Linde Plc · NASDAQ:LIN
Linde — Non-Deal Roadshow (January 2006)
44 slides from Linde's roadshow presentation, Jan 13, 2006
Slide 1: North America Roadshow 12th-13th January, 2006
Linde Group North America Roadshow 12th-13th January, 2006 Thomas Eisenlohr, Head of Investor Relations 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 Group Linde Engineering 04 | Structure 24 | Highlights 05 | 9 Months 2005 25 | Product segments 06 | Strategy 26 | Global positioning 09 | Cash flow 27 | Business environment 10 | Net debt, Gearing 28 | EBITA, EBT 11 | Working capital 29 | 9 Months 2005 12 | ROCE Material
Slide 4: 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 5: Sales and EBITA 9M 2005: strong performance
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 6: 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 6
Slide 7: 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 8: 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 9: A profitable company with 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 10: 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 11: Working capital reduction 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 12: Ambitious ROCE targets drive 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 13: Linde Gas
Linde Group Linde Gas 13
Slide 14: 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 14
Slide 15: Linde Gas: 9M 2005 sales
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 16: 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 17: Gas: EBITDA margin at leading edge within 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 17
Slide 18: 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% 12% +53.1% 414 1,568 38% 45% 1,575 -0.4% 1,121 27% 26% 887 +26.4% 590 821 20% 17% +39.2% 2000 2004 On-site Bulk Cylinder Healthcare 18
Slide 19: 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 20: 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 21: 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 * - F
Slide 22: 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 23: Linde Engineering
Linde Group Linde Engineering 23
Slide 24: 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 24
Slide 25: 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 25
Slide 26: 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 27: 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 28: 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 29: 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 30: Material Handling
Linde Group Material Handling 30
Slide 31: 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 — Growth focus on fast growing regions: — already well positione
Slide 32: Material Handling ahead of peers on 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 32
Slide 33: 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 34: 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 35: 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 36: Linde outperformed DAX and DJ Europe Chemicals index
Linde Group Linde outperformed DAX and DJ Europe Chemicals index, since Jan. 2003 Source: Bloomberg 36
Slide 37: Appendix
Linde Group Appendix 37
Slide 38: Linde Engineering: Change of accounting treatment for 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: Engineering: Earnings bridge 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 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
Slide 44: What matters.
Linde Group What matters. Innovation. Internationality. Performance. 44