Linde Plc · NASDAQ:LIN
Linde — Dresdner Kleinwort Wasserstein German Investment Seminar 2006
32 slides from Linde's conference presentation, Jan 11, 2006
Slide 1: Dresdner Kleinwort Wasserstein German Investment Seminar 2006
Linde Group Dresdner Kleinwort Wasserstein German Investment Seminar 2006 New York, 9th-11th January, 2006 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 and EBITA 9M 2005
Linde Group Sales 9M 2005: €6,833 million EBITA 9M 2005: €590 million Material Handling 18% Material Gas 47% Handling Engineering 37% 8% Gas 74% Engineering 16% Strong performance in 9M 2005: — Sales plus 7.8% to €6,833 million — Incoming Orders up 18.6% to €7,903 million — EBITA plus 17.5% to €590
Slide 4: 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 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) — 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 6: 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 7: 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 8: 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 9: 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 10: 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 11: Linde Gas
Linde Group Linde Gas 11
Slide 12: 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 12
Slide 13: 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 14: ROCE drivers for Linde Gas
Linde Group ROCE drivers for Linde Gas Efficiency improvement and Growth initiatives: — „Fit-For-Future“ program was completed in 2005 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
Slide 15: 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 15
Slide 16: Linde Gas: Growth drivers On-Site and Healthcare
Linde Group Linde Gas: Growth drivers On-Site and Healthcare On-site Healthcare Sales 2004 €821 million (20% of sales) €634 million (15% of sales) • thereof Institutional €376 million • thereof Homecare €145 million • thereof INO €113 million Key Factors • Long-term stable business • Above average m
Slide 17: Linde Gas: Growth drivers Eastern Europe and Asia/Pacific
Linde Group Linde Gas: Growth drivers Eastern Europe and Asia/Pacific Eastern Europe Asia/Pacific Sales 2004 €430 million (11% of sales) €94 million (2% of sales) Key Factors • Dominant market position • Emerging new industrial clusters in • Strong economic growth leading to China offering numerous
Slide 18: 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 19: Linde Engineering
Linde Group Linde Engineering 19
Slide 20: 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 20
Slide 21: 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 21
Slide 22: 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 23: Linde Engineering: Highest profitability in the industry
Linde Group Linde Engineering: Highest profitability in the industry 2004 EBT-Marge 5,0% 4,0% 3,0% 2,0% 1,0% EBT Cagr 2002-04 Stable long-term profitability: 0,0% -25% -15% -5% 5% 15% 25% 35% 45% 55% 65% -1,0% 1800 6% 1600 -2,0% 5% 1400 -3,0% 1200 4% -4,0% 1000 3% 800 -5,0% 600 2% -6,0% 400 1% 200 -
Slide 24: 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 25: Material Handling
Linde Group Material Handling 25
Slide 26: 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 27: 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 27
Slide 28: ROCE drivers for Material Handling
Linde Group ROCE drivers for Material Handling Efficiency improvement and Growth initiatives: — „TRIM“ program was completed in 2005 and lead to improvements of €150m — Start of the „GO“ program (Growth and Operational excellence) in 2005 — Focus on sustainable efficiency improvement in core process
Slide 29: 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 30: 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 31: 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 31
Slide 32: What matters.
Linde Group What matters. Innovation. Internationality. Performance. 32
Linde Group — Dresdner Kleinwort Wasserstein German Investment Seminar 2006 on 6ix