petrochemicals)
competitiveness and customer
energy efficiency processes
21Engineering Division
Core competence in gas processing applicable to full portfolio
6,144 employees* 3,000 engineers 1,000 process engineering patents 4,000 completed plant projects
Expertise & experience
Feedstock Products
Liquefaction Hydrogen Oxygen
Air Natural gas
Rare gases Nitrogen
Hydrocarbons Olefins
Separation Carbon monoxide
Exhaust gases
Tail gases Carbon dioxide Synthesis gas
Thermal Cracking
Offerings
Components Standardised plants Customised plants Services
Air separation plants Hydrogen and Syngas plants Petrochemical plants Natural gas plants
For Linde Gas & third-party customers For the chemical & energy-related industries
*Status: 31/12/2017 22Engineering Division
Balanced revenue, order intake & backlog mix by plant type
Revenue by plant type Order intake by plant type Order backlog by plant type
EUR 2,388m EUR 2,390m EUR 4,178m
21% 26% 23%
23%
10% 7%
7%
9%
20%
20%
36% 23%
35% 46%
46%
27%
6% 7% 4%
4%
2017 2017 2017
2017
Air Separation Plants Hydrogen/Synthesis Gas Plants Olefin Plants Natural Gas Plants Others
23Group | Definition of key financial figures
Earnings per Share (EPS) Earnings per Share (EPS) Return on Capital
Operating Profit
before special items reported Employed (ROCE)
Return Return Return Return
EBIT before special
Profit for the Profit for the period
items adjusted for
period before special attributable to EBIT
amortisation of intangible
items attributable to Linde AG before special items
assets and depreciation
Linde AG shareholders shareholders
of tangible assets
Average
Shares Shares
Capital Employed
Equity (incl. non-controlling interests)
+ financial debt
Number of Number of
+ liabilities from finance leases
weighted average weighted average
+ net pension obligations
outstanding shares outstanding shares
- cash, cash equivalents and securities
- receivables from finance leases
24Corporate Responsibility
Dow Jones STOXX Global
Ethibel
Sustainability FTSE4Good ESG Leaders CDP
EXCELLENCE
Index Indices
Linde listed among Linde has been Linde is a Linde is represented Linde has achieved
leading companies reconfirmed as a component of the in the EURO STOXX A- score for CDP’s
(top 10%) in constituent of the FTSE4Good Sustainability 40 climate and B for
chemicals industry Ethibel Sustainability Index series and the its water rating
Index (ESI) EURO STOXX
Excellence Europe ESG Leaders 50
indices
25Investor Relations
14 Nov 12 Dec
Financial calendar 9M 2018 EGM
Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr
2018 2018 2018 2018 2018 2018 2019 2019 2019 2019
Contact Linde share (untendered)
Phone: Type of share:
+49 89 357 57 1321 Bearer shares
Email: Stock exchanges:
investorrelations@linde.com All German stock exchanges
Internet: Security reference number:
www.linde.com ISIN DE0006483001
CUSIP 648300
26You can also read
