Linde Plc · NASDAQ:LIN
Linde — Non-Deal Roadshow (September 2007)
53 slides from Linde's roadshow presentation, Sep 24, 2007
Slide 1: The Linde Group. Growing Together.
The Linde Group. Growing Together. Frankfurt, 24. September 2007 Georg Denoke, CFO
Slide 2: Disclaimer
Disclaimer This presentation contains forward-looking statements about Linde AG (“Linde”), The BOC Group plc (“BOC”) and their respective subsidiaries and businesses. These include, without limitation, those concerning the strategy of an integrated group, future growth potential of markets and produ
Slide 3: Contents
Contents Business Update 1 First half year results 2 Status of integration process 3 Business synergies Company presentation 3
Slide 4: Highlights First Half Year 2007
Highlights First Half Year 2007 Operating performance on solid growth trend — Group sales rise 12.7% to € 5,888 bn in the first half year, Q2 sales up 16.1% to € 3,028 bn — H1 operating profit up by 14.7% to € 1,158 bn, 19.5% increase in Q2 to € 589 mn — Half-year reported EPS increases to € 3.66 (2
Slide 5: Group - Segment overview
Group - Segment overview Sales and operating profit by segment Sales 2007, in € million Q2 ∆ yoy H1 ∆ yoy Division Gases 2,304 9.9% 4,553 8.1% Division Engineering 636 43.6% 1,134 43.2% Division Corporate / Cons. 88 -17.8% 201 -8.2% Group 3,028 16.1% 5,888 12.7% Operating profit 2007, in € million*
Slide 6: Contents
Contents Business Update 1 First half year results 2 Status of integration process 3 Business synergies Company presentation 6
Slide 7: Significant deleveraging achieved
Significant deleveraging achieved Year-end net debt target remains € 7,2-7,5 billion € million 13,677 Debt rating upgrade by one notch 6,977 from S&P and Moody´s in March / April 2007 (S&P: BBB; Moody’s: Baa1) 1,505 2005 Acquisition H1 2007 of BOC 7
Slide 8: Net debt of € 6,977 billion
Net debt of € 6,977 billion Year-end net debt target remains € 7,2-7,5 billion In € million 9.933 128 3.542 57 6.977 258 240 745 762 31.12.2006 Consolidation Disposals Operating Net Interest Dividends Others 30.06.2007 Cashflow investments 8
Slide 9: Group – Cash Flow Statement
Group – Cash Flow Statement Key elements (in € million) Q1/2007 Q2/2007 H1 2007 H1 2006 Operating profit before unusual items 569 589 1,158 863 Change in Working Capital -79 70 -9 12 Funds from operations 490 659 1,149 875 P&L Taxes as reported -201 -94 -295 -150 Accrued taxes on disposals 160 160 P
Slide 10: Synergy program: ramp-up fully on track
Synergy program: ramp-up fully on track € 250 m cost savings to be fully effective in 2009 End of 2008: € 250 m € million 30% 2007 100 15% Supply 20% Procurement 25% 65% G&A 45% 0 End 2006 Q1 Q2 Q3 Q4 — G&A: reduction of overhead in central functions and in regions with overlap — Procurement: price
Slide 11: Continuous improvement culture
Continuous improvement culture GAP programme: Synergies — Strategic programme for •Integration related •Efficiency related future development of the Linde •EUR 250 m savings •Further growth company — Profitable growth and GAP efficiency improvement — Roll-out of experience from all programmes across
Slide 12: Contents
Contents Business Update 1 First half year results 2 Status of integration process 3 Business synergies Company presentation 12
Slide 13: Engineering Division: Leading market position in all segments
Engineering Division 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 competitors: Air Liquide, Air Product
Slide 14: Engineering Division – Good presence in emerging markets (China)
Engineering Division – Good presence in emerging markets offers competitive advantage for the Gases Division (i. e. China) [147 plants] Heilongjiang Jilin Liaoning Xinjiang Beijing Dalian Ningxia Tianjin Shandong Shanxi Jiangsu Gansu Shaanxi Henan Anhui Shanghai Taipei Hubei Taichung Sichuan Zhejian
Slide 15: Engineering Division – Good presence in emerging markets (South-East Asia)
Engineering Division – Good presence in emerging markets offers competitive advantage for the Gases Division (i. e. South-East Asia) [82 plants] Myanmar Hanoi Laos Hainan Yangon Thailand Sepon Bangkok Manila Cambodia Vietnam Philippines Sabah Brunei Malaysia Sarawak Singapor Sulawesi Borneo Sumatra
Slide 16: Entering new markets by joining gas and engineering forces
Entering new markets by joining gas and engineering forces (i. e. Lyse Gas, Norway) Feed Gas LNG Gas Sales Natural Gas LNG LNG Transport by Liquefaction Storage and Satellite Trailer and Unloading Stations Ship – The Engineering Division will deliver a LNG plant for Lyse Gas AS in Norway (order volu
Slide 17: Contents
Contents Company presentation 1 Strategic transformation of The Linde Group 2 Status of integration process 3 First half year results 4 Appendix 17
Slide 18: The Linde Group is a global industry leader
The Linde Group is a global industry leader Strong set-up for future value creation Pure play on Gases & Engineering Both divisions hold leading positions in attractive product segments Integrated offer provides us with a competitive advantage Truly global footprint Worldwide presence with strong lo
Slide 19: Industrial Gases: Stable growth market – attractive opportunities
Industrial Gases Stable growth market – attractive opportunities Strong and stable growth Global Industrial Gases — Expected market growth of 7% p.a. Market Growth 1999-2009e — In line with historic performance €51.0 bn New applications across all end markets CAGR +7 % — For high innovation (electro
Slide 20: Gases Division - A truly global player
Gases Division - A truly global player # 1 or 2 position in 55 countries Present in >70 countries representing >90% of global GDP Market Leader #2 Player Others 20
Slide 21: Gases Division: Leading position in 3 out of 6 growth segments
Gases Division Leading position in 3 out of 6 growth segments Global market shares per growth segments Geographies Products #1 35-40% #2 #1 #2 #1 #4 15-20% 15-20% 15-20% 15-20% 15-20% (1) (2) Eastern South Asia Healthcare Speciality Gases Hydrogen Europe America CAGR 10-15% 5-10% ~15% 6-8% 5-10% ~10
Slide 22: Gases Division Tonnage – pipeline of upcoming and recent start-ups
Gases Division Tonnage – pipeline of upcoming and recent start-ups BP/Sunoco USA Wacker/OMV Borsodchem Germany Hungary Valero Maksi Group SeverCorr USA Russia Bayer USA Corus TISCO PR China Netherlands PR China Chevron / Holly Total Elektrostal USA Germany voestalpine Ukraine Ma Steel Shell Austria
Slide 23: Gases Division Tonnage market outlook
Gases Division Tonnage market outlook Gas supplies to new customer sites in emerging gases markets – Build-up of chemical capacity in South-East Asia, China and Eastern Europe – Steel industry investments in South America, China and India – Outsourcing trend amplifies widespread underlying growth in
Slide 24: Engineering Division: Leading market position in all segments
Engineering Division 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 competitors: Air Liquide, Air Product
Slide 25: Engineering Division: Strong financial track record
Engineering Division Strong financial track record € million 2000 1,863 8% 1800 1,623 7% 1,581 1600 6% 1400 1,270 5% 1200 1,117 1,047 1,036 1000 904 909 4% 800 3% 600 GEA 2% 400 1% 200 0 0% 1998 1999 2000 2001 2002 2003 2004 2005 2006 Sales EBITA-Margin 25
Slide 26: Engineering Division – Good presence in emerging markets (China)
Engineering Division – Good presence in emerging markets offers competitive advantage for the Gases Division (i. e. China) [147 plants] Heilongjiang Jilin Liaoning Xinjiang Beijing Dalian Ningxia Tianjin Shandong Shanxi Jiangsu Gansu Shaanxi Henan Anhui Shanghai Taipei Hubei Taichung Sichuan Zhejian
Slide 27: Engineering Division – Good presence in emerging markets (South-East Asia)
Engineering Division – Good presence in emerging markets offers competitive advantage for the Gases Division (i. e. South-East Asia) [82 plants] Myanmar Hanoi Laos Hainan Yangon Thailand Sepon Bangkok Manila Cambodia Vietnam Philippines Sabah Brunei Malaysia Sarawak Singapor Sulawesi Borneo Sumatra
Slide 28: Entering new markets by joining gas and engineering forces
Entering new markets by joining gas and engineering forces (i. e. Lyse Gas, Norway) Feed Gas LNG Gas Sales Natural Gas LNG LNG Transport by Liquefaction Storage and Satellite Trailer and Unloading Stations Ship – The Engineering Division will deliver a LNG plant for Lyse Gas AS in Norway (order volu
Slide 29: Engineering Division - major market drivers
Engineering Division - major market drivers 6-8% market growth potential in all four end markets Air separation units Capacity extensions in the global steel industry New applications with high oxygen usage like GTL or CTL Development of Clean Energy alternatives could open up new market potential H
Slide 30: Contents
Contents Company presentation 1 Strategic transformation of The Linde Group 2 Status of integration process 3 First half year results 4 Appendix 30
Slide 31: Disposal process accomplished
Disposal process accomplished Proceeds Closing (Enterprise Value, €m) Q4/06 KION Group 4,000 28/12/06 9 Q1/07 Stake in Indura 150 31/01/07 9 Linde Australia 300 01/02/07 9 Stake in JAG 695 01/03/07 9 8 Linde US ASUs 386 09/03/07 9 INO Therapeutics 380 * 27/03/07 9 Q2/07 Asian Jvs with AL 275 27/04/0
Slide 32: Significant deleveraging achieved
Significant deleveraging achieved Year-end net debt target remains € 7,2-7,5 billion € million 13,677 Debt rating upgrade by one notch 6,977 from S&P and Moody´s in March / April 2007 (S&P: BBB; Moody’s: Baa1) 1,505 2005 Acquisition H1 2007 of BOC 32
Slide 33: Synergy program: ramp-up fully on track
Synergy program: ramp-up fully on track € 250 m cost savings to be fully effective in 2009 End of 2008: € 250 m € million 30% 2007 100 15% Supply 20% Procurement 25% 65% G&A 45% 0 End 2006 Q1 Q2 Q3 Q4 — G&A: reduction of overhead in central functions and in regions with overlap — Procurement: price
Slide 34: Continuous improvement culture
Continuous improvement culture GAP programme: Synergies — Strategic programme for •Integration related •Efficiency related future development of the Linde •EUR 250 m savings •Further growth company — Profitable growth and GAP efficiency improvement — Roll-out of experience from all programmes across
Slide 35: Outlook confirmed
Outlook confirmed — Sales increase above market growth Gases Division — Overproportionate increase of operating profit — Average annual capex / sales ratio of 13% — Further significant increase of sales and operating profit based Engineering Division on high order backlog and positive market environ
Slide 36: Contents
Contents Company presentation 1 Strategic transformation of The Linde Group 2 Status of integration process 3 First half year results 4 Appendix 36
Slide 37: Highlights First Half Year 2007
Highlights First Half Year 2007 Operating performance on solid growth trend — Group sales rise 12.7% to € 5,888 bn in the first half year, Q2 sales up 16.1% to € 3,028 bn — H1 operating profit up by 14.7% to € 1,158 bn, 19.5% increase in Q2 to € 589 mn — Half-year reported EPS increases to € 3.66 (2
Slide 38: Group - Segment overview
Group - Segment overview Sales and operating profit by segment Sales 2007, in € million Q2 ∆ yoy H1 ∆ yoy Division Gases 2,304 9.9% 4,553 8.1% Division Engineering 636 43.6% 1,134 43.2% Division Corporate / Cons. 88 -17.8% 201 -8.2% Group 3,028 16.1% 5,888 12.7% Operating profit 2007, in € million*
Slide 39: Gases Division Key Figures
Gases Division Key Figures — Sales increase of 7.9% on comparable basis for the first half year — Operating profit over the first six months 2007 improves by 10.6% to € 1,125 bn — Embedded Financial Lease impact on operating profit of € -69 mn in H1 — Operating margin for the half year up by 60bp to
Slide 40: Solid growth momentum in all regions
Solid growth momentum in all regions Europe — Steady growth in Continental & Northern Europe Sales: € 2,310 mn — Strong growth all over Eastern Europe / Middle East (+8.1%/+6.5% comp.) — Recently approved acquisition in Turkey and Algeria strengthen our market position in attractive growth regions A
Slide 41: Gases Division Product Segment Sales
Gases Division Product Segment Sales — Strongest growth momentum in tonnage driven by production ramp-ups — Ongoing strong development on a broad base in the cylinder, bulk and healthcare segments In € million* H1 07 H1 06 ∆ yoy Bulk 1,357 1,271 6.8% Cylinder 1,837 1,700 8.1% Tonnage 1,025 938 9.3%
Slide 42: Engineering Division Key Figures
Engineering Division Key Figures — Order intake for the first half up 22.0% on last year´s high level — Half-year sales rise by 43.2% to € 1,134 bn — Increase in operating profit of 44.1% to € 98 mn — Order backlog of € 4,700 bn as of end of June In € million Q2 07 ∆ yoy H1 07 ∆ yoy Order intake 531
Slide 43: Net debt of € 6,977 billion
Net debt of € 6,977 billion Year-end net debt target remains € 7,2-7,5 billion In € million 9.933 128 3.542 57 6.977 258 240 745 762 31.12.2006 Consolidation Disposals Operating Net Interest Dividends Others 30.06.2007 Cashflow investments 43
Slide 44: Contents
Contents Company presentation 1 Strategic transformation of The Linde Group 2 Status of integration process 3 First half year results 4 Appendix 44
Slide 45: Income Statement
Income Statement — Sales rise by 12.7% to € 5,888 bn — Overproportional increase in operating profit to € 1,158 bn (+14.7%) — PPA impact of € 201 mn, book gain on disposals of € 574 mn In € million Q2 07 ∆ yoy H1 07 ∆ yoy Sales 3,028 16.1% 5,888 12.7% Operating profit* 589 19.5% 1158 14.7% EBIT befo
Slide 46: Gases Division Sales bridge H1/07
Gases Division Sales bridge H1/07: underlying growth of 7.9% In € million 7.9% 3.1% 4,553 4,212 -2.8% -0.1% H1 06 Currency Natural gas Price/Volume Consolidation H1 07 46
Slide 47: Gases Division Impact of disposals and acquisitions
Gases Division Impact of disposals and acquisitions (in € million) Sales 280 Operating Profit 850 4,553 750 230 1,125 650 4,212 +8.1% 207 +10.6% 180 56 550 1,017 450 206 132 34 130 50 350 250 80 4.006 +7.9%* 4.214 967 +9.2%* 1.035 150 30 50 -50 -20 H1 2006 H1 2007 H1 2006 H1 2007 Cont. operations Di
Slide 48: Gases Division Proportionate contribution of JVs
Gases Division Proportionate contribution of JVs Sales Net Income 16.7% 455 390 115 +8.5% 106 24.1% 36 29 10 340 +0% 284 +19.7% 10 26 19 +36.8% H1 2006 H1 2007 H1 2006 H1 2007 JV´s sold In € million JV‘s 48
Slide 49: Group – Cash Flow Statement
Group – Cash Flow Statement Key elements (in € million) Q1/2007 Q2/2007 H1 2007 H1 2006 Operating profit before unusual items 569 589 1,158 863 Change in Working Capital -79 70 -9 12 Funds from operations 490 659 1,149 875 P&L Taxes as reported -201 -94 -295 -150 Accrued taxes on disposals 160 160 P
Slide 50: 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 51: Major accounting implications Purchase Price Allocation
Major accounting implications Purchase Price Allocation Development of depreciation (€ million) Expected range 500 2007 > 400 – 450 400 2008 > 350 – 400 300 2009 > 250 – 300 200 2010 > 200 – 250 100 2011 < 200 … 0 07 09 11 15 21 2021 < 100 20 20 20 20 20 51
Slide 52: Impact of mandatory adoption of IFRIC 4
Impact of mandatory adoption of IFRIC 4 Financial Statements as of 31 December 2006 The Linde Group shows a significant amount of plants as embedded finance leases due to the adoption of IFRIC 4 Receivables from Financial Services: 31/12/2006 € 1,001 million Important considerations: 31/12/2006 — No
Slide 53: 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 53