Linde plc · NASDAQ:LIN
Linde — Non-Deal Roadshow (July 2009)
52 slides from Linde's roadshow presentation, Jul 3, 2009
Slide 1: Staying on Track. Paris Roadshow
Staying on Track. Paris Roadshow Paris, 2-3 July 2009 Georg Denoke Member of the Executive Board and CFO
Slide 2: Disclaimer
Disclaimer This presentation contains forward-looking statements about Linde AG (“Linde”) and their respective subsidiaries and businesses. These include, without limitation, those concerning the strategy of an integrated group, future growth potential of markets and products, profitability in speci
Slide 3: Agenda
Agenda 1. Operational Performance 2. Financial Position 3. Strategic Set-up and HPO Appendix 3
Slide 4: Highlights
Highlights Q1 operational performance Group sales declined by 5.3%, group operating profit by 7.3% (excluding currency effects) Group operating profit before restructuring charges down by 4%, 20.7% margin (Q1 08: 20.6%) Gases sales declined by 4.4% on comparable basis, margin stable at 25.3% Executi
Slide 5: Gases Division, operating segments
Gases Division, operating segments Diversified global footprint Sales Operating Profit in € million 2,301 -6.3% 586 -6.8% South Pacific 2,157 Comparable*: 546 297 68 & Africa +4.0% 309 +2.0% -2.9% 66 Asia & 464 Eastern Europe 131 -7.8% -1.5% 428 -7.9% 129 Americas 528 104 -5.1% 501 – -7.1% 104 Weste
Slide 6: Gases Division, product areas
Gases Division, product areas Well balanced business mix in € million, comparable*, 2,258* consolidated -4.4% 2,157 Healthcare 238 *excluding currency, natural gas price +5.5% 251 and consolidation effect Tonnage 522 -4.4% 499 Bulk 576 -6.9% 536 Cylinder 922 -5.5% 871 Q1 2008 Q1 2009 ▸ Operational P
Slide 7: Gases Division, project outlook
Gases Division, project outlook Strong committed pipeline — New revenue streams from 64 projects by 2011 (incl. JVs) — Minor number of delays following regular customer contacts — Strong support from emerging markets and energy applications 12 13 33 23 Americas Western Eastern Europe / ME Europe Chi
Slide 8: Group set-up, business synergies of Gases & Engineering
Group set-up, business synergies of Gases & Engineering Two global set-ups with common customer focus Global set-up of Gases Division Plant Sales of Engineering Division Greater China Recent tonnage contracts with long-term Engineering customers: ADNOC 2 tonnage contracts signed in 2007/2008 SAIL (S
Slide 9: Engineering Division, financial track record
Engineering Division, financial track record Leading market position in all segments Air Separation Plants Hydrogen and Synthesis Gas Plants Order intake, € m Q1 09 order intake by segment Top 1 Top 2 Products: Products: — Oxygen — H2/CO/Syngas — Nitrogen — Rare gases — Ammonia — Gas removal 406 Oth
Slide 10: Outlook
Outlook Scenario-based approach given limited economic visibility In an environment of severe industrial slowdown and still limited visibility, we continue with our scenario-based approach for the 2009 outlook: Group Forecasts for sales and earnings range from the same level as the prior year figure
Slide 11: Agenda
Agenda 1. Operational Performance 2. Financial Position 3. Strategic Set-up and HPO Appendix 11
Slide 12: Group, cash flow statement
Group, cash flow statement Strong cash flow generation in € million Q1 08 Q1 09 Operating Profit 602 538 Change in Working Capital -199 -37 Other changes -66 -89 Operating Cash Flow 337 412 Investment in tangibles/ intangibles -256 -267 Acquisitions -11 -60 Other 42 45 Investment Cash Flow -225 -282
Slide 13: Group, financial position
Group, financial position Well spread maturity profile with strong liquidity reserve Net debt in € bn Net debt/EBITDA ratio well within our target range of 2–3x 3,5 4.8 12.815 9.933 3 Target range: 6.427 6.423 6.522 2.7 2.0–3.0x 2.5 2,5 2 30/9/06 2006 2007 2008 31/3/09 2006 2007 2008 Financial debt:
Slide 14: Agenda
Agenda 1. Operational Performance 2. Financial Position 3. Strategic Set-up and HPO Appendix 14
Slide 15: High Performance Organisation (HPO)
High Performance Organisation (HPO) Implementing the next step of our continuous optimisation BOC Acquisition Integration Synergies HPO Transformation The Linde Group Direct merger savings Continuous improvement — Pure play — New operating model — G&A — Process excellence — Portfolio — One culture —
Slide 16: Gases Division, customer industries
Gases Division, customer industries Stability driven by a broad customer base 2008: Split by end-customer groups Others 7% Chemistry & Retail Energy 11% 22% Electronics 5% Metallurgy & Manufacturing Glass 21% 16% Healthcare Food & 11% Beverages 8% ▸ Operational Performance | ▸ Financial Position | ▸
Slide 17: Gases Division, customer industries: Bulk
Gases Division, customer industries Stability driven by a broad customer base 2008: Split of product areas by major end-customer groups Retail Other Electronics Chemistry & Energy Manufacturing Bulk Metallurgy & Glass Tonnage Chemistry & Energy Metallurgy & Glass Food & Beverages Electronics Other F
Slide 18: Gases Division, local business model
Gases Division, local business model 70% of revenues come from a leading market position In bulk & cylinder: >70% of revenues from >30% market share positions Sales split by market shares Market leader in 46 of the 70 major countries, #2 Player in another 10 €9.5 bn <30% ≥ 30% ≥ 40% 70% ≥ 60% Market
Slide 19: Gases Division, local business model: emerging markets
Gases Division, local business model Strong set-up in emerging markets Market leader in 4 out of 5 emerging market regions Eastern Europe & Middle East #1 Greater #1 China South and #1 East Asia South America #2 #1 South Africa ▸ Operational Performance | ▸ Financial Position | ▸ Strategic Set-up &
Slide 20: Industrial gases market, consumption by region
Industrial gases market, consumption by region Wide diversity between mature and developing markets USA: $49 Western Europe: $38 Eastern Europe: $16 China: $2 South and East Asia: $3 South America: $13 Gases market per capita South Africa: $13 Australia: $42 Overproportionate growth in emerging mark
Slide 21: Long term growth drivers: Energy/Environmental Mega-Trend
Long term growth drivers remain intact Energy/Environmental Mega-Trend Our Gases & Engineering solutions address structural challenges: Higher returns on existing fields Enhanced Oil & Gas recovery Nitrogen/CO2 Limited resources / environmental protection Sourer crude / lower emissions Refinery fuel
Slide 22: Long term growth drivers: Healthcare Mega-Trend
Long term growth drivers remain intact Healthcare Mega-Trend Global healthcare systems face structural trends: — MORE patients Increasing consumption of Hospital Care (ageing population) traditional healthcare gases — HIGHER expectations New diagnostics f.ex. COPD*, (quality of life) & therapies Sle
Slide 23: Summary
Summary Q1 operational performance relatively stable Operating margins holding up well, ongoing strong cash flow generation Competitive set-up in an uncertain market environment in 2009 Focus on Gases & Engineering business model, supported by structural mega-trends Financial position: sustainable c
Slide 24: Agenda
Agenda 1. Operational Performance 2. Financial Position 3. Strategic Set-up and HPO Appendix 24
Slide 25: Gases & Engineering technology portfolio
Energy Mega-Trend Gases & Engineering technology portfolio Energy Transport/ Efficiency in Energy value chain Upstream conversion Storage/Climate energy use Fossil Floating Natural Gas LNG ship LNG GTL LPG Numerous (gaseous) LNG processing systems industrial gas applications Fossil Frac Enhanced Oil
Slide 26: Group, Q1 2009 Financial highlights
Group, Q1 2009 Financial highlights in € million Q1 08 Q1 09 Δ in % Sales 2,917 2,695 -7.6 Operating profit 602 538 -10.6 Margin 20.6 20.0 -60bps EBIT before special items and PPA depreciation 397 323 -18.6 Special items 15 0 - PPA depreciation 94 74 - EBIT 318 249 -21.7 Financial Result -79 -79 - T
Slide 27: Group, Q1 2009 Financial highlights: adjusted net income
Group, Q1 2009 Financial highlights in € million Q1 08 Q1 09 Δ in % Net income - Part of shareholders Linde AG 160 115 -28.1 + depreciation/amortisation from purchase price allocation + 94 + 74 + special items - 15 - - net of tax -24 - 23 Adjusted Net Income 215 166 -22.8 - Restructuring costs - +20
Slide 28: Group, Q1 2009 Sales by Divisions
Group, Q1 2009 Sales by Divisions in € million, Q1 2008 Q1 2009 as reported 2,917 -7.6% 2,695 4,709 Gases Division — Comparable* sales development of -4.4%, -1.7% incl. bolt-on acquisitions — Volume effect from lower customer activity drives year-on-year sales decline, pricing remains positive Gases
Slide 29: Group, Q1 2009 Operating Profit by Divisions
Group, Q1 2009 Operating Profit by Divisions in € million, Q1 2008 Q1 2009 as reported 602 -10.6% Gases Division 538 Gases — Operating profit -3.2% excl. currency — Operating margin of 25.3% only slightly below the previous year level (25.5%) — HPO acceleration and lower natural gas prices 586 -6.8%
Slide 30: Gases Division, Q1 2009 Western Europe
Gases Division, Q1 2009 Western Europe in € million, as reported Sales Operating Profit Operating Margin -9.2% 283 -12.7% 1,030 935 247 27.5% -110 bps 26.4% Q1 2008 Q1 2009 Q1 2008 Q1 2009 Q1 2008 Q1 2009 Q1 highlights — Comparable sales development of -3.5%, impact from GBP weakness on reported fig
Slide 31: Gases Division, Q1 2009 Americas
Gases Division, Q1 2009 Americas in € million, as reported Sales Operating Profit Operating Margin -5.1% 104 - 104 +110 bps 20.8% 528 501 19.7% Q1 2008 Q1 2009 Q1 2008 Q1 2009 Q1 2008 Q1 2009 Q1 highlights — Comparable sales development of -7.1% — Operating margin supported by lower natural gas pric
Slide 32: Gases Division, Q1 2009 Asia & Eastern Europe
Gases Division, Q1 2009 Asia & Eastern Europe in € million, as reported Sales Operating Profit Operating Margin 464 -7.8% -1.5% +190 bps 30.1% 428 131 129 28.2% Q1 2008 Q1 2009 Q1 2008 Q1 2009 Q1 2008 Q1 2009 Q1 highlights — Comparable sales development of -7.9% — China: volume declines in tonnage p
Slide 33: Gases Division, Q1 2009 South Pacific & Africa
Gases Division, Q1 2009 South Pacific & Africa in € million, as reported Sales Operating Profit Operating Margin 297 +4.0% 309 -2.9% 68 66 22.9% -150 bps 21.4% Q1 2008 Q1 2009 Q1 2008 Q1 2009 Q1 2008 Q1 2009 Q1 highlights — Comparable sales development of +2.0% — Currency impact from ZAR and AUD off
Slide 34: Gases Division, Q1 2009 Sales bridge
Gases Division, Q1 2009 Sales bridge in € million +2.7% -2.8% 2,301 -1.8% -4.4% 2,157 Q1 2008 Consolidation Currency Natural Gas Price/Volume Q1 2009 ▸ Operational Performance | ▸ Financial Position | ▸ Strategic Set-up & HPO | ▸ Appendix 34
Slide 35: Gases Division, Q1 2009 Joint ventures
Gases Division, Q1 2009 Joint ventures in € million Proportionate Sales Share of Net Income (not incl. in the Group top-line) (contribution to operating profit) 10 Reduction due to full Driven by new plant 139 consolidation of former start-ups, esp. in Asia JV Elgas as of Oct 2, 2008 18 -47.5% +100%
Slide 36: Group, FY 2008 Key P&L items
Group, FY 2008 Key P&L items in € million 2007 2008 Δ in % Sales 12,306 12,663 +2.9 Operating profit 2,424 2,555 +5.4 Margin 19.7% 20.2% +50bps EBIT before special items and PPA depreciation 1,591 1,703 +7.0 Special items 607 59 - PPA depreciation -446 -371 - EBIT 1,752 1,391 - Financial Result -377
Slide 37: Group, FY 2008 Financial key indicators
Group, FY 2008 Financial key indicators Further improvement in all our three key financial indicators Profitable growth for our shareholders: adjusted EPS increase of 8.8% Further improvement in capital returns: ROCE improvement of 210 bps Strong cash flow generation maintained in weakening environm
Slide 38: Group, FY 2008 Adjusted ROCE
Group, FY 2008 Adjusted ROCE in € million Capital Employed Adj. ROCE Adj. ROCE (B/S date) 10.3% 12.4% 15,490 13,884 13,508 7,878 13,696 7,116 Adj. Equity 7,445 7,330 1,703 + Financial debt 1,591 Adj. EBIT + Net pension obligation 403 681 Avg. CE - Net financial services -824 -712 - Cash -903 -1,022
Slide 39: Group, FY 2008 Cash flow statement
Group, FY 2008 Cash flow statement in € million Q1/08 Q2/08 Q3/08 Q4/08 2008 2007 Operating Profit 602 656 652 645 2,555 2,424 Change in Working Capital -199 17 -59 44 -197 -114 Funds from operations 403 673 593 689 2,358 2,310 Paid taxes -38 -77 -86 -28 -229 -336 Other changes -28 -117 -22 -86 -253
Slide 40: Group, FY 2008 Free cash flow after investments
Group, FY 2008 Free cash flow after investments Operating Cash flow in € million -225 337 Free Cash flow Q1 112 Cash Flow from investing activities -199 Q2 479 280 -292 Q3 485 193 -556 Q4 575 19 -1,272 1,876 Total 604 — Strong development of operating CF in Q4 — High investment activties in Q4 for b
Slide 41: Group, FY 2008 Capital expenditure and acquisitions
Group, FY 2008 Capital expenditure and acquisitions Cash Flow from investing activities CAPEX Acquisitions 42.0% in € million -1,272 2,086 -1,683 -1,611 1,470 1,451 1,035 CAPEX/ 576 Acquisitions 1,062 +36.6% Gases 213 Other* -21 -31 Engineering 46 +15.2% 53 -73 -34 Other Proceeds 3,781 442 2007 2008
Slide 42: Gases Division, FY 2008 Capital expenditure
Gases Division, FY 2008 Capital expenditure in € million +36.6% 1,451 506 1,062 +34.2% Western Europe 377 295 +38.5% Americas 213 505 Asia & Eastern Europe 334 +51.2% 145 213 South Pacific & Africa 138 +5.1% 2007 2008 ▸ Operational Performance | ▸ Financial Position | ▸ Strategic Set-up & HPO | ▸ Ap
Slide 43: Group Tax rate
Group Tax rate 39.7% 27.6% 2009 target Range: 25–27% 22.9% 2006 2007 2008 — Post-acquisition restructuring fully effective in 2008 — Positive impact of tax rate changes — Strong performance of the Group in countries with lower tax rates ▸ Operational Performance | ▸ Financial Position | ▸ Strategic
Slide 44: Group Dividend
Group Dividend Consistent dividend policy: dividend development in line with growth of operating profit +5.9% €1.80 +13.3% €1.70 €1.50 2006 2007 2008 ▸ Operational Performance | ▸ Financial Position | ▸ Strategic Set-up & HPO | ▸ Appendix 44
Slide 45: Group, FY 2008 Pensions
Group, FY 2008 Pensions Net obligation increases due to Further actuarial losses of approx. € 400 m actuarial gains/losses avoided due to early optimization of the plan assets portfolio structure DBO Plan Net in € million 45% 28% Shares asset obligation 01.01.2008 5,152 4,813 339 Service costs 106 1
Slide 46: Group, FY 2008 Net debt
Group, FY 2008 Net debt Net debt/EBITDA in € million 4.8 2.7 2.5 2006 2007 2008 108 1,876 329 190 6,427 6,423 353 1,272 Net debt Consolidation Operating Cash Flow Net Dividends Others Net debt 31/12/2007 Cash Flow from interest 31/12/2008 investment activities ▸ Operational Performance | ▸ Financial
Slide 47: Group, FY 2008 Reconciliation of Capital Employed
Group, FY 2008 Reconciliation of Capital Employed 31.12.2007 31.12.2008 Key Financial As reported Non-GAAP Key Financial Effects in € million Figures adjustment Figures Equity incl. minority 7,878 8,249 -1,133 7,116 PPA and disposal effects interest Plus: net debt 6,427 6,423 6,423 Plus: liabilities
Slide 48: Group, FY 2008 Reconciliation of EPS
Group, FY 2008 Reconciliation of EPS 31.12.2007 31.12.2008 Key Financial As reported Non-GAAP Key Financial Effects in € million Figures adjustment Figures EBIT before special items 1,591 1,391 312 1,703 PPA Special items - 59 -59 - Disposal of businesses Taxes on income -356 -230 -112 -342 deferred
Slide 49: Group, Purchase Price Allocation Expected depreciation & amortisation
Group, Purchase Price Allocation Expected depreciation & amortisation Development of depreciation and amortisation (in € million) Impact in 2008: € 371 million Expected range 500 2009 > 275 – 325 2010 > 200 – 250 400 2011 > 175 – 225 300 … 200 2022 < 100 100 0 15 21 07 09 11 20 20 20 20 20 ▸ Operati
Slide 50: Group, accounting considerations Impact of PPA and EFL
Group, accounting considerations Impact of PPA and EFL Purchase Price Allocation (PPA) IFRIC 4: Embedded Finance Lease (EFL) Impact in Q1 2009: € 74 m (Q1 08: € 94 m) Impact* in Q1 2009: € -32 m (Q1 08: € -32 m) Expected impact FY 2009: €275-325 m Expected impact* FY 2009: €-118 m *(on Sales and EBI
Slide 51: Group Definition of financial key indicators
Group Definition of financial key indicators Operating Return EBITDA (incl. IFRIC 4 adjustment) excl. finance costs for pensions Profit excl. special items incl. share of net income from associates and joint ventures adjusted Return Operating profit - depreciation / amortisation ROCE excl. depreciat
Slide 52: Investor Relations Contacts
Investor Relations Contacts Thomas Eisenlohr, Head of Investor Relations Phone +49 89 357 57 1330 [email protected] Robert Schneider Phone +49 89 357 57 1332 [email protected] 52