Linde Plc · NASDAQ:LIN
Linde — Non-Deal Roadshow (November 2005)
50 slides from Linde's roadshow presentation, November 2005
Slide 1: Scandinavia Roadshow November 10–11, 2005
Linde Group Linde Group Scandinavia Roadshow November 10 – 11, 2005 1
Slide 2: Disclaimer
Linde Group Disclaimer This investor 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 caref
Slide 3: Contents
Linde Group Contents Linde Engineering Linde Group 29 | Highlights 04 | Overview 30 | Global positioning 10 | Cash flow 31 | Profitability (Peer group comparison) 11 | Net debt, Gearing 33 | Business segments 12 | Working capital 34 | Business environment 13 | ROCE 14 | Share price performance Mater
Slide 4: Linde Group divisions overview
Linde Group 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 4
Slide 5: Since 2003 Linde is focussed on continuous performance improvement (1)
Linde Group Since 2003 Linde is focussed on continuous performance improvement (1) Management Development — New structure of senior management — Since 2003: 17 out of 25 managers are new, thereof 11 were external — Introduction of significant portion of variable compensation for middle management —
Slide 6: Since 2003 Linde is focussed on continuous performance improvement (2)
Linde Group Since 2003 Linde is focussed on continuous performance improvement (2) — Portfolio optimization — Disposal of Refrigeration division — Sale of various other non-core businesses — Set-up of new management tools — Six Sigma — Balanced Scorecard — Dedicated performance initiatives — 2003-20
Slide 7: 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 8: Linde is a portfolio driven company
Linde Group Linde is a portfolio driven company. Every Division must … — 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 8
Slide 9: Leading market position in all activities
Linde Group Leading market position in all activities Business Segment Market Position Main Competitors Linde Gas No. 2 in Europe Air Liquide, BOC, No. 4 worldwide Praxair, Air Products Linde Engineering Top 1-3 position Air Liquide, Technip in all activities Material Handling No. 1 in Europe Toyota
Slide 10: 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 11: Significant reduction of Net Debt and Gearing
Linde Group Significant reduction of Net Debt and Gearing Mid-term gearing target of 50% already achieved 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 50% 40% 2.000 3.659 30% 3.264 2.814 20% 1.500 2.342 2.430 1.968 10% 1.000 0% 1999 2000 2001 (IAS)
Slide 12: 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 13: Ambitious ROCE targets are the drivers for profitable growth
Linde Group Ambitious ROCE targets are the drivers for profitable growth ROCE targets: 2002 2003 2004 Target 2007/8 Group 7.0% 7.7% 9.5% (to be revised) 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% * Since 2003 based on new allocation
Slide 14: 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 14
Slide 15: 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 16: Outlook FY2005
Linde Group Outlook FY2005 — Group: Sales* increase, EBITA* to rise at least 10% — Group: Capex (excl. financial assets) around €1bn (2004: €1bn) — Linde Gas: Increase in sales and EBITA — Linde Engineering: Sales increase, significant rise in EBITA — Material Handling: Sales increase, significant i
Slide 17: Linde Gas
Linde Group Linde Gas 17
Slide 18: Linde Gas highlights
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 18
Slide 19: Linde Gas: FY 2004 sales €4,003 million
Linde Group Linde Gas: FY 2004 sales - €4,003 million Asia 1.4% Australia / South America (2003: 0.8%) Africa1.1% 6.8% (2003: 1.0%) (2003: 6.2%) Germany 22.1% Sales Growth in 9M 2005: (2003: 22.3%) Y-o-Y (excl. currency) North America Germany 5.5% 19.8% (2003: 21.3%) R of Europe 8.1% (6.4%) Rest of
Slide 20: 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 20
Slide 21: Linde Gas: Efficiency improvement & Growth initiatives
Linde Group Linde Gas: Efficiency improvement & 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 — 1/3 of initiative
Slide 22: Linde Gas: Sales development 2000-2004 by Product Segments
Linde Group Linde Gas: Sales development 2000-2004 by Product Segments (Total sales, unconsolidated, € million) 4,144 +15.5% 3,466 634 15% +53.1% Sales Growth 9M 2005: 12% 414 38% Y-o-Y (excl. currency) 1,568 45% -0.4% 1,575 On-site +21.2% (+21.2%) +26.4% 1,121 27% Bulk +8.8% (+7.4%) 26% 887 Cylinde
Slide 23: 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 24: Linde Gas: Major On-site start-ups 2005/6
Linde Group Linde Gas: Major On-site start-ups 2005/6 (€400m dedicated Capex) Avesta Polarit * Salzgitter AG - Finland - Germany Maksi Group Sokolovska uhelna - Russia - Czech Republic Merchant Market - Russia Bayer BorsodChem Bayer - Germany - Hungary - PR China Oltchim * - Romania Cognis - France
Slide 25: 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 26: Linde Gas: Healthcare - Focus on Homecare and Therapeutic Gases
Linde Group Linde Gas: Healthcare - Focus on Homecare and Therapeutic Gases Homecare: Therapeutic Gases: • Market growth appx. 10% p. a. • Double-digit sales growth • Fragmented market offers good growth • EBITA margin above sector average opportunities • Linde with unique market position with • Lin
Slide 27: 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 28: Linde Engineering
Linde Group Linde Engineering 28
Slide 29: Linde Engineering highlights
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 29
Slide 30: Linde Engineering: A global business
Linde Group Linde Engineering: A global business Europe* 36% Goteborg Aldershot Dresden Paris Munich Pfungen Rome North America* Dalian Peking Tulsa Seoul 20% Blue Bell Middle East* Hangzhou 15% Baroda Asia/Pacific* Riyadh Abu Bangkok Dhabi 20% South America* Africa* Kuala Lumpur 3% 6% Engineering B
Slide 31: 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 32: 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 33: 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 33
Slide 34: 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 35: Material Handling
Linde Group Material Handling 35
Slide 36: Material Handling highlights
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 and fast growing regions 36
Slide 37: Material Handling: Successful multi-brand strategy
Linde Group Material Handling: Successful multi-brand strategy Differentiated product range offers the best product for every customer: - Clients of different sectors and size have specific needs - Product range offers a large choice of technology, service and options - Full market coverage with lea
Slide 38: Material Handling: FY 2004 €3,372 million sales, €191 million EBITA
Linde Group Material Handling: FY 2004 - €3,372 million sales, €191 million EBITA Sales 2004 by Region Sales and EBITA Asia/Pacific Middle (€ million) 6% East/Africa S. America 2% 4000 9% 1% 8% N. America 3500 3% 3000 7% 6% 2500 5% 2000 4% 1500 3% 1000 2% 500 1% 0 0% 1998 1999 2000 2001 2002 2003 20
Slide 39: 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 39
Slide 40: Material Handling: Efficiency Improvement & Growth Initiatives
Linde Group Material Handling: Efficiency Improvement & 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 processes — R & D, p
Slide 41: Material Handling: Focus on growth market China
Linde Group Material Handling: Focus on growth market China Today: — Market share in China: 9% A-Segment (Premium) — Local production facility — Dominant market position (M/S > 90%) Target market segment Tomorrow: B-Segment — New value truck (OM brand) (Value) — Market volume: appx. 14,000 units — C
Slide 42: 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 43: Appendix
Linde Group Appendix 43
Slide 44: 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 45: 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 46: 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 46
Slide 47: 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 48: 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 49: 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 49
Slide 50: What matters.
Linde Group What matters. Innovation. Internationality. Performance. 50