Linde Plc · NASDAQ:LIN
Linde — Non-Deal Roadshow (April 2008)
42 slides from Linde's roadshow presentation, Apr 17, 2008
Slide 1: Ambition counts. Roadshow London/Edinburgh
Ambition counts. Roadshow London/Edinburgh 17-18 April 2008 Georg Denoke, 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: Adjustment of prior year figures for comparability
To ensure comparability of our business trends, we have adjusted the prior year figures for sales and operating profit (EBITDA*) to reflect the new Group structure. The prior year figures therefore include BOC’s operations for the full 12-month period, while KION, the forklift truck division sold in
Slide 4: Highlights – Good set-up for future growth
Highlights – Good set-up for future growth The Linde Group expands on a strong and stable platform Strong operational performance in the first year of the new set-up Group sales increased by 13.9% to €12.306 bn Group operating profit improved by 18.1% to € 2.424 bn, achieving double-digit growth in
Slide 5: Group, sales and operating profit by segment
Group, sales and operating profit by segment Double digit growth in operating profit in both Divisions in € million Sales Operating profit 2006 2007 2006 2007 +13.9% 12,306 +18.1% 2,424 9,209 10,803 2,314 2,053 8,421 2,035 +9.4% +13.7% Gases Gases 2,750 Engineering 1,958 +40.4% Engineering +39.5% 24
Slide 6: Gases Division, by operating segment
Gases Division, by operating segment Growth momentum across all geographies in € million Sales Comparable* Operating Profit 9,209 2,314 +7.2% +9.4% +13.7% 8,421 2,035 303 1,284 +13.3% +9.8% +7.4% S. Pacific & Africa 1,169 282 1,618 +9.1% 467 Asia & +34.9% +49.2% 1,199 313 Eastern Europe 447 2,348 +6
Slide 7: Gases Division, operating margin by operating segment
Gases Division, operating margin by operating segment Solid profitability in all geographies 25.1% 24.2% +90 bps 23.6% S. Pacific & Africa 24.1% -50 bps 28.9% Asia & Eastern Europe 26.1% +280 bps Americas 17.5% +150 bps 19.0% Western Europe 27.2% -- 27.2% 2006 2007 ▸ Operational performance | ▸ Fina
Slide 8: Gases Division, sales by segment
Gases Division, sales by segment Balanced business mix drives stable growth in € million, unconsolidated Comparable* 983 9.4% +11.3% Healthcare 883 2,111 7.9%** +5.0% Tonnage 2,011 +9.1% 2,821 6.2% Bulk 2,586 Cylinder 3,269 +12.1% 3,666 8.6% * excluding currency, natural gas price and consolidation
Slide 9: Gases Division, joint ventures
Gases Division, joint ventures Proportionate contribution of JVs Sales (like-for-like) Net Income (like-for-like) +57.1% 77 831 10 JV disposals 106 -10.3% 745 +8.5% 115 49 JV disposals 10 JVs 725 +71.8% 67 -13.1% 630 JVs 39 2006 2007 in € million 2006 2007 ▸ Operational performance | ▸ Financial met
Slide 10: Engineering Division
Engineering Division Ongoing momentum in order intake / strong order backlog Ongoing strong environment in all four end markets drives order intake again close to € 3 bn Order backlog stable at € 4.4 bn despite strong uplift in recognised sales Order intake Order backlog € 2,931 million € 4,391 mill
Slide 11: Integration process progressing on plan
Integration process progressing on plan Synergy program on track towards our bottom-line target Bottom-line effect of € 75 mn in 2007 Phasing ahead of time, strong confidence in our target of € 250 mn in 2009 in € million € 250 mn 30% Supply 25% Procurement 125 100 45% G&A 0 End 2006 End 2007 End 20
Slide 12: Operating profit margin improvement
Operating profit margin improvement Synergy impact visible in the bottom-line 2006 2007 Δ Group 19.0% 19.7% +70bps Gases 24.2% 25.1% + 90bps Gases & Corporate Revenue Gases 8,421 9,209 OP Gases 2,035 2,314 OP Corporate -173 -151 Operating Profit 1,862 2,163 OP Margin 22.1% 23.5% +140bps JV impact 49
Slide 13: Investments (capex + acquisitions)
Investments (capex + acquisitions) Investing in our growth path Group (∑ = € 1,572 mn) Gases Division (∑ = € 1,587 mn) +33.4% 1,035 +31.4% 1,062 +31.4% 1,062 -2.6% 377 776 808 808 387 +10.4% 213 W. Europe Acquisitions Acquisitions 537 525 Gases +112.7% 334 193 + Americas + 157 Asia & Eastern Europe
Slide 14: Solid financial position
Solid financial position Deleveraging executed ahead of plan and expectations Significant reduction of net debt driven by disposal proceeds and strong cash generation [in € mn] 9,933 3,557 1,471 1,742 404 281 363 6,427 31/12/2006 Disposals Net investments Operating Net Dividends Others 31/12/2007 (i
Slide 15: Group Financial key indicators
Group Financial key indicators Ahead of targets: Adjusted EPS already accretive in 2007 Double-digit ROCE achieved one year ahead of plan Improved cash generation in the new set-up Adjusted EPS Adjusted ROCE Operating Cash Flow € mn, as reported 1,742 11.4% € 5.02 10.3% 1,227 € 4.66 2006 2007 2006 2
Slide 16: Outlook
Outlook Strong confidence in our mid-term financial targets Group — Increase in sales and overproportionate growth of operating profit in 2008 — Operating profit above € 3 bn in 2010 — Adjusted ROCE of at least 13% in 2010 — € 250 mn cost savings (fully effective in 2009) — Tax rate of around 30% in
Slide 17: Focus on Industrial Gases
Focus on Industrial Gases Stable growth – attractive opportunities Strong and stable growth Global Industrial Gases — Expected market growth of ~7% p.a. Market Growth 1999-2011e — In line with historic performance New applications across all end markets ≥ €60 bn CAGR +~7 % — For high innovation (sol
Slide 18: Gases Division – Global balance with strong market shares
Gases Division – Global balance with strong market shares Solid basis for a stable business development Present in around 100 countries, representing >90% of global GDP Market leader in 46 of the 70 major countries, #2 Player in another 10 Market Leader #2 Player Others ▸ Operational performance | ▸
Slide 19: Gases Division - Well balanced business mix
Gases Division - Well balanced business mix Growth opportunities and cash generation Merchant Market Tonnage — Global #1 in bulk and cylinder — Global #2 — Dominant market position in core markets — Significant share of tonnage business — Broad and diversified customer base, increasing exposure to (
Slide 20: Gases Division Busy pipeline of plant start-ups
Gases Division Busy pipeline of plant start-ups More than half of the new projects located in emerging markets 8 9 24 Americas Western Eastern Europe / ME Europe China / South and East Asia 22 16 7 Africa / 10 South Pacific 2008 2009 2010 ▸ Operational performance | ▸ Financial metrics and targets |
Slide 21: Business synergies in combined Gases & Engineering set-up
Business synergies in combined Gases & Engineering set-up Tonnage contract with ADNOC Leveraging our Engineering customer relationships Plants in operation: — First plant for ABU Dhabi National Oil Company (ADNOC) built in 1999 2 Ethylene plants with Nitrogen supply, built in 1999/2003 by Linde Engi
Slide 22: Engineering Division – Well balanced business mix
Engineering Division – Well balanced business mix Leading market position in all segments Air Separation Plants Hydrogen and Synthesis Gas Plants Top 1 Top 2 Products: Products: — Oxygen — H2/CO/Syngas — Nitrogen — Ammonia — Rare gases — Gas removal — Gas purification Main competitors: Main competit
Slide 23: Engineering Division Strong financial track record
Engineering Division Strong financial track record € million 3000 10% 2,750 9% 2500 8% 1,958 7% 2000 1,581 1,623 6% 1500 1,270 5% 1,117 1,047 4% 1,036 1000 904 909 GEA 3% 2% 500 1% 0 0% 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Sales EBITDA margin ▸ Operational performance | ▸ Financial metr
Slide 24: Energy mega-trends, a sustainable long-term growth driver
Energy mega-trends, 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 g
Slide 25: The Linde Group expands on a strong and stable platform
The Linde Group expands on a strong and stable platform Good set-up for future growth Business on a solid growth track — Strong underlying growth carried by all regions and product segments — Balanced profitability profile across our gases portfolio Very strong balance sheet — Significant improvemen
Slide 26: Appendix
Appendix a THE LINDE GROUP
Slide 27: Gases Division, sales bridge
Gases Division, sales bridge Comparable growth of 7.2% in 2007 7.2% pure volume & price growth cleaned of all acquisitions 11.9% growth including acquisitions In € million +4.7% 9,209 -0.1% +7.2% 8,421 -2.4% +9.4% FY 2006 Currency Natural Gas Price/Volume Consolidation FY 2007 ▸ Appendix 27
Slide 28: Gases Division, sales and operating profit
Gases Division, sales and operating profit Effect of acquisitions and disposals in FY 2007 Sales Operating profit 9,209 2,314 209 56 398 110 8,421 8,602 2,035 2,148 210 50 8,211 1,985 in € million Disposals Acquisitions (incl. MOX&HK) Continued operations 2006 2007 2006 2007 ▸ Appendix 28
Slide 29: Engineering Division order intake by end market
Engineering Division Solid end market trends drive momentum in order intake Others: 8.4% (2006: 8.4%) Synthesis Gas Plants: 18.3% Olefin Plants: 33.7% (2006: 14.1%) (2006: 16.0%) Air Separation Plants: 23.3% Natural Gas Plants: 16.2% (2006: 47.4%) (2006: 14.2%) ▸ Appendix 29
Slide 30: Engineering Division - 147 Linde-built plants in China
Engineering Division - Leveraging customer relationships 147 Linde-built plants in China Heilongjiang Jilin Liaoning Xinjiang Beijing Dalian Ningxia Tianjin Shandong Shanxi Jiangsu Gansu Shaanxi Henan Anhui Shanghai Taipei Hubei Taichung Sichuan Zhejiang Jiangxi Hunan Fujian Mai Liao Taiwan Air sepa
Slide 31: Integration Process Synergy program
Integration Process Synergy program 2007 Synergy Achievements (Examples) 2008 Planned Activities (Examples) Consolidation of Corporate Headquarters Continued reduction on selective regional (BOC and Linde) overheads Restructuring of central functions Selected consolidation of operational sites Restr
Slide 32: Tax rate and dividend development
Tax rate and dividend development Effective Tax Rate (ETR): Outlook: Total Tax: € 379 mn (ETR: 27.6%) Expected tax rate for 2008 is around 30% Comprising: € 484 mn current tax expense € 105 mn deferred tax income Main Impacts on Effective Tax Rate in 2007: — Relatively strong performance of the Grou
Slide 33: Group – Cash Flow Statement, key elements
Group – Cash Flow Statement, key elements Strong cash flow generation in the new set-up in million € 2006 2007 Operating profit* 2,216 2,424 Change in Working Capital 175 -139 Funds from operations 2,391 2,285 Paid taxes -573 -336 Other changes -591 -207 Cashflow from operating activities 1,227 1,74
Slide 34: Development of group equity
Development of group equity Gearing down to 69.8% in € million 686 9,210 1,013 8,225 281 686 253 01/01/2007 Dividends Currency Net exercise Net income Others 31/12/2007 of conv. bond ▸ Appendix 34
Slide 35: Capital market debt
Capital market debt Solid maturity profile No major maturities until April 2012 after issuance of senior benchmark bonds in April at attractive rates: € 1 bn, 5 years with fixed coupon of 4,375% (at midswap + 24bp) € 1 bn, 10 years with fixed coupon of 4,750% (at midswap + 45 bp) GBP 300 mn, 16 year
Slide 36: Pension financing, key elements
Pension financing, key elements Net pension obligation down to € 403 mn in € million Defined Plan- Net- Net- benefit assets obligation obligation obligations 2007 2006 UK 2,860 2,900 -40 416 Germany 803 283 520 610 US+Canada 395 581 -186 -166 Other activities 1,094 1,049 45 91 Net obligation 5,152 4
Slide 37: Purchase Price Allocation
Purchase Price Allocation Confirmation of expected Depreciation & Amortisation Development of depreciation and amortisation (in € million) Impact in 2007: € 446 million Expected range 500 2008 > 375 – 425 2009 > 300 – 350 400 2010 > 200 – 250 300 2011 > 200 … 200 2022 < 100 100 0 07 09 11 15 21 20 2
Slide 38: 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 39: Linde Group Reconciliation of EPS
Linde Group Reconciliation of EPS 31.12.2006 31.12.2007 Key Financial As reported Non-GAAP Key Financial Effects € million Figures adjustment Figures EBIT before special item 989 1,145 446 1,591 PPA Special items - 607 -607 - Disposal of businesses Taxes on income -294 -379 23 -356 deferred taxes on
Slide 40: Linde Group Reconciliation of Capital Employed
Linde Group Reconciliation of Capital Employed 31.12.2006 31.12.2007 Key Financial As reported Non-GAAP Key Financial Effects € million Figures adjustment Figures Equity incl. minority 7,031 9,210 -1,332 7,878 PPA and disposal effects interest from 2006 and 2007 Plus: net debt 9,933 6,427 6,427 Plus
Slide 41: Mandatory adoption of IFRIC 4
Mandatory adoption of IFRIC 4 Expected impact on sales and EBITDA The Linde Group shows a significant amount of plants as embedded finance leases due to the adoption of IFRIC 4 Sales and EBITDA from IFRIC 4 plants not recognized through reported sales and EBITDA in 2007: € 134 million Receivables fr
Slide 42: 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 +44 20 7647 9614 robert.schneider@linde.com 42