Linde plc · NASDAQ:LIN
Linde — FY2004 Earnings Presentation
40 slides from Linde's earnings presentation, Mar 22, 2005
Slide 1: Analysts' Conference Full Year Results 2004
Linde Group Analysts’ Conference Full Year Results 2004 Frankfurt, March 22, 2005 3.00pm
Slide 2: Agenda
Linde Group Page 4 Presentation of Dr Wolfgang Reitzle President & CEO, Linde AG Page 17 Presentation of Dr Peter Diesch CFO, Linde AG Page 32 Appendix
Slide 3: Disclaimer
Linde Group Disclaimer This presentation has been prepared independently by Linde AG (“Linde”). The presentation contains statements which address such key issues as Linde’s growth strategy, future financial results, market positions, and product development. Such statements should be carefully cons
Slide 4: Presentation of Dr Wolfgang Reitzle, President and CEO
Linde Group Analysts’ Conference Full Year Results 2004 Frankfurt, March 22, 2005 Dr Wolfgang Reitzle, President and CEO, Linde AG
Slide 5: Linde Group: a good performance in 2004
Linde Group Linde Group… a good performance in 2004 — Sales plus 4.8% to €9,421 million, +6.3% excl. currency — Excl. Refrigeration +8.5%, excl. currency +10.1% — Incoming Orders up 6.1% to €9,637 million — Excl. Refrigeration +8.4%, excl. currency +10.1% — EBITA plus 14.9% to €785 million, +16.6% e
Slide 6: Linde Group: a promising outlook for 2005
Linde Group Linde Group… a promising outlook for 2005 — Sales and EBITA will exceed FY 2004 — Capex of around €1 billion — ROCE of 10.0% — Sales and Incoming Orders for the first 2 months 2005 on track — Sales up 9.9% to €1,313 million, Incoming Orders up 10.4% to €1,544 million Assumptions: — World
Slide 7: Linde Gas: another successful year 2004
Linde Group Linde Gas… another successful year 2004 — Sales up 4.2% to €4,003 million (cons.), +6.9% excl. currency — On-site: €821 million, +6.3% (+9.1% excl. currency) — Bulk: €1,121 million, +7.1% (+9.3% excl. currency) — Cylinder: €1,568 million, +0.8% (+3.5% excl. currency) — Healthcare: €634 m
Slide 8: Linde Gas: Improvement and Growth Initiatives (1)
Linde Group Linde Gas… Improvement and Growth Initiatives (1) — Efficiency Improvement — Fit-For-Future program fully on track (€120 million cost reduction achieved in 2 years) — Plan to launch a Growth and Performance (GAP) program in 2005, to identify and exploit additional efficiency and growth p
Slide 9: Linde Gas: Improvement and Growth Initiatives (2)
Linde Group Linde Gas… Improvement and Growth Initiatives (2) — Eastern Europe — Sales 2004 increased to €430 million, +11% excl. currency — Strong growth ahead in the On-site business — 5 start-ups in 2005: 4 Air separation plants, 1 HyCo plant — Total Capex: €150 million — Annual sales growth targ
Slide 10: Linde Gas: positive outlook for 2005
Linde Group Linde Gas… positive outlook for 2005 — Increase in Sales and EBITA — ROCE of 11.0% — Capex of around €600 million, main focus on new On-site business — Long-term positive outlook based on: — Regional Diversification, Performance Improvement and Product Segments with over-proportionate gr
Slide 11: Linde Engineering: simply a strong business
Linde Group Linde Engineering… simply a strong business — Sales up 24.5% to €1,581 million — EBITA improved by 50.0% to €69 million — ROCE increased to 17% (2003: 14.8%), exceeding target for 2005 — Incoming orders of €1,525 million exceeds last year’s high level — Good project situation across all
Slide 12: Linde Engineering: excellent outlook for 2005
Linde Group Linde Engineering… excellent outlook for 2005 — Sales and EBITA at least on last year’s high level — ROCE of 16% — Order backlog > €2.3 bn — Promising order situation in all product segments — Regional focus on Middle East and China — Highest growth rates for ethylene, oxygen and synthes
Slide 13: Material Handling: strong performance improvement
Linde Group Material Handling … strong performance improvement — 2004: A good year for the entire Industrial Truck Industry — Sales up 10.1% to €3,372 million — EBITA significantly increased by 22.4% to €191 million — Despite steel price effect of minus €18 million — Margin improved from 5.1% to 5.7
Slide 14: Material Handling: Improvement and Growth Initiatives
Linde Group Material Handling… Improvement and Growth Initiatives — Efficiency Improvement — TRIM.100 program fully on track (€100 million cost reduction achieved in 2 years) — Plan to launch a follow-up program in 2005, leading to further improvement of processes and cost structures — Asia/China —
Slide 15: Material Handling: promising outlook for 2005
Linde Group Material Handling… promising outlook for 2005 — 2005: Expected slower market growth for the entire Industrial Truck Industry — Growth drivers remain USA and Asia (especially China) — Slower growth in Western Europe vs 2004, above-average increase in demand in Eastern Europe — Increase in
Slide 16: Linde: What matters?
Linde Group Linde… What matters? — Linde aspires to be LeadIng. — LeadIng. means to Linde: — Innovation. — Internationality. — Performance. — Gas & Engineering and Material Handling have the potential to fulfill these requirements 16
Slide 17: Presentation of Dr Peter Diesch, CFO
Linde Group Analysts‘ Conference Full Year Results 2004 Frankfurt, March 22, 2005 Dr Peter Diesch, CFO, Linde AG
Slide 18: Financial Highlights
Linde Group Financial Highlights — Earnings improved — Strong Cash Flow — Focus on Growth — Financial Gearing overachieved — Key Financial Ratios improved — Incoming orders & Sales per February 2005 on track 18
Slide 19: Group Key Figures
Linde Group Group Key Figures (in € million) 2003 2004 in % Incoming orders 9,079 9,637 6.1 3) Sales 8,992 9,421 4.8 4) EBITDA1) 1,456 1,541 5.8 EBITA1) 683 785 14.9 EBT 287 518 80,5 Net income 108 274 153.7 Capital employed 8,371 7,979 -4.7 Equity 3,886 4,081 5.0 ROCE1) 7.7% 9.5% ROE2) 7.2% 13.0% C
Slide 20: Group Cash Flow
Linde Group Group Cash Flow (all Divisions generate positive free cash flow) 1500 1,281 1,249 1,145 1000 891 886 705 626 505 500 412 € million 400 10 0 -500 -4,034* -1000 1999 2000 2001 (IAS) 2002 (IAS) 2003 (IAS) 2004 (IAS) Operating cash flow Free cash flow before dividend * Includes acquisition o
Slide 21: Group Capex & Sales
Linde Group Group Capex & Sales 1100 10000 9,421 8,833 8,992 1050 8,726 9000 8,450 1000 8000 including financial assets 950 6,194 7000 Sales (€ million) Capex (€ million) 900 6000 Capex 850 5000 Sales 800 1,037 4000 979 965 967 750 3000 913 885 700 2000 650 1000 600 0 1999 2000 2001 (IAS) 2002 (IAS)
Slide 22: Group CAPEX by division
Linde Group Group CAPEX by division (incl. Financial assets) € million 967* 1,037* 7.2% 34 (3%) 11 (1%) 18 (2%) 1000 29 (3%) 433 (41%) -11.3% 750 488 (51%) Rental/Leasing 252 Rental/Leasing 249 13 (1%) -48.0% 500 25 (1%) +32.3% 250 430 (44%) 569 (53%) 0 2003 2004 Gas Engineering Material Handling Re
Slide 23: Group Net Debt and Gearing Reduction
Linde Group Group Net Debt and Gearing Reduction (Net debt = Financial debt – cash & cash equivalents and securities) (Gearing = Net debt / equity) 4.000 88.60% 100% 90% 74.90% 3.500 80% 68.30% 62.50% 70% 3.000 57.70% 60% € billion 48.22% 2.500 50% 40% 2.000 3.659 30% 3.264 2.814 20% 1.500 2.342 2.4
Slide 24: Working capital reduction
Linde Group Working capital reduction of €905 million over 3 years 2500 9500 8992 8856 * 9000 2000 8833 8726 Working Capital (€ million) 8500 Sales (€ million) 1500 Working Capital 8000 Sales 1000 2101 1721 1513 1196 7500 500 7000 0 6500 2001 2002 2003 2004 Reach of material 85.6 days 71.0 days 60.6
Slide 25: Key Ratings ratios
Linde Group Key Ratings ratios (Including pensions & leasing) 10 105 102 96 9 9.0 95 EBITDA* / Net 7.7 Net debt / Equity 8 interest expense 85 7 6.5 75 76 6 EBITA* / Net 5 Net debt / Funds interest expense 4.7 65 from operations 3.8 4 3.9 55 Net debt / Capital 3.1 3.7 3.1 employed 3 45 2.8 47 45 2 N
Slide 26: Linde Engineering – Change of accounting treatment with regard to EBITA
Linde Group Linde Engineering – Change of accounting treatment with regard to EBITA Up to now: So far, EBITA of LE included the following: Interest income from long-term construction contracts. Other interest income. Starting Due to the change, the following applies: 31/12/04: now, only the interest
Slide 27: Engineering - Earnings bridge between old and new method
Linde Group Linde Engineering - Earnings bridge showing difference between old and new method 2003 2004 2004 61 82 13 -13 +13 -2 -5 -3 -4 15 -15 +15 17 14 54 69 75 46 52 32 EBITA Other EBITA Other Other Goodwill EBT EBITA Other EBITA Other Other Goodwill EBT „old“ interest „new“ interest interest am
Slide 28: Corporate – Change of accounting treatment with regard to EBITA
Linde Group Corporate – Change of accounting treatment with regard to EBITA Up to now: So far, EBITA of Corporate included the following: Intercompany profit elimination between LE & LG due to sale of plants. Reclassification of recognized interest income from EBITA to the financial result . Startin
Slide 29: Corporate - Earnings bridge between old and new method
Linde Group Corporate - Earnings bridge showing difference between old and new method € million -158 -172 -119 -99 -121 20 13 17 23 Old Old Consolid- Financial Other New Reversal of Actual New method method ation result from interest method Refrigeration 2004 method 2003 2004 LG/LE long-term income
Slide 30: Incoming orders & Sales per February 2005
Linde Group Linde Group – Incoming orders & Sales per February 2005 (in € million) Incoming orders Sales ∆ in % ∆ in % 1,398* 10.4 1,544* 1,201* 9.3 1,313* Material 513 6.6 547 4.3 483 Handling 463 280 18.2 331 Engineering 120 35.8 163 625 8.0 675 Gas 625 8.0 675 2004 2005 2004 2005 *Total is consol
Slide 31: Focus 2005
Linde Group Focus 2005 — Ongoing Cost Reduction & Efficiency Improvements — Further improve Budgeting / Controlling systems and processes — Strengthen HR Development 31
Slide 32: Appendix
Linde Group Appendix
Slide 33: Key Rating ratios
Linde Group Key Rating ratios (Including pensions & leasing) 2002 2003 2004 EBITDA* / net interest expense 6.5 7.7 9.0 EBITA* / net interest expense 3.1 3.8 4.7 Net debt / Equity 102 96 76 Net debt / Capital employed 47 45 39 Net debt / EBITDA* 2.8 2.5 2.0 Net debt / funds from operations 3.9 3.7 3.
Slide 34: Group ROCE
Linde Group Group ROCE We use ROCE as the key measure of success in the individual business segments and for the Group. 2002 2003 2004 Target (2005) Group 7.0% 7.7% 9.5% 10% Linde Gas 9.6% 10.1% 10.9% 11% Linde Engineering 13.3% 11.7%* 17.0% 16% 16% Material Handling 8.7% 9.7% 12.0% (2007) * Since 2
Slide 35: Pension Obligations – net obligation €985 million
Linde Group Pension Obligations – net obligation €985 million In € million 2003 2004 Defined benefit obligation 1,857 1,932 Of which internally financed 940 880 Of which externally funded 917 1,052 Fair Value of plan assets 796 947 Net obligation 1,061 985 Unrecognized actuarial losses -148 -205 Ser
Slide 36: Pension Related Expenses and Cash Payments
Linde Group Pension Related Expenses and Cash Payments 2003 2004 Pension Cash Pension Cash In € million expense payments expense payments 1. Defined Benefits Plans Regular 111 88 110 79 (of which financial items) (59) (47) 2. Special contribution 131 84 3. Defined Contribution Plans 12 12 13 13 Tota
Slide 37: Linde Gas: Key Figures
Linde Group Linde Gas: Key Figures In € million 2003 2004 Sales 3,483 4,003 EBITDA before special items 1,014 1056 Amortization of intangible assets (excluding goodwill -416 -416 amortization), depreciation of tangible assets & leased assets EBITA before special items 598 640 Special items (net) -10
Slide 38: Linde Engineering: Key Figures
Linde Group Linde Engineering: Key Figures In € million 2003 2004 Sales 1,270 1,581 EBITDA 66 83 Amortization of intangible assets (excluding goodwill -20 -14 amortization), depreciation of tangible assets & leased assets EBITA 46 69 Financial result 12 11 EBTA 58 80 Amortization of goodwill -4 -5 E
Slide 39: Engineering EBITA 2004
Linde Group Linde Engineering EBITA 2004 40 36 35 32 30 25 € million 20 20 17 18 14 15 10 8 5 5 0 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Old method New method 39
Slide 40: Material Handling: Key Figures
Linde Group Material Handling: Key Figures In € million 2003 2004 Sales 3,063 3,372 EBITDA before special items 464 487 Amortization of intangible assets (excluding goodwill amortization), -308 -296 depreciation of tangible assets & leased assets EBITA before special items 156 191 Special items (net