Linde Plc · NASDAQ:LIN
Linde — Non-Deal Roadshow (May 2008)
41 slides from Linde's roadshow presentation, May 16, 2008
Slide 1: Ambition counts. Roadshow Boston / New York
Ambition counts. Roadshow Boston / New York 15-16 May 2008 Georg Denoke, 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: Highlights – Good set-up for future growth
Highlights – Good set-up for future growth The Linde Group expands on a strong and stable platform Solid start into the new year — Group sales growth excl. currency of 7.5% to € 2.917 bn — Group operating profit up 11.1% exc. currency to € 602 mn — Adjusted EPS rises 20.6% to € 1.29 (07: € 1.07) — S
Slide 4: Group, sales by Divisions
Group, sales by Divisions 7.5% growth in group sales excluding currency effects in € million, as reported +2.0% 2,917 Gases Division 2,860 9,209 — Comparable* growth of +7.5% 2,249 2,301 — 13.6% comparable growth incl. bolt-on acquisitions — 13.0% comparable growth in JVs, not incl. in top-line +2.3
Slide 5: Group, operating profit by Divisions
Group, operating profit by Divisions Margin up by 70 bps in € million, Q1 2007 Q1 2008 as reported +5.8% 602 Gases Division 569 586 — 10.7% operating profit growth excl. currency 556 — Operating margin up by 80 bps to 25.5% Engineering Division +5.4% — Operating profit growth reflects strong project
Slide 6: Gases Division, sales bridge
Gases Division, sales bridge 7.5% comparable growth 13.6% growth including bolt-on acquisitions in € million 2,249 +1.6% -5.7% +7.5% 2,301 -1.1% Q1 2007 Natural Gas Currency Consolidation Price/Volume Q1 2008 ▸ Operational performance | ▸ Outlook | ▸ Defensive growth 6
Slide 7: Gases Division, sales by operating segment
Gases Division, sales by operating segment Underlying growth momentum across all geographies +2.3% As reported Gases Division +7.5% Comparable: excluding currency, natural gas price and consolidation effect 2,249 2,301 +2.8% S. Pacific & Africa 289 297 +10.3% Asia & Eastern Europe 313 +48.2% 464 +9.
Slide 8: Gases Division, joint ventures
Gases Division, joint ventures 13% underlying sales growth in € million, comparable Proportionate Sales Share of Net Income (not incl. in the Group top-line) (contribution to operating profit) 10 139 +13% 123 19 67 9 5 +80% Q1 2007 Q1 2008 Q1 2007 Q1 2008 ▸ Operational performance | ▸ Outlook | ▸ De
Slide 9: Gases Division, operating profit by operating segment
Gases Division, operating profit by operating segment 10.7% increase excl. currency effects in € million, Operating Profit Operating Margin as reported +5.4% 24.7% +80 bps 25.5% 586 556 +3.0% 68 +10 bps 22.9% 22.8% S. Pacific & Africa 66 +47.2% +19.3%* 89 131 Asia & Eastern Europe 28.4% -20 bps 28.2
Slide 10: Gases Division, sales by products areas
Gases Division, sales by products areas (consolidated) Ongoing growth momentum across our business mix in € million, comparable*, 2,301 consolidated +7.5% 2,141* 244 Healthcare 222 +9.9% 578 Tonnage 540 +7.0% 569 Bulk 536 +6.2% Cylinder 843 +8.0% 910 *excluding currency, natural gas price and consol
Slide 11: Engineering Division: Strong margin performance
Engineering Division Strong margin performance — Keeping very strong 8.7% margin Others Olefin 12% 11% — Mid-term sales growth range of 8-10% — Order backlog of € 4,152 bn (year-end 2007: € 4,391 bn) HyCo Order 17% intake — Order intake in Q1 2007 included Ethylene plant for Borouge ASU Q1 08 40% —
Slide 12: The integration process is fully on track
The integration process is fully on track Achievement of cost synergies in line with target — Phasing on track toward our target of €250 mn fully bottom-line effective for 2009 — Implementation of program measures progressing on plan Successful transaction refinancing — Significant deleveraging sinc
Slide 13: Outlook confirmed
Outlook confirmed On track towards our short- and mid-term financial targets Group 2008 — Increase in sales and overproportionate growth of operating profit 2010 — Operating profit above € 3 bn — Adjusted ROCE of at least 13% Gases Division — Sales increase above market growth — Overproportionate in
Slide 14: Focus on Industrial Gases
Focus on Industrial Gases Stable growth – attractive opportunities Strong and stable growth Global Industrial Gases — Expected market growth of ~7% p.a. Market Growth 1999-2011e — In line with historic performance New applications across all end markets ≥ €60 bn CAGR +~7 % — For high innovation (sol
Slide 15: Gases Division – Global balance with strong market shares
Gases Division – Global balance with strong market shares Solid basis for a stable business development Present in around 100 countries, representing >90% of global GDP Market leader in 46 of the 70 major countries, #2 Player in another 10 Market Leader #2 Player Others ▸ Operational performance | ▸
Slide 16: Gases Division - Well balanced business mix
Gases Division - Well balanced business mix Growth opportunities and cash generation Merchant Market Tonnage — Global #1 in bulk and cylinder — Global #2 — Dominant market position in core markets — Significant share of tonnage business — Broad and diversified customer base, increasing exposure to (
Slide 17: Gases Division: Busy pipeline of plant start-ups
Gases Division Busy pipeline of plant start-ups More than half of the new projects located in emerging markets 8 9 24 Americas Western Eastern Europe / ME Europe China / South and East Asia 22 16 7 Africa / 10 South Pacific 2008 2009 2010 ▸ Operational performance | ▸ Outlook | ▸ Defensive growth 17
Slide 18: Mega tonnage win in the energy sector
Mega tonnage win in the energy sector New “Enhanced Gas Recovery” scheme for ADNOC Project key figures — 2 large air separation units (ASU) — Total capacity of 670,000 standard cubic metres of nitrogen per hour — Total investment costs of appx. USD 800 mn — Going on-stream at the end of 2010 — Not c
Slide 19: Energy mega-trends, a sustainable long-term growth driver
Energy mega-trends, a sustainable long-term growth driver Linde has extensive technology expertise 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 g
Slide 20: Energy mega-trends as long-term growth driver
Energy mega-trends as long-term growth driver 2008 signings show our extensive technology expertise Enhanced Oil & Gas Recovery (N2) Tonnage contract with ADNOC Liquid Biogas JV plant with Waste Management 3rd generation Bio-Ethanol Detailed slide see appendix Exclusive cooperation with Süd-Ch
Slide 21: The Linde Group expands on a strong and stable platform
The Linde Group expands on a strong and stable platform Good set-up for future growth Business on a solid growth track — Underlying growth carried by all regions and product segments — Balanced profitability profile, synergy program reaching the bottom line — Attractive project pipeline supported by
Slide 22: Appendix
Appendix a THE LINDE GROUP
Slide 23: Group Financial Highlights
Group Financial Highlights (in € million) Q1 2007 Q1 2008 Δ in % Sales 2,860 2,917 2.0 Operating profit 569 602 5.8 Margin 19.9 20.6 +70bp EBIT before special items and PPA depreciation 358 397 10.9 Special items 510 15 - PPA depreciation -107 -94 - EBIT 761 318 - Financial Result -114 -79 30.7 Taxe
Slide 24: Group – Cash flow Statement
Group – Cash flow Statement Key elements in million € Q1 2007 Q1 2008 Operating profit 569 602 Change in working capital -85 -199 Funds from operations 484 403 Paid taxes -201 -38 Other changes 135 -28 Cash flow from operating activities 418 337 Disposal proceeds 1,810 38 Acquisitions -67 -11 Net in
Slide 25: Engineering Division – Well balanced business mix
Engineering Division – Well balanced business mix Leading market position in all segments Air Separation Plants Hydrogen and Synthesis Gas Plants Top 1 Top 2 Products: Products: — Oxygen — H2/CO/Syngas — Nitrogen — Ammonia — Rare gases — Gas removal — Gas purification Main competitors: Main competit
Slide 26: Engineering Division: Strong financial track record
Engineering Division Strong financial track record € million 3000 10% 2,750 9% 2500 8% 1,958 7% 2000 1,581 1,623 6% 1500 1,270 5% 1,117 1,047 4% 1,036 1000 904 909 GEA 3% 2% 500 1% 0 0% 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Sales EBITDA margin ▸ Appendix 26
Slide 27: Engineering Division - Leveraging customer relationships
Engineering Division - Leveraging customer relationships 147 Linde-built plants in China Heilongjiang Jilin Liaoning Xinjiang Beijing Dalian Ningxia Tianjin Shandong Shanxi Jiangsu Gansu Shaanxi Henan Anhui Shanghai Taipei Hubei Taichung Sichuan Zhejiang Jiangxi Hunan Fujian Mai Liao Taiwan Air sepa
Slide 28: Integration process progressing on plan
Integration process progressing on plan Synergy program on track towards our bottom-line target Bottom-line effect of € 75 mn in 2007 Phasing ahead of time, strong confidence in our target of € 250 mn in 2009 in € million € 250 mn 30% Supply 25% Procurement 125 100 45% G&A 0 End 2006 End 2007 End 20
Slide 29: Integration Process: Synergy program
Integration Process Synergy program 2007 Synergy Achievements (Examples) 2008 Planned Activities (Examples) Consolidation of Corporate Headquarters Continued reduction on selective regional (BOC and Linde) overheads Restructuring of central functions Selected consolidation of operational sites Restr
Slide 30: Operating profit margin improvement
Operating profit margin improvement Synergy impact visible in the bottom-line 2006 2007 Δ Group 19.0% 19.7% +70bps Gases 24.2% 25.1% + 90bps Gases & Corporate Revenue Gases 8,421 9,209 OP Gases 2,035 2,314 OP Corporate -173 -151 Operating Profit 1,862 2,163 OP Margin 22.1% 23.5% +140bps JV impact 49
Slide 31: Solid financial position
Solid financial position Deleveraging executed ahead of plan and expectations Significant reduction of net debt driven by disposal proceeds and strong cash generation [in € mn] 9,933 3,557 1,471 1,742 404 281 363 6,427 31/12/2006 Disposals Net investments Operating Net Dividends Others 31/12/2007 (i
Slide 32: Capital market debt
Capital market debt Solid maturity profile No major maturities until April 2012 after issuance of senior benchmark bonds in April at attractive rates: € 1 bn, 5 years with fixed coupon of 4,375% (at midswap + 24bp) € 1 bn, 10 years with fixed coupon of 4,750% (at midswap + 45 bp) GBP 300 mn, 16 year
Slide 33: Pension financing, key elements
Pension financing, key elements Net pension obligation down to € 403 mn in € million Defined Plan- Net- Net- benefit assets obligation obligation obligations 2007 2006 UK 2,860 2,900 -40 416 Germany 803 283 520 610 US+Canada 395 581 -186 -166 Other activities 1,094 1,049 45 91 Net obligation 5,152 4
Slide 34: Definition of financial key figures
Definition of financial key figures 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. depreciation/amort
Slide 35: Linde Group Reconciliation of EPS
Linde Group Reconciliation of EPS 31.12.2006 31.12.2007 Key Financial As reported Non-GAAP Key Financial Effects € million Figures adjustment Figures EBIT before special item 989 1,145 446 1,591 PPA Special items - 607 -607 - Disposal of businesses Taxes on income -294 -379 23 -356 deferred taxes on
Slide 36: Linde Group Reconciliation of Capital Employed
Linde Group Reconciliation of Capital Employed 31.12.2006 31.12.2007 Key Financial As reported Non-GAAP Key Financial Effects € million Figures adjustment Figures Equity incl. minority 7,031 9,210 -1,332 7,878 PPA and disposal effects interest from 2006 and 2007 Plus: net debt 9,933 6,427 6,427 Plus
Slide 37: Group Financial key indicators
Group Financial key indicators Ahead of targets: Adjusted EPS already accretive in 2007 Double-digit ROCE achieved one year ahead of plan Improved cash generation in the new set-up Adjusted EPS Adjusted ROCE Operating Cash Flow € mn, as reported 1,742 11.4% € 5.02 10.3% 1,227 € 4.66 2006 2007 2006 2
Slide 38: Accounting considerations: Impact of PPA and EFL
Accounting considerations Impact of PPA and EFL Purchase Price Allocation (PPA) IFRIC 4: Embedded Finance Lease (EFL) Impact in Q1 2008: € 94 million Impact* in Q1 2008: € -32 million (Q1 07: € -35 mn) Expected impact 2008: € 375-425 million Expected impact* 2008: € -137 million *(on Sales and EBITD
Slide 39: Purchase Price Allocation
Purchase Price Allocation Confirmation of expected Depreciation & Amortisation Development of depreciation and amortisation (in € million) Impact in 2007: € 446 million Expected range 500 2008 > 375 – 425 2009 > 300 – 350 400 2010 > 200 – 250 300 2011 > 200 … 200 2022 < 100 100 0 07 09 11 15 21 20 2
Slide 40: Mandatory adoption of IFRIC 4
Mandatory adoption of IFRIC 4 Expected impact on sales and EBITDA The Linde Group shows a significant amount of plants as embedded finance leases due to the adoption of IFRIC 4 Sales and EBITDA from IFRIC 4 plants not recognized through reported sales and EBITDA in 2007: € -134 million Receivables f
Slide 41: Investor Relations Contacts
Investor Relations Contacts Thomas Eisenlohr, Head of Investor Relations Phone +49 89 357 57 1330 thomas.eisenlohr@linde.com Robert Schneider Phone +44 20 7647 9614 robert.schneider@linde.com 41