Linde Plc · NASDAQ:LIN
Linde — Non-Deal Roadshow (May 2009)
51 slides from Linde's roadshow presentation, May 7, 2009
Slide 1: Staying on Track. London Roadshow
Staying on Track. London Roadshow. 6-7 May 2009 Georg Denoke Member of the Executive Board & CFO
Slide 2: Disclaimer
Disclaimer This presentation contains forward-looking statements about Linde AG (“Linde”) and their respective subsidiaries and businesses. These include, without limitation, those concerning the strategy of an integrated group, future growth potential of markets and products, profitability in speci
Slide 3: Agenda
Agenda 1. Highlights and Operational Performance 2. Financials and KPIs 3. Outlook 4. Strategic set-up and HPO 5. Appendix 3
Slide 4: Highlights
Highlights Q1 operational performance Group sales declined by 5.3%, group operating profit by 7.3% (excluding currency effects) Group operating profit before restructuring charges down by 4%, 20.7% margin (Q1 08: 20.6%) Cash Flow generation remains strong: Operating Cash Flow up 22.3% to € 412 m (Q1
Slide 5: Group, sales by Divisions
Group, sales by Divisions Group sales down 5.3% excluding currency effects in € million, Q1 2008 Q1 2009 as reported 2,917 -7.6% 2,695 4,709 Gases Division — Comparable* sales development of -4.4%, -1.7% incl. bolt-on acquisitions — Volume effect from lower customer activity drives year-on-year sale
Slide 6: Group, operating profit by Divisions
Group, operating profit by Divisions Underlying margin remains strong with 20.7% in € million, Q1 2008 Q1 2009 as reported 602 -10.6% Gases Division 538 Gases — Operating profit -3.2% excl. currency — Operating margin of 25.3% only slightly below the previous year level (25.5%) — HPO acceleration an
Slide 7: Gases Division, operating segments Western Europe
Gases Division, operating segments Western Europe in € million, as reported Sales Operating Profit Operating Margin -9.2% 283 -12.7% 1,030 935 247 27.5% -110 bps 26.4% Q1 2008 Q1 2009 Q1 2008 Q1 2009 Q1 2008 Q1 2009 Q1 highlights — Comparable sales development of -3.5%, impact from GBP weakness on r
Slide 8: Gases Division, operating segments Americas
Gases Division, operating segments Americas in € million, as reported Sales Operating Profit Operating Margin -5.1% 104 - 104 +110 bps 20.8% 528 501 19.7% Q1 2008 Q1 2009 Q1 2008 Q1 2009 Q1 2008 Q1 2009 Q1 highlights — Comparable sales development of -7.1% — Operating margin supported by lower natur
Slide 9: Gases Division, operating segments Asia & Eastern Europe
Gases Division, operating segments Asia & Eastern Europe in € million, as reported Sales Operating Profit Operating Margin 464 -7.8% -1.5% +190 bps 30.1% 428 131 129 28.2% Q1 2008 Q1 2009 Q1 2008 Q1 2009 Q1 2008 Q1 2009 Q1 highlights — Comparable sales development of -7.9% — China: volume declines i
Slide 10: Gases Division, operating segments South Pacific & Africa
Gases Division, operating segments South Pacific & Africa in € million, as reported Sales Operating Profit Operating Margin 297 +4.0% 309 -2.9% 68 66 22.9% -150 bps 21.4% Q1 2008 Q1 2009 Q1 2008 Q1 2009 Q1 2008 Q1 2009 Q1 highlights — Comparable sales development of +2.0% — Currency impact from ZAR
Slide 11: Gases Division, sales by product areas
Gases Division, sales by products areas (consolidated) Volume decline in industrial applications, healthcare growing in € million, comparable*, 2,258* -4.4% 2,157 consolidated 238 Healthcare +5.5% 251 522 Tonnage -4.4% 499 576 Bulk -6.9% 536 Cylinder 922 -5.5% 871 *excluding currency, natural gas pr
Slide 12: Gases Division Project pipeline remains strong
Gases Division Project pipeline remains strong, despite some delays — 64 start-ups will deliver new revenue streams by 2011 (incl. JVs) — Project list remains strong, supported by Emerging Markets and energy applications 12 13 33 23 Americas Western Eastern Europe / ME Europe China / South and East
Slide 13: Business Synergies of Gases & Engineering Divisions
Business Synergies of Gases & Engineering Divisions Leveraging a global set-up and common customer focus Global set-up of Gases Division Plant Sales of Engineering Division Greater China Recent tonnage contracts with long-term Engineering customers: ADNOC 2 tonnage contracts signed in 2007/2008 SAIL
Slide 14: Engineering Division, financial track record
Engineering Division, financial track record Leading market position in all segments Air Separation Plants Hydrogen and Synthesis Gas Plants Order intake, € m Q1 09 order intake by segment Top 1 Top 2 Products: Products: — Oxygen — H2/CO/Syngas — Nitrogen — Rare gases — Ammonia — Gas removal 406 Oth
Slide 15: Agenda
Agenda 1. Highlights and Operational Performance 2. Financials and KPIs 3. Outlook 4. Strategic set-up and HPO 5. Appendix 15
Slide 16: Group Financial key indicators
Group Financial key indicators Further improvement in all our three key financial indicators Profitable growth for our shareholders: adjusted EPS increase of 8.8% Further improvement in capital returns: ROCE improvement of 210 bps Strong cash flow generation maintained in weakening environment: OCF
Slide 17: Group – Cash Flow Statement
Group – Cash Flow Statement Strong Cash Flow generation in € million Q1 08 Q1 09 Operating Profit 602 538 Change in Working Capital -199 -37 Other changes -66 -89 Operating Cash Flow 337 412 Investment in tangibles/ intangibles -256 -267 Acquisitions -11 -60 Other 42 45 Investment Cash Flow -225 -28
Slide 18: Group Cash Flow FY 2008
Group Cash Flow FY 2008 Strong cash flow finances long-term investments Operating Cash flow in € million -225 337 Free Cash flow Q1 112 Cash Flow from investing activities -199 Q2 479 280 -292 Q3 485 193 -556 Q4 575 19 -1,272 1,876 Total 604 — Strong development of operating CF in Q4 — High investme
Slide 19: Solid financial position
Solid financial position Well spread maturity profile with strong liquidity reserve Net debt in € bn Net debt/EBITDA ratio well within our target range of 2–3x 3,5 4.8 12.815 9.933 3 Target range: 6.427 6.423 6.522 2.7 2.0–3.0x 2.5 2,5 2 30/9/06 2006 2007 2008 31/3/09 2006 2007 2008 Financial debt:
Slide 20: Agenda
Agenda 1. Highlights and Operational Performance 2. Financials and KPIs 3. Outlook 4. Strategic set-up and HPO 5. Appendix 20
Slide 21: Outlook
Outlook Market environment requires a scenario-based approach In an environment of severe industrial slowdown and still limited visibility, we continue with our scenario-based approach for the 2009 outlook: Group Forecasts for sales and earnings range from the same level as the prior year figures to
Slide 22: Agenda
Agenda 1. Highlights and Operational Performance 2. Financials and KPIs 3. Outlook 4. Strategic set-up and HPO 5. Appendix 22
Slide 23: High Performance Organisation (HPO)
High Performance Organisation (HPO) Implementing the next step of our continuous optimisation Continuous transformation towards our vision to be the leading global gases and engineering group BOC Acquisition Integration Synergies HPO Transformation The Linde Group Synergies on track Continuous impro
Slide 24: Gases Division Stability driven by a broad customer base
Gases Division Stability driven by a broad customer base 2008: Split by end-customer groups Others 7% Chemistry & Retail Energy 11% 22% Electronics 5% Metallurgy & Manufacturing Glass 21% 16% Healthcare Food & 11% Beverages 8% ▸ Highlights & Operational Performance | ▸ Financials & KPIs | ▸ Outlook
Slide 25: Gases Division Stability driven by a broad customer base
Gases Division Stability driven by a broad customer base 2008: Split of product areas by major end-customer groups Retail Other Electronics Chemistry & Energy Manufacturing Bulk Metallurgy & Glass Tonnage Chemistry & Energy Metallurgy & Glass Food & Beverages Electronics Other Food & Beverages Homec
Slide 26: Gases Division 70% of revenues from a leading market position
Gases Division 70% of revenues come from a leading market position Sales split by market shares Market leader in 46 of the 70 major countries, #2 Player in another 10 €9.5 bn <30% ≥ 30% ≥ 40% 70% >70% of our merchant ≥ 60% business sales come Market Leader from a leading market #2 Player position Ot
Slide 27: Long term growth drivers remain intact: Energy/Environmental
Long term growth drivers remain intact Energy/Environmental mega-trend Industrial gases solutions address structural challenges: Higher returns on existing fields Enhanced Oil & Gas recovery Nitrogen/CO2 Limited resources / environmental protection Sourer crude / lower emissions Refinery fuel upgrad
Slide 28: Long term growth drivers remain intact: Healthcare
Long term growth drivers remain intact Healthcare mega-trend Global healthcare systems face structural trends: — MORE patients Increasing consumption of Hospital Care (ageing population) traditional healthcare gases — HIGHER expectations New diagnostics f.ex. COPD*, (quality of life) & therapies Sle
Slide 29: Stable strategic set-up with strong management action
Stable strategic set-up with strong management action Q1 operational performance relatively stable Single-digit decline in group sales and operating profit, excluding currency Operating margins holding up well Ongoing strong cash flow generation Stable set-up in an uncertain market environment in 20
Slide 30: Agenda
Agenda 1. Highlights and Operational Performance 2. Financials and KPIs 3. Outlook 4. Strategic set-up and HPO 5. Appendix 30
Slide 31: Industrial gas consumption per capita, by region
Industrial gas consumption, USD per capita, by region Still very low intensity in the emerging markets USA: $49 Western Europe: $38 Eastern Europe: $16 China: $2 South and East Asia: $3 South America: $13 Gases market per capita South Africa: $13 Australia: $42 Overproportionate growth in emerging m
Slide 32: Energy mega-trend, a sustainable long-term growth driver
Energy mega-trend, a sustainable long-term growth driver Linde has extensive technology expertise Energy Transport/ Efficiency in Energy value chain Upstream conversion Storage/Climate energy use Fossil Floating Natural Gas LNG ship LNG GTL LPG Numerous (gaseous) LNG processing systems industrial ga
Slide 33: Group Financial Highlights
Group Financial Highlights in € million Q1 08 Q1 09 ' in % Sales 2,917 2,695 -7.6 Operating profit 602 538 -10.6 Margin 20.6 20.0 -60bps EBIT before special items and PPA depreciation 397 323 -18.6 Special items 15 0 - PPA depreciation 94 74 - EBIT 318 249 -21.7 Financial Result -79 -79 - Taxes 67 4
Slide 34: Group Financial Highlights
Group Financial Highlights in € million Q1 08 Q1 09 ' in % Net income - Part of shareholders Linde AG 160 115 -28.1 + depreciation/amortisation from purchase price allocation + 94 + 74 + special items - 15 - - net of tax -24 - 23 Adjusted Net Income 215 166 -22.8 - Restructuring costs - +20 + net of
Slide 35: Gases Division, sales bridge
Gases Division, sales bridge Sales -4.4% on comparable basis in € million +2.7% -2.8% 2,301 -1.8% -4.4% 2,157 Q1 2008 Consolidation Currency Natural Gas Price/Volume Q1 2009 ▸ Highlights & Operational Performance | ▸ Financials & KPIs | ▸ Outlook | ▸ Strategic set-up & HPO | ▸ Appendix 35
Slide 36: Gases Division, Joint Ventures
Gases Division, Joint Ventures Stronger operational performance of our JV activities in € million Proportionate Sales Share of Net Income (not incl. in the Group top-line) (contribution to operating profit) 10 Reduction due to full Driven by new plant 139 consolidation of former start-ups, esp. in A
Slide 37: Group Key P&L items, 2008
Group Key P&L items, 2008 in € million 2007 2008 Δ in % Sales 12,306 12,663 +2.9 Operating profit 2,424 2,555 +5.4 Margin 19.7% 20.2% +50bps EBIT before special items and PPA depreciation 1,591 1,703 +7.0 Special items 607 59 - PPA depreciation -446 -371 - EBIT 1,752 1,391 - Financial Result -377 -3
Slide 38: Adjusted ROCE
Adjusted ROCE Further improved to 12.4% in € million Capital Employed Adj. ROCE Adj. ROCE (B/S date) 10.3% 12.4% 15,490 13,884 13,508 7,878 13,696 7,116 Adj. Equity 7,445 7,330 1,703 + Financial debt 1,591 Adj. EBIT + Net pension obligation 403 681 Avg. CE - Net financial services -824 -712 - Cash -
Slide 39: Group: Cash Flow Statement Key elements
Group: Cash Flow Statement Key elements in € million Q1/08 Q2/08 Q3/08 Q4/08 2008 2007 Operating Profit 602 656 652 645 2,555 2,424 Change in Working Capital -199 17 -59 44 -197 -114 Funds from operations 403 673 593 689 2,358 2,310 Paid taxes -38 -77 -86 -28 -229 -336 Other changes -28 -117 -22 -86
Slide 40: Cash Flow from investing activities
Cash Flow from investing activities Capital expenditure and Acquisitions Cash Flow from investing activities CAPEX Acquisitions 42.0% in € million -1,272 2,086 -1,683 -1,611 1,470 1,451 1,035 CAPEX/ 576 Acquisitions 1,062 +36.6% Gases 213 Other* -21 -31 Engineering 46 +15.2% 53 -73 -34 Other Proceed
Slide 41: Capital expenditure Gases Division
Capital expenditure Gases Division in € million +36.6% 1,451 506 1,062 +34.2% Western Europe 377 295 +38.5% Americas 213 505 Asia & Eastern Europe 334 +51.2% 145 213 South Pacific & Africa 138 +5.1% 2007 2008 ▸ Highlights & Operational Performance | ▸ Financials & KPIs | ▸ Outlook | ▸ Strategic set-
Slide 42: Tax
Tax Successful development of the Group tax rate 39.7% 27.6% 2009 target Range: 25–27% 22.9% 2006 2007 2008 — Post-acquisition restructuring fully effective in 2008 — Positive impact of tax rate changes — Strong performance of the Group in countries with lower tax rates ▸ Highlights & Operational Pe
Slide 43: Dividends
Dividends Proposed Dividend in line with growth of operating profit Consistent dividend policy +5.9% €1.80 +13.3% €1.70 €1.50 2006 2007 2008 ▸ Highlights & Operational Performance | ▸ Financials & KPIs | ▸ Outlook | ▸ Strategic set-up & HPO | ▸ Appendix 43
Slide 44: Pensions
Pensions Key figures Net obligation increases due to Further actuarial losses of approx. € 400 m actuarial gains/losses avoided due to early optimization of the plan assets portfolio structure DBO Plan Net in € million 45% 28% Shares asset obligation 01.01.2008 5,152 4,813 339 Service costs 106 106
Slide 45: Net debt
Net debt Change from year-end 2007 Net debt/EBITDA in € million 4.8 2.7 2.5 2006 2007 2008 108 1,876 329 190 6,427 6,423 353 1,272 Net debt Consolidation Operating Cash Flow Net Dividends Others Net debt 31/12/2007 Cash Flow from interest 31/12/2008 investment activities ▸ Highlights & Operational P
Slide 46: Reconciliation of Capital Employed
Linde Group Reconciliation of Capital Employed 31.12.2007 31.12.2008 Key Financial As reported Non-GAAP Key Financial Effects in € million Figures adjustment Figures Equity incl. minority 7,878 8,249 -1,133 7,116 PPA and disposal effects interest Plus: net debt 6,427 6,423 6,423 Plus: liabilities fr
Slide 47: Reconciliation of EPS
Linde Group Reconciliation of EPS 31.12.2007 31.12.2008 Key Financial As reported Non-GAAP Key Financial Effects in € million Figures adjustment Figures EBIT before special items 1,591 1,391 312 1,703 PPA Special items - 59 -59 - Disposal of businesses Taxes on income -356 -230 -112 -342 deferred ta
Slide 48: Purchase Price Allocation
Purchase Price Allocation Confirmation of expected Depreciation & Amortisation Development of depreciation and amortisation (in € million) Impact in 2008: € 371 million Expected range 500 2009 > 275 – 325 2010 > 200 – 250 400 2011 > 175 – 225 300 … 200 2022 < 100 100 0 15 21 07 09 11 20 20 20 20 20
Slide 49: Accounting considerations: Impact of PPA and EFL
Accounting considerations Impact of PPA and EFL Purchase Price Allocation (PPA) IFRIC 4: Embedded Finance Lease (EFL) Impact in Q1 2009: € 74 m (Q1 08: € 94 m) Impact* in Q1 2009: € -32 m (Q1 08: € -32 m) Expected impact FY 2009: €275-325 m Expected impact* FY 2009: €-118 m *(on Sales and EBITDA) Ba
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: 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 +49 89 357 57 1332 robert.schneider@linde.com 51