Linde Plc · NASDAQ:LIN
Linde — Non-Deal Roadshow (September 2005)
54 slides from Linde's roadshow presentation, Sep 16, 2005
Slide 1: London Roadshow
Linde Group Linde Group London Roadshow 15th-16th September 2005 Dr. Peter Diesch, CFO 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 05 | Overview 09 | Cash flow 10 | Net debt development 11 | Working capital 12 | Key Rating ratios 13 | RoCE 14 | H1 2005 Performance 15 | Outlook 2005 16 | Strategy Linde Gas 18 | Highlights 19 | Global market positions 20 | 2004 Sales by region 21 | Sales developme
Slide 4: Contents (continued)
Linde Group Linde Engineering 32 | Highlights 33 | Market positions by product segment 34 | EBT development 35 | Strengths of the business 36 | Profit growth 37 | Global business Material Handling 39 | Highlights 40 | Sales, EBITA 41 | EBITA margins 42 | Multi-brand strategy 43 | Efficiency improvem
Slide 5: Sales 2004: €9,421 million EBITA 2004: €785 million
Linde Group Sales 2004: €9,421 million EBITA 2004: €785 million Refrigeration Refrigeration 6% Material 1% Handling 21% Gas 42% Material Engineering Handling 8% 35% Gas 70% Engineering 17% € billion 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 EBITA 8.800
Slide 6: Linde outperformed DAX and DJ Europe Chemicals index
Linde Group Linde outperformed DAX and DJ Europe Chemicals index, since Jan. 2003 Source: Bloomberg 6
Slide 7: Linde Group portfolio driven company
Linde Group Linde Group Gas Engineering Material Handling Industrial Gases Air Separation Plants Forklift Trucks Hydrogen Plants Healthcare Warehouse Trucks Natural Gas Plants Ethylene Plants Hydraulic Systems Linde is a portfolio driven company. Every Division must … — have a leading market positio
Slide 8: 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. 5 worldwide Praxair, Air Products Linde Engineering Top 1-3 position Air Liquide, Technip in all activities Material Handling No. 1 in Europe Toyota
Slide 9: A profitable company with robust cash flow generation
Linde Group A profitable company with a robust cash flow generation 1500 1,281 1249 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 bef
Slide 10: Net Debt and Gearing reduction
Linde Group Net Debt and Gearing reduction (Net debt = Financial debt – cash & cash equivalents and securities) (Gearing = Net debt / equity) 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
Slide 11: Working capital reduction of €905 million
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: Key rating ratios improved
Linde Group Key rating ratios improved (including pensions & leasing) 10 105 102 96 9 9.0 95 EBITDA* / Net 7.7 Net debt / Equity 8 interest expense 85 7 6.5 75 76 6 EBITA* / Net 5 Net debt / Funds interest expense 4.7 65 from operations 3.8 4 3.9 55 Net debt / Capital 3.1 3.7 3.1 employed 3 45 2.8 4
Slide 13: RoCE
Linde Group RoCE We use RoCE as the key measure of success in the individual business segments and for the Group. 2002 2003 2004 Target 10%** Group 7.0% 7.7% 9.5% (2005) 13% Linde Gas 9.6% 10.1% 10.9% (2008) 16% Linde Engineering 13.3% 11.7%* 17.0% (2005) 16% Material Handling 8.7% 9.7% 12.0% (2007)
Slide 14: Good performance in H1 2005
Linde Group Good performance in H1 2005 (numbers excluding Refrigeration and amortization of goodwill) — Sales plus 8.3% to €4,464 million — Incoming Orders up 6.4% to €4,840 million — EBITA plus 20.4% to €372 million — thereof Linde Gas plus 13.8% to € 339 million — thereof Linde Engineering plus 8
Slide 15: Outlook FY2005
Linde Group Outlook FY2005 — Group: Increase in sales and EBITA — Group: Capex (excl. financial assets) around €1bn (2004: €1bn) — Linde Gas: Increase in sales and EBITA — Linde Engineering: Sales and EBITA at least on last year‘s high level — Material Handling: Increase in sales and significant imp
Slide 16: Clear strategy towards profitable growth
Linde Group Clear strategy towards profitable growth INNOVATION Fred Butler LNG INO Hydrogen KEY GROWTH PRODUCTS On-Site Healthcare gases After Sales & Services GLOBALISATION Eastern Europe Asia Logistics Megatrend Efficiency Improvement Continuous improvement of core business processes 16
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, Hydrogen, Healthcare — Growth focus on emerging markets Eastern Europe and Asia/Paci
Slide 19: Global Market Positions 2004
Linde Group Global Market Positions 2004 #1 Northern Europe ASU 19 Ecovar 23 HyCo/CO2 17 #2 Filling Stations 35 #5 Western Europe #1 North America ASU 26 Strong regional positions Ecovar 74 Central & HyCo/CO2 17 Eastern Europe ASU 13 Filling Stations 64 ASU 31 Ecovar 71 Ecovar 25 Asia/ Pacific HyCo/
Slide 20: Sales by Region 2004
Linde Group Sales by Region: 2004 - €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 H1 2005: (2003: 22.3%) Y-o-Y (excl. currency) North America Germany 5.8% 19.8% (2003: 21.3%) R of Europe 8.0% (6.5%) Rest of Eur
Slide 21: Sales development 2000-2004 by Product Segment
Linde Group Sales development 2000-2004 by Product Segment (Total sales, unconsolidated, € million) 4,144 +15.5% 3,466 634 15% +53.1% Sales Growth H1 2005: 12% 414 38% Y-o-Y (excl. currency) 1,568 45% -0.4% 1,575 On-site +24.4% (+24.8%) +26.4% 1,121 27% Bulk +9.0% (+8.1%) 26% 887 Cylinder +3.8% (+3.
Slide 22: EBITDA margin of Linde Gas at leading edge
Linde Group EBITDA margin of Linde Gas 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 22
Slide 23: Efficiency improvement initiatives
Linde Group Efficiency improvement 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 initiatives lead to efficiency
Slide 24: On-Site
Linde Group On-Site — High hurdle rates for new investments (IRR, ROCE) ensure high profitability — Stable business due to long-term take or pay contracts — Strong trend in HyCO in addition to ASU demand — Competitive advantage of Linde Engineering Strategy: — Focus on industrial clusters and multi-
Slide 25: Major On-site start-ups 05/06
Linde Group Major On-site start-ups 05/06 (€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 Jianlong P
Slide 26: Healthcare - Growth driver with low capital intensity
Linde Group Healthcare - Growth driver with low capital intensity — Top 3 global market position — EBITA margin (appx. 20%) above gas industry average — Low Capex ratio (1:1) supports growth Sales split 2004 (€ million): Sales growth H1 2005: Therapeutic H1 05 ∆ H1 05 ∆ Gases excl. curr. 113 + conso
Slide 27: Healthcare - Focus on Homecare and Therapeutic Gases
Linde LindeGroup Gas Healthcare - Focus on Homecare and Therapeutic Gases — Focus on Homecare market (mainly Europe) and Therapeutic Gases (INO, GEMI) — Annual sales growth target >10% Homecare: Therapeutic Gases: • Market growth appx. 10% p. a. • Double-digit sales growth • Fragmented market offers
Slide 28: Extend leading market position in Eastern Europe
Linde Group Extend leading market position in Eastern Europe — Fastest growing region in Europe, double-digit growth rates predicted to continue — Linde sales 2004: €430 million (2003: €400 million, +11% excluding currency) — Ongoing double-digit sales growth in high-margin cylinder business Strateg
Slide 29: Leverage market position in Asia/Pacific
Linde Group Leverage market position in Asia/Pacific — Sales 2004 increased to €94 million (2003: €62 million) — Acquisitions in 2004 strengthened market position Top priority: China — Well positioned in regions Shanghai/Ningbo and Fujian — Target: Build-up „one-stop supplier“ position in each regio
Slide 30: Innovation creates new markets for gas applications
Linde Group Innovation creates new markets for gas applications — Fred Butler: Innovative technology for CO2 based dry cleaning – Innovative service: less pollution at same efficiency and cost – Strong value proposition to end customers – Roll-out through franchise model started in major European ci
Slide 31: Linde Engineering
Linde Group Linde Engineering 31
Slide 32: Linde Engineering highlights
Linde Group Linde Engineering — Focussed player with Top 1-3 position in all product segments — Business environment provides ongoing order inflow to strong backlog – structural growth in LNG and HyCO – strong demand for ASU and Olefins in Middle and Far East — Stable contribution to profit growth —
Slide 33: Market positions by product segment
Linde Group Market positions by product segment Expertise and focus are key to retaining technology leadership 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: EBT development vs peers
Linde Group EBT development vs peers – highest margin 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/D
Slide 35: Strong business environment in all segments
Linde Group Strong business environment in all segments H1 2005 order intake: €902 million Key growth drivers: • Air Separation: Middle East, China • Olefins: Middle East Olefins Others • Syngas: USA, China, Russia 13% 18% • Natural Gas: Middle East, Norway Natural Gas 16% Strong order intake contin
Slide 36: Stable contribution to profit growth
Linde Group Stable contribution to profit growth — 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 margin 36
Slide 37: A global business
Linde Group A global business Europe* 61% Goteborg Aldershot Dresden Paris Munich Pfungen Rome North America* Dalian Peking Tulsa Seoul 9% Blue Bell Hangzhou Riyadh Middle East/Africa* Abu Baroda Dhabi Bangkok Asia/Pacific* 16% 13% Kuala Lumpur South America* 1% Engineering Base Sydney Johannesburg
Slide 38: Material Handling
Linde Group Material Handling 38
Slide 39: Material Handling highlights
Linde Group Material Handling — Megatrend in logistics driven by ongoing globalisation — European market leadership — Highest profitability in the industry — Successful multibrand strategy — Growth focus on high margin service business and fast growing regions 39
Slide 40: FY 2004: €3,372 million sales, €191 million EBITA
Linde Group FY 2004: €3,372 million sales, €191 million EBITA Sales 2004 by Region Sales and EBITA (€ million) Asia/Pacific Middle 6% East/Africa 4000 9% S. America 2% 3500 8% 1% N. America 3000 7% 3% 6% 2500 5% 2000 4% 1500 3% 1000 2% 500 1% 0 0% 1998 1999 2000 2001 2002 2003 2004 Europe 88% Sales
Slide 41: 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% 5.2% 4.5% 5% 4% 3.1% 3% 2% 1% 0% Linde Toyota Jungheinrich Nacco Source: Company data 41
Slide 42: Successful multi-brand strategy
Linde Group 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 leading positions in a
Slide 43: Efficiency Improvement Programs
Linde Group Efficiency Improvement Programs — „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, production, logistics and procur
Slide 44: Innovation: Product Offensive 2005-2007
Linde Group Innovation: Product Offensive 2005-2007 Linde STILL OM Pimespo Large scale product roll-out Counterbalanced 5 3 4 Trucks Warehouse Trucks 7 8 13 2005 2006 2007 44
Slide 45: After-Sales-Service Activities
Linde Group Linde offers a full range of After-Sales-Service Activities — 2004: 40% of Sales, > 50% of Profit - Service/ Fleet New Spare Used Long-term Rental Leasing Mainte- manage- trucks Parts trucks warranties nance ment — Well positioned to control end-market Used Trucks — Development of new ma
Slide 46: Good market position in Eastern Europe and China
Linde Group Good market position in Eastern Europe and China Eastern Europe: — Strongest growing market in Europe, high growth rate in the high margin Counterbalanced Truck business — Good market position in key markets — Strong growth pattern in the Counterbalanced Truck segment — Already dense sal
Slide 47: 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 48: Appendix
Linile Linde Group Appendix
Slide 49: 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 50: Linde 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 51: Engineering EBITA 2004
Linde Group Linde Engineering EBITA 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 51
Slide 52: 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 53: 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 54: Investor Relations Contacts
Linde Group Investor Relations Contacts Thomas Eisenlohr, Head of Investor Relations Tel: +49 611 770 610 E-mail: thomas.eisenlohr@linde.de Robert Schneider Tel: +49 611 770 270 E-mail: robert.schneider@linde.de Jo Raja Tel: +49 611 770 128 E-mail: jo.raja@linde.de 54