Linde Plc · NASDAQ:LIN
Linde — WestLB Deutschland Conference 2005
43 slides from Linde's conference presentation, Nov 17, 2005
Slide 1: WESTLB Deutschland Conference 2005
Linde Group WESTLB Deutschland Conference 2005 „Corporate Germany‘s Secrets of Success“ Frankfurt, 17th November 2005 Dr Peter Diesch, CFO 1
Slide 2: Who is Linde?
Linde Group Who is Linde? Linde Gas Engineering Material Handling Refrigeration Industrial Gases Air Separation Plants Counterbalanced Trucks Sold Hydrogen Plants Healthcare Warehouse Trucks 10/2004 Natural Gas Plants Ethylene Plants Hydraulic Systems No. 2 in Europe Top 1-3 position No. 1 in Europe
Slide 3: Sales 2004: €9,421 million, EBITA 2004: €785 million
Linde Group Sales 2004: €9,421 million EBITA 2004: €785 million Refrigeration Refrigeration 6% 1% Material Handling 21% Gas 42% Material Engineering Handling 8% 35% Gas 70% Engineering 17% € billion € million 9.600 9.421 800 700 785 9.400 683 9.200 600 658 8.992 9.000 500 +10.1% CAGR 518 8.726 400 E
Slide 4: Good performance in 9M 2005
Linde Group Good performance in 9M 2005 (numbers excluding Refrigeration and amortization of goodwill) — Sales plus 7.8% to €6,833 million — Incoming Orders up 18.6% to €7,903 million — EBITA plus 17.5% to €590 million, EBITA-margin increased from 7.9% to 8.6% — thereof Linde Gas plus 11.9% to €519
Slide 5: Key Success Criteria
Linde Group Key Success Criteria Every Division of Linde must be able to … — have a leading market position — be at least as good as its benchmarks (pure play companies) — have the potential for top-line growth — be able to generate free cash flow — be able to achieve defined ROCE targets 5
Slide 6: Since 2003 Linde is focussed on continuous performance improvement (1)
Linde Group Since 2003 Linde is focussed on continuous performance improvement (1) — Portfolio optimization — Disposal of Refrigeration division — Sale of various other non-core businesses — Set-up of new management tools — Six Sigma — Balanced Scorecard — New 3-year planning-/budgeting-process — De
Slide 7: Since 2003 Linde is focussed on continuous performance improvement (2)
Linde Group Since 2003 Linde is focussed on continuous performance improvement (2) Management Development — New structure of senior management — Since 2003: 17 out of 25 managers are new in their position, thereof 11 were external — Introduction of significant portion of variable compensation for mi
Slide 8: A profitable company with a robust cash flow generation
Linde Group A profitable company with a robust cash flow generation 1500 1,281 1,249 1,145 891 1000 886 705 626 412 400 505 500 € million 10 0 -500 All Divisions generate positive Free Cash flow -4,034* -1000 1999 2000 2001 (IAS) 2002 (IAS) 2003 (IAS) 2004 (IAS) Operating cash flow Free cash flow be
Slide 9: Significant Reduction of Net Debt and Gearing
Linde Group Significant reduction of Net Debt and Gearing Mid-term gearing target of 50% already achieved in 2004, reduction ongoing 4.000 88.60% 100% 90% 74.90% 3.500 80% 68.30% 62.50% 70% 3.000 57.70% 60% 48.22% € billion 2.500 43,60% 50% 40% 2.000 3.659 30% 3.264 2.814 20% 1.500 2.342 2.430 1.968
Slide 10: Working capital reduction of €905 million over years
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 *excluding sales of material 85.6
Slide 11: Ambitious ROCE targets are the drivers for profitable growth
Linde Group Ambitious ROCE targets are the drivers for profitable growth (Def. ROCE=EBITA/Capital Employed) ROCE targets: 2002 2003 2004 Target 2007/8 Linde Gas 9.6% 10.1% 10.9% 13% Linde Engineering 13.3% 11.7%* 17.0% 16% Material Handling 8.7% 9.7% 12.0% 16% Group 7.0% 7.7% 9.5% (to be revised) *
Slide 12: Linde Gas
Linde Group Linde Gas 12
Slide 13: Linde Gas
Linde Group Linde Gas — Industry underlies a very stable growth trend (2-2.5 times GDP) — Leading market position — Highest profitability in the industry — Strong position in fast growing business segments: On-site, Healthcare — Growth focus on emerging markets Eastern Europe and Asia/Pacific 13
Slide 14: Linde Gas: 9M 2005 sales - €3,278 million
Linde Group Linde Gas: 9M 2005 sales - €3,278 million Sales Growth in 9M 2005: Sales Growth in 9M 2005: Y-o-Y (excl. currency) Y-o-Y (excl. currency) On-site 21.2% (21,2%) Germany 5.5% Bulk 8.8% (7.4%) R of Europe 8.1% (6.4%) Cylinder 4.5% (3.5%) N America 11.5% (14.6%) Healthcare 12.4% (12.0%) S Am
Slide 15: ROCE-drivers for Linde Gas
Linde Group ROCE-drivers for Linde Gas Efficiency improvement and Growth initiatives: — „Fit-For-Future“ program will be completed this year and lead to total improvements of €150 million — Start of the „GAP“ program (Growth and Performance) in 2005 — 2/3 of initiatives focused on profitable growth
Slide 16: Gas: EBITDA margin at the leading edge within the industry
Linde Group Linde Gas: EBITDA margin at the leading edge within the industry 28 27 26 EBITDA Margin (%) Linde 25 BOC Air Products 24 Air Liquide Praxair 23 22 21 2000 2001 2002 2003 2004 Source: Company reports, analyst reports 16
Slide 17: Linde Gas: Growth driver On-Site
Linde Group Linde Gas: Growth driver On-Site — High hurdle rates for new investments (IRR, ROCE) ensure high profitability — Stable business due to long-term take or pay contracts — Competitive advantage of Linde Engineering — Strong growth ahead: 14 start-ups in 2005/6, total Capex volume €400 mill
Slide 18: Linde Gas: Healthcare - Growth driver with low capital intensity
Linde Group Linde Gas: Healthcare - Growth driver with low capital intensity — Top 2 global market position — EBITA margin (appx. 20%) above gas industry average — Low Capex ratio (1:1) supports growth — Focus on Homecare and Therapeutic Gases (CAGR in Healthcare > 10%) Sales split 2004 (€ million):
Slide 19: Focus on growth markets Eastern Europe and Asia/Pacific
Linde Group Focus on growth markets Eastern Europe and Asia/Pacific Eastern Europe: — Fastest growing region in Europe, ongoing double-digit growth rates — €430 million sales in 2004 (target: CAGR >10%) — Dominant market position in key markets (market shares > 40%) — Strategy: Extension of market l
Slide 20: Linde Gas: 9M figures and guidance
Linde Group Linde Gas: 9M figures and guidance — Sales grow 10.8% to €3,278 million — EBITA rises 11.9% to €519 million — Guidance confirmed: — Outlook 2005: Increase in sales and EBITA — ROCE increase to 13% by 2008 supported by growth and efficiency gains In € million Q3 05 ∆ 9M 05 ∆ Sales 1,127 1
Slide 21: Linde Engineering
Linde Group Linde Engineering 21
Slide 22: Linde Engineering
Linde Group Linde Engineering — Focussed player with Top 1-3 position in all product segments — Highest profitability in the industry — Business environment provides ongoing order inflow to strong backlog 22
Slide 23: Linde Engineering: Leading market position in all product segments
Linde Group Linde Engineering: Leading market position in all product segments Top 3 No. 1 Olefins (29% MS) Air separation (>40% MS) Syngas (25% MS) Natural gas (9% MS) Top 3 Top 3 23
Slide 24: Linde Engineering: Strong business environment in all segments
Linde Group Linde Engineering: Strong business environment in all segments 9M 2005 order intake: €2,002 million Key growth drivers (6-8% CAGR for all segments): ASU Others • Air Separation: Middle East, China 24% 10% • Olefins: Middle East • Syngas: USA, China, Russia • Natural Gas: Middle East, Nor
Slide 25: Linde Engineering: Stable long-term profitability
Linde Group Linde Engineering: Stable long-term profitability — No oversizing in upcycle markets — Experienced project management — Solid long term margins Sales and EBITA (€ million) 1800 6% 1600 5% 1400 1200 4% 1000 3% 800 600 2% 400 1% 200 0 0% 1998 1999 2000 2001 2002 2003 2004 Sales EBITA margi
Slide 26: Linde Engineering: Highest profitability in the industry
Linde Group Linde Engineering: Highest profitability in the industry 2004 EBT margin 5,0% 4,0% 3,0% 2,0% 1,0% 0,0% EBT Cagr 2002-04 -25% -15% -5% 5% 15% 25% 35% 45% 55% 65% -1,0% -2,0% -3,0% -4,0% -5,0% -6,0% -7,0% -8,0% -9,0% Linde Engineering Lurgi AG (excl. Lentjes, Zimmer AG) Technip (Onshore/Do
Slide 27: Linde Engineering: 9M figures and guidance
Linde Group Linde Engineering: 9M figures and guidance — Sales increase 9.8% on last year´s strong figure — EBITA up 53% to €55 million (2004: €36 million) — EBITA outlook increased for FY 2005: Given the strong business development year-to-date and the ongoing promising outlook, we expect the sales
Slide 28: Material Handling
Linde Group Material Handling 28
Slide 29: Material Handling
Linde Group Material Handling — Megatrend in logistics driven by ongoing globalization — European market leadership — Highest profitability in the industry — Successful multibrand strategy — Growth focus on high margin service business — Growth focus on fast growing regions: — already well positione
Slide 30: Material Handling is ahead of peers concerning profitability
Linde Group Material Handling is ahead of peers concerning profitability (EBITA margins for FY 2004) 5.7% 6% 5.4% 5.2% 5% 3.6% 4% 3% 2% 1% 0% Linde Jungheinrich Toyota Nacco Source: Company data 30
Slide 31: ROCE-drivers for Material Handling
Linde Group ROCE-drivers for Material Handling Efficiency improvement and Growth initiatives: — „TRIM“ program will be completed this year and lead to improvements of €150m — Start of the „GO“ program (Growth and Operational excellence) in 2005 — Focus on sustainable efficiency improvement in core p
Slide 32: Material Handling: 9M figures and guidance
Linde Group Material Handling: 9M figures and guidance — 9 month sales growth increases to 5.5% yoy after +4.8% in H1 — EBITA margin up 0.4% to 4.9% for 9M (2004: 4.5%) — Guidance confirmed: — Increase in sales and significant improvement in EBITA — ROCE increase to 16% by 2007 In € million Q3 05 ∆
Slide 33: Why invest in Linde?
Linde Group Why invest in Linde? — Market leader in all business segments — Focus on above average growth segments — Highest profitability within its peer group — Robust balance sheet supported by strong Free Cash Flow generation — ROCE targets drive clear strategy of profitable growth — Strong trac
Slide 34: Linde outperformed DAX and DJ Europe Chemicals index since Jan. 2003
Linde Group Linde outperformed DAX and DJ Europe Chemicals index, since Jan. 2003 Source: Bloomberg 34
Slide 35: Linde: recent company / sector studies
Linde Group Linde: recent company / sector studies Since Q3 results on 31/10/05: - 07/11: Commerzbank: sector study, Linde, BUY, target price EUR 70 - 08/11: Merck Finck & Co: Linde study, Linde, BUY, target price EUR 70 35
Slide 36: What matters.
Linde Group What matters. Innovation. Internationality. Performance. 36
Slide 37: Appendix
Linde Group Appendix 37
Slide 38: 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 39: Linde 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 40: Engineering: EBITA FY 2004
Linde Group Linde Engineering: EBITA FY 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 40
Slide 41: 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 42: 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 43: Investor Relations Contacts
Linde Group Investor Relations Contacts Thomas Eisenlohr, Head of Investor Relations Phone +49 611 770 610 thomas.eisenlohr@linde.de Robert Schneider Phone +49 611 770 270 robert.schneider@linde.de Jo Raja Phone +49 611 770 128 jo.raja@linde.de 43