Linde plc · NASDAQ:LIN
Linde — Nomura Global Chemicals Conference Rome 2012
60 slides from Linde's conference presentation, Mar 23, 2012
Slide 1: Profitable Growth.
Nomura Global Chemicals Conference Rome 23 March 2012 Profitable Growth. Georg Denoke CFO and Member of the Executive Board
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. Operational and Financial Performance 2. Strategic Focus: — Growth Markets — Energy / Environment — Healthcare 3. Outlook Appendix 3
Slide 4: Highlights 2011 Profitable Growth.
Highlights 2011 Profitable Growth. Group sales and profit again on record levels Group sales increased by 7.1% to € 13.787 bn Operating profit grew at a faster pace by 9.7% and came to € 3.210 bn Group operating margin has further improved by 60 bp to 23.3% Gases operating margin increased by 50 bp
Slide 5: Group, sales by Divisions
Group, sales by Divisions Continued growth in all areas in € million, as reported 13,787 Group 12,868 +7.1% Gases Division — Growth track continued in 2011 in all regions led by Asia/Pacific — Growth in all product areas led by Tonnage and Bulk +8.1% 11,061 Gases 10,228 Engineering Division — Order
Slide 6: Group, operating profit by Divisions
Group, operating profit by Divisions Profitable Growth. - Group margin further improved in € million, as reported 3,210 2,925 +9.7% Group Gases Division — Growth of operating profit* continued — Operating margin further improved by 50 bp to 27.5% +9.9% 3,041 Engineering Division 2,766 Gases — Operat
Slide 7: Gases Division, operating profit by operating segment
Gases Division, operating profit by operating segment Profitable Growth continued in 2011 in € m EMEA Asia/Pacific Americas Growth Markets Sales Sales Sales in % 5,672 5,330 +6.4% Sales OP 3,076 2,279 2,384 2,692 +14.3% +4.6% 65% 68% +5.7%* +9.2%* +9.1%* 2010 2011 2010 2011 2010 2011 35% 32% Operati
Slide 8: Gases Division, sales by product areas
Gases Division, sales by product areas Balanced mix as basis for profitable growth in € million, comparable* (consolidated) +7.4% 11,061 Solid growth in Healthcare 10,296* 1,189 — The Mega-trend growth opportunities continue Healthcare 1,132 +5.0% — Acquisition will strengthen Homecare portfolio 2,6
Slide 9: Gases Division, product areas
Gases Division, product areas Comparable* year-on-year growth in percent Healthcare Tonnage 13.3 11.1 10.3 12.1 10.0 10.7 5.5 5.8 5.7 6.5 5.8 6.5 4.0 5.0 4.2 5.1 5.1 5.1 2.7 3.7 1.5 -1.7 -4.4 -6.5 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2009 2010 2011 2009 2010 2011 B
Slide 10: Engineering Division, key figures
Engineering Division, key figures Order intake well balanced — Order intake increased by 3.5% to € 2.235 bn — Order backlog stays strong at € 3.600 bn (year-end 2010: € 3.965 bn) — Exceptional operating profit* margin in 2011 of 12.0% — Operating profit margin in 2012 of at least 10% due to continua
Slide 11: Group Financial key indicators again on record levels
Group Financial key indicators again on record levels Profitable growth for our shareholders — adjusted EPS up by 11.9% — adjusted ROCE further improved by 50 bp Adjusted* EPS Adjusted* ROCE Operating Cash Flow in € m, as reported €6.89 7.71€ 2,422 2,426 €5.46 6.89€ €4.58 2,142 4.58€ 13.0% 12.5% 10.
Slide 12: Group, solid financial position
Group, solid financial position Sound financial strategy Net debt (€ m) Net debt/EBITDA 12,815 5 4.8 9,933 4 6,427 6,423 6,119 3 2.7 2.6 2.5 5,497 5,094 2 1.9 1.6 1 0 30/09/ 2006 2007 2008 2009 2010 2011 2006 2007 2008 2009 2010 2011 2006 Credit Ratings — Standard&Poor‘s: A-/A-2 with stable outlook
Slide 13: Group Financial Result and Tax Rate
Group Financial Result and Tax Rate Financial Result (in € million) Tax Rate 385 329 280 291 22.9% 23.9% 23.2% 22.1% 2008 2009 2010 2011 2008 2009 2010 2011 13
Slide 14: Group, Pensions
Group, Pensions Performance and key figures 2011 Net obligation Performance of major pension plans in € million DBO Plan Net asset obligation United Kingdom Germany 01/01/2011 4,971 4,467 504 Service costs 88 88 14.6% Net financing 253 254 -1 12.3% 12.8% Actuarial losses/gains 335 153 182 11.6% Cont
Slide 15: Group, dividends
Group, dividends Proposed dividend increased by 13.6% to € 2.50 +13.6% € 2.50 € 2.20 +22.2% +5.9% € 1.80 stable € 1.80 +13.3% € 1.70 +9.7% €1.50 Change in +22.6% Operating Profit +5.4% +18.1%* -6.7% 2006 2007 2008 2009 2010 2011 * Comparable change: prior year figures including twelve months of BOC
Slide 16: HPO (High Performance Organisation)
HPO (High Performance Organisation) Covering the full value chain in all regions — HPO is fully on track with savings – additional savings of ~ € 160 m — Initiatives have been launched and rolled out in all relevant areas — Contribution expected also in 2013 ff. — Gross cost savings increased to € 6
Slide 17: Agenda
Agenda 1. Operational and Financial Performance 2. Strategic Focus: — Growth Markets — Energy / Environment — Healthcare 3. Outlook Appendix 17
Slide 18: Mega-trends
Mega-trends Leveraging growth with our Gas & Engineering set-up Growth Markets Energy/Environment Healthcare Leveraging Gases & Engineering business synergies 18
Slide 19: Mega-trend Growth Markets
Mega-trend Growth Markets Strong investments in future growth Growth Markets exposure 54% of Capex 2011 further increased invested in Growth Markets Growth Market sales (% of Gases sales) Gases Capex 2007 – 2011 in € bn 36% 1.5 1.4 35% 1.3 34% 1.1 0.8 1.0 0.6 33% 0.7 32% 32% 0.6 0.6 0.7 0.8 29% 0.5
Slide 20: Mega-trend Growth Markets: Industrial gases market 2011 vs. 2020
Mega-trend Growth Markets Industrial gases market 2011 vs. 2020 in € bn Market leader in 4 out of 5 Growth Markets ~20~23~23 ~13 ~16 ~16 ~16 ~5 ~5 ~16 ~10 ~6 ~2~5 ~2 2.2 #1 #1 ~10 ~4 ~5 ~5 ~1 ~5 ~1 #1 ~2 ~0.5 ~0.5 ~2 ~2 #2 #1 ~1 Growth Markets Mature Markets 2020 2020 2011 2011 Source: Linde databas
Slide 21: Gases Division, project pipeline
Gases Division, project pipeline Good basis for sustainable growth — € 4.1 bn investments between 2009-2014 (thereof € 0.6 bn in JVs @ share) — Project amount for 2012 and 2013 further increased by around € 200 m — 2014 project amount already at around € 550 m — Around 70% of total project-Capex all
Slide 22: Comprehensive strategy to capture growth potential in Asia
Mega-trend Growth Markets Comprehensive strategy to capture growth potential in Asia Consolidates sales in Asia in € m Major investment commitments in 2011 Construction of ASU in Map Ta Phut, Thailand (largest ASU) Greater 2011 701 - Investment ~ € 78 m, on-stream date 2013* +22% China 2010 576 Sign
Slide 23: Mega-trend Energy/Environment
Mega-trend Energy/Environment LeadIng joint capabilities & access to Energy/Environment sector Engineering Division Gases Division Mega-projects Proven technology and project execution Proven long-term operations track record Technology Know-How Energy: LNG (Merchant/Floating), EOR/EGR, Coal-to-X, G
Slide 24: Importance of new technologies & industrial gases applications
Mega-trend Energy/Environment Importance of new technologies & industrial gases applications Global energy consumption* Energy/Environment annual market revenue estimates* 700 Renewables € 80 -140 bn 500 Nuclear € 14 -19 bn Coal CO2 emission reduction 300 € 5 -7 bn Natural Gas CLEAN COAL Petroleum L
Slide 25: Opportunities in shale gas business: Example US
Mega-trend Energy/Environment Opportunities in shale gas business: Example US Active major shale gas fields Expected development of US shale gas Natural gas processing plant in the USA production in the next decade (in Bcf) Barnett 5.5 Fayetteville 4.5 Woodford 2.0 Haynesville 8.0 Marcellus 4.5 Bcf
Slide 26: Mega-trend Healthcare: Market environment and drivers
Mega-trend Healthcare Market environment and drivers Market environment Drivers of development New and innovative pharmaceutical Increasing and ageing population gases and services Quality and optimum care for patients Increasing wealth in Growth Markets Value creation by cost-effective and reliable
Slide 27: From medical gas provider to solutions & service provider
Mega-trend Healthcare From medical gas provider to solutions & service provider Development of new therapies Homecare — Home oxygen therapies and applications — Ventilation services — Sleep therapies Cost ease to Healthcare budgets — Other service Intermediate Care — Patient centered care — REMEO: t
Slide 28: Homecare: growth through innovation and regional expansion
Mega-trend Healthcare Homecare: growth through innovation and regional expansion EMEA AMERICAS Linde Homecare sales ASIA/ by operating segments 2011 78% 18% 4% PACIFIC Home Oxygen Therapy Sleep Therapy Ventilation Services Chronic respiratory diseases, Obstructive Sleep Apnea, Advanced respiratory d
Slide 29: Agenda
Agenda 1. Operational and Financial Performance 2. Strategic Focus: — Growth Markets — Energy / Environment — Healthcare 3. Outlook Appendix 29
Slide 30: Gases, Capex Development
Gases, Capex Development Capex Sales Ratio 2007 - 2011 15% 13% 13% average 2011-2014 13% plus* Capex/Sales Ratio 12% 11% ~1,800 1,451 1,439 1,326 1,062 1,029 Capex in € million 2007 2008 2009 2010 2011 2012 Data 2007-2011 @ actual average fx rates at the end of the respective year * plus: additional
Slide 31: Outlook Profitable Growth.
Outlook Profitable Growth. 2012 Group — Growth in sales and operating profit vs. 2011 — Confirmation of HPO-programme: € 650-800 m of gross cost savings in 2009-2012 Gases — Sales increase vs. 2011 — Continuous improvement of productivity Engineering — Sales at the same level as in 2011 — Operating
Slide 32: Thank you for your interest.
Thank you for your interest. Georg Denoke CFO and Member of the Executive Board
Slide 33: Agenda
Agenda 1. Operational and Financial Performance 2. Strategic Focus: — Growth Markets — Energy / Environment — Healthcare 3. Outlook Appendix 33
Slide 34: Group, FY 2011 Key P&L items
Group, FY 2011 Key P&L items in € million 2010 2011 ∆ in % Sales 12,868 13,787 7.1 Operating Profit 2,925 3,210 9.7 Margin 22.7% 23.3% +60 bp EBIT before PPA depreciation 1,933 2,152 11.3 PPA depreciation -254 -242 -5.0 EBIT 1,679 1,910 13.8 Financial Results -280 -291 3.9 Taxes -335 -375 11.9 Net i
Slide 35: Group, Q4 2011 Key P&L items
Group, Q4 2011 Key P&L items in € million Q4/2010 Q4/2011 ∆ in % Sales 3,463 3,578 3.3 Operating Profit 780 847 8.6 Margin 22.5% 23.7% +120 bp EBIT before PPA depreciation 509 572 12.4 PPA depreciation -63 -61 -3.2 EBIT 446 511 14.6 Financial Results -50 -76 52.0 Taxes -80 -94 17.5 Net income 316 34
Slide 36: Group, FY 2011 Cash Flow Statement
Group, FY 2011 Cash Flow Statement in € million Q1 11 Q2 11 Q3 11* Q4 11* 2011* 2010 Operating profit 761 798 804 847 3,210 2,925 Change in Working Capital -180 6 60 39 -75 84 Other changes -141 -267 -142 -159 -709 -587 Operating Cash Flow 440 537 722 727 2,426 2,422 Investments in tangibles/intangi
Slide 37: Net debt reduction of € 403 million
Group, solid financial position Net debt reduction of € 403 million in € million 1,254 5,497 2,426 5,094 12 757 Net debt Cash flow from Operating Net interest Other FX & Fair Value 31/12/2010 investment cash flow Dividends Accounting activities excl. inv. in liquidity reserve 37
Slide 38: Early refinancing of existing financial debt
Group, solid financial position Early refinancing of existing financial debt Continuous efforts to extend the Group’s maturity profile — ~€ 360 m partial bond buyback and issuance of € 600 m notes due in 2021 Financial debt, by instrument — Issuance of € 750 m senior notes due in 2018 2% — More than
Slide 39: Liquidity reserve again further strengthened
Group, solid financial position Liquidity reserve again further strengthened € 2.5 bn committed revolving credit facility — Arranged in May 2010 with 25 national and international banks — Maturing in 2015 — No financial covenants — Fully undrawn More than € 2.6 bn cash and securities 3,897 in € mill
Slide 40: PPA – Expected Depreciation & Amortisation
Group PPA – Expected Depreciation & Amortisation — Development of depreciation and amortisation (in € million) — Impact in 2011: € 242 million Expected range 2012 > 175 – 225 PPA Depreciation Planning (in € m) 2013 > 190 - 210 400 … 2022 < 125 300 200 100 0 2006 2008 2010 2012 2014 2016 2018 2020 20
Slide 41: Gases Division Joint ventures
Gases Division Joint ventures in € million Proportionate Sales* Share of Net Income (not incl. in the Group top-line) (contribution to operating profit) +13.8% +4.2% 453 85 89 398 2010 2011 2010 2011 * Adjusted for local accounted joint ventures 41
Slide 42: Division Gases, sales bridge
Division Gases, sales bridge FY 2011 sales increased by 7.4% on comparable basis in € million +7.4% 11,061 +0.3% -0.2% +0.6% 10,228 FY 2010 Consolidation Currency Natural Gas Price/Volume FY 2011 42
Slide 43: Gases Division, Split of Capex
Gases Division, Split of Capex Growth Markets Capex increased to above 50 percent Split Capex by operating segments Split Capex by markets in € million 1,439 2011 +8.5% Growth Markets 1,326 +1.8% 627 EMEA 2010 616 54% 46% 54% 46% +19.3% 587 Asia/Pacific 492 218 +3.2% 225 Americas Mature Markets 2010
Slide 44: Gases Division From source to customer
Gases Division From source to customer Gas production centre On-site supply Customer Pipeline Tonnage Customer Transport of liquefied gas Bulk Filling station Customer Cylinder Retailer Cylinder transport 44
Slide 45: Various distribution mix served from one product source
Gases Division Various distribution mix served from one product source Tonnage Healthcare Global #2 Global #2 24% 24% 11% 11% — 15-year take-or-pay contracts — Hospital care & Homecare (incl. base facility fees) — Bulk & cylinder gases — Add. growth in JVs & Embedded — Structural growth Finance Leas
Slide 46: Stability driven by a broad customer base
Gases Division Stability driven by a broad customer base 2011: Split of product areas by major end-customer groups 2011: Split of sales by major end-customer groups Chemistry & Energy Tonnage Food & Beverages Metallurgy & Glass Bulk Other Manufacturing Electronics Electronics 22% Chemistry & Energy
Slide 47: Gases Division, local business model
Gases Division, local business model 70% of revenues come from a leading market position Market leader in 48 of the 75 major countries, Sales split by market share #2 Player in another 13 Bulk & Cylinder €7.1 bn* < 30% ≥ 30% ≥ 40% 70% ≥ 60% Market Leader #2 Player Others Status 2011 *Sales of Bulk &
Slide 48: Engineering Division: leading market position in all segments
Engineering Division Global set-up with leading market position in all segments Air Separation Plants Hydrogen/ Olefin Plants Natural Gas Plants Synthesis Gas Plants Top1 Top2 Top2 Top3 Providing plants for the gases business Providing chemistry and energy related solutions and 3rd party customers t
Slide 49: Engineering Division, key figures
Engineering Division, key figures Order intake up by 3.5% in € million in € million Order Intake Sales +3.5% +2.8% 2,159 2,235 2,461 2,531 2010 2011 2010 2011 in € million Operating Profit* Operating Margin +12.3% +100 bp 304 11.0% 12.0% 271 2010 2011 2010 2011 *EBITDA incl. share of net income from
Slide 50: FY 2011 order intake by plant type and region
Engineering Division FY 2011 order intake by plant type and region Order Intake by Plant Type Order Intake by Region 2010 2011 2010 2011 28.3% Air Separation 25.7% 57.2% EMEA 32.4% Plants Hydrogen/ 16.2% Synthesis Gas 21.5% Plants 44.1% Olefin Plants 15.8% 28.5% ASIA/PACIFIC 27.2% 23.4% Natural Gas
Slide 51: Solid and diversified order backlog
Engineering Division Solid and diversified order backlog Order backlog by plant type (31/12/2011) Other: 7.4% (2010: 4.6%) Synthesis Gas Plants: 18.9% Olefin Plants: 28.6% (2010: 14.7%) (2010: 43.5%) Air Separation Plants: 24.7% Natural Gas Plants: 20.4% (2010: 24.7%) (2010: 12.5%) 51
Slide 52: Business approach in Growth Markets
Mega-trend Growth Markets Business approach in Growth Markets Price selling Solutions selling Application Technology Differentiation Geographical infrastructure capability Engineering & Gases synergy Strong customer portfolio Early mover in growth markets t Current position 52
Slide 53: Leading player in Greater China
Mega-trend Growth Markets LeadIng player in Greater China Sales in Greater China in € m 2011 701 240 941 2010 576 198 774 2009 421 163 584 2008 420 132 552 2007 328 109 437 Consolidated Key locations of Linde Gases: Joint ventures (@ share) Supply Schemes Offices Industrial Parks Application Center
Slide 54: Growing with leading companies in key industries
Growing with leading companies in key industries A diverse customer portfolio to match an integrated business Oil/Petrochemicals Chemicals Metallurgy Electronics Healthcare Others 54
Slide 55: Gases Division in China: Integrated offer
Gases Division in China Integrated offer in selected industrial poles Integrated Clusters Pipeline linkage (key concept) Example – Ningbo Gases products supply to bulk and Multiple customers supplied Fully Integrated Cluster cylinder markets by pipeline (GAN/GOX/GHY) Integrated plant operation C B O
Slide 56: Clean Energy market estimation 2020 & 2030
Clean Energy market estimation 2020 & 2030 top down Market size in € bn 2015 2020 2030 Assumptions for 2030 – Triple-digit number of 1 GW Carbon Capture Clean Coal --- --- 20 – 40 (1.5 Gt/a CO2 at EUR25-40/t) – Installation of significant pipeline network and corresponding 1 15 – 25 compression CO2
Slide 57: Current and future growth markets for Gases & Engineering
Mega-trend Energy/Environment Current and future growth markets for Gases & Engineering Better use of fossil resources: Renewable energy: Clean energy: Existing growth markets Developing growth markets Future growth markets Liquified Natural Statoil plant, Hammerfest, Photo- Signed Gases contracts f
Slide 58: Acquisition of Continental-European homecare business from Air Products
Mega-trend Healthcare Acquisition of Continental-European homecare business from Air Products* Main Rationale Strategic acquisition supporting sustainable growth in the mega-trend Healthcare Step up to a strong number 2 position in the European respiratory homecare market Scaling-up our product and
Slide 59: Group, Definition of financial key figures
Group, 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. depreciatio
Slide 60: Investor Relations
Investor Relations Contact Phone: +49 89 357 57 1321 eMail: investorrelations@linde.com Internet: www.linde.com Financial Calendar — Interim Report January to March: 4 May 2012 — Annual General Meeting: 4 May 2012 — Interim Report January to June: 27 July 2012 — Interim Report January to September: