Linde Plc · NASDAQ:LIN
Linde — Debt Investor Presentation (June 2003)
36 slides from Linde's debt investor presentation, June 2003
Slide 1: Linde Undated Subordinated Bonds Roadshow
Linde Undated Subordinated Bonds Roadshow June 12 – 16, 2003
Slide 2: Transaction Rationale
Transaction Summary Transaction Rationale • Strengthening the capital base by refinancing senior debt • Create part equity substitute for the balance sheet • Support and demonstrate commitment to current credit ratings • Diversification of investor base • Extend debt maturity and enhance liquidity p
Slide 3: Summary of the Offering
Transaction Summary Summary of the Offering Obligor Linde AG Ratings S&P: BBB+ (long term), A-2 (short term) Moody’s: A3 (long term), P-2 (short term) Instrument Ratings S&P: BBB- Moody’s: Baa1 Currency / Maturity EUR / Perpetual, non-call 10 Status Senior Subordinated Coupon Fixed, then Floating wi
Slide 4: Company Overview & Strategy
Company Overview & Strategy
Slide 5: Company Overview
Company Overview Linde Group 2002 Sales: € 8,726 m EBITDA: € 1,436 m Material Handling Gas and Engineering Refrigeration 2002 Sales € 2,979 m € 4,916 m € 879 m 2002 EBITDA € 433 m € 1,110 m € 32 m EBITDA margin 15% 23% 4% Gas Engineering Sales: € 3,880 m Sales: € 1,036 m EBITDA: € 1,034 m EBITDA: €
Slide 6: Company Overview
Company Overview Business Segment Market Position Main Competitors Linde Gas No. 5 worldwide Air Liquide, BOC, No. 1 in Europe Praxair, Air Products, Messer Griesheim Linde Engineering No. 1 worldwide Technip, ABB Lumus, in most activities Foster Wheeler Material Handling No. 1 worldwide Toyota/BT,
Slide 7: Group Strategy (1)
Company Strategy Group Strategy (1) • Focus on core business, but remain a portfolio driven company • Focus on fast growing markets • Further implementation of optimization programs in Linde Gas, Material Handling and Refrigeration • Implementation of controlling tools (Six Sigma & Balanced Scorecar
Slide 8: Group Strategy (2)
Company Strategy Group Strategy (2) Linde remains a portfolio driven company. But to stay part of the portfolio, every Division must … •… be able to achieve defined ROCE targets •… have a leading market position •… have the potential for top-line growth •… be at least as good as benchmarks (pure pla
Slide 9: Divisions' Strategy (1)
Company Strategy Divisions´ Strategy (1) Linde Gas • Focus on growth segments On-site, Hydrogen, Helium and Healthcare • Completion of € 150 million cost reduction program by end of 2004 Linde Engineering • Remain a focussed player • Strengthen technology leadership 9
Slide 10: Divisions' Strategy (2)
Company Strategy Divisions´ Strategy (2) Material Handling • Top priority: Optimization in order to achieve sustainable earnings recovery: - TRIM.100 program will lead to new business model and cost savings of at least € 100 million by year-end 2004 • Extension of service business Refrigeration • Sp
Slide 11: Expectations for FY 2003
Financial Targets Expectations for FY 2003 Group: • Slight growth in sales • Slight improvement of EBITA • Linde Gas: Flat sales and profit • Linde Engineering: Increased sales, stable profit • Material Handling: Slight increase in sales and profit • Refrigeration: Sales and profit near last year‘s
Slide 12: Mid-term Financial Targets
Financial Targets Mid-term Financial Targets • Debt reduction of € 300 million per year on average, mid-term gearing target: 50% • Generation of free cash flow through working capital management and disciplined Capex approach • Realisation of € 275 million cost reduction by end of 2004 in Linde Gas,
Slide 13: Debt Story
Linde Debt Story
Slide 14: Financial Overview
Linde Debt Story Financial Overview € million 1Q 2003 2002 2001 Sales 1,947 8,726 8,833 EBITDA 298 1,436 1,519 Net Interest - 35 - 170 - 209 Net Income 11 240* 241 Net Debt** 2,725 2,814 3,264 Equity 4,036 4,086 4,313 EBITDA / Net Interest 7.8x 8.4x 7.3x Debt / Total Capital 25.9% 27.0% 29.5% Operat
Slide 15: Stable Business Model
Linde Debt Story Stable Business Model 8,833 8,726 8,450 1,274 6,194 1,115 4,500 979 €m 965 885 913 567 705 412 370 1996 1999 2000 2001 2002 (IAS) (IAS) Sales Cash Flow from operating activities Capex (incl. financial assets) 15
Slide 16: Financial Policy
Linde Debt Story Financial Policy • Centralized financing (>90% of financing at group level) • Ensure financial flexibility - focus on core bank group - transparent liquidity policy - disciplined allocation of Capex - working capital management program Rating Policy • Strong commitment to credit pro
Slide 17: Credit Rating a High Priority
Linde Debt Story Credit Rating a High Priority • Standard & Poor’s BBB+ Stable • Moody’s A3 Stable S&P (May 2003) • Lowered long-term rating to BBB+ from A-, reaffirming short-term A-2, due to change in rating methodology which now treats unfunded pension provisions as long-term debt • Linde’s liqui
Slide 18: Debt Reduction
Linde Debt Story Debt Reduction € -385 m in 2001 5,000 € -501 m 4,180 in 2002 3,795 4,000 3,294 2,740 Debt in € m 3,000 2,000 1,000 0 1999 2000 2001 (IA S *) 2002 (IA S *) * Excl. Leasing/ Pensions • Debt Reduction Targets published since beginning 2001 18
Slide 19: Defined Debt Policy
Linde Debt Story Defined Debt Policy • Bank loans substituted by capital market instruments 4,000 IAS 3,354 IAS 2,941 3,000 2,740 2,318 B an k L o an s 1,862 2,000 €m C ap ital 1,000 M arkets 441 353 0 0 1999 2000 2001 2002 • Also in Future: Focus on Capital Markets 19
Slide 20: Funding
Linde Debt Story Funding Funding Strategy Debt Maturity € million • Prudent mix of various products 1.250 • Diversification of investor base • Outstandings (5/03): 1.000 – Bonds/EMTNs: € 2.5 bn – CPs: € 285 m 750 – Bilateral Agreements > €1bn 500 (unutilized); Tenor: 55 % up to 1 yr 250 45 % up to 3
Slide 21: Two Approaches to Finance Pension Obligations
Linde Debt Story Two Approaches to Finance Pension Obligations I II Internally financed pension Externally funded pension obligations (so-called unfunded obligations pensions as they form balance sheet provisions) Mainly in Germany Mainly in the US, GB, Switzerland, Norway, Netherlands and Finland G
Slide 22: Review of Net Pension Obligation
Linde Debt Story Review of Net Pension Obligation € million 2002 Defined Benefit Obligation 1,809 – of which internally financed 1,015 – of which externally funded 794 Fair Value of Plan Assets - 653 Net Obligation 1,156 Unrecognized Actuarial Losses - 141 Limitation (IAS 19.58) 8 Provision in Balan
Slide 23: Pension-related Expenses and Cash Payments
Linde Debt Story Pension-related Expenses and Cash Payments 2001 2002 € million Pension Cash Pension Cash Defined Benefit Plans Expense Payments Expense Payments 1. Regular 96 68 100 74 (of which financial items) (50) (53) 2. Special Contribution 22 Defined Contribution Plans 5 5 6 6 Total 101 73 10
Slide 24: Summary
Summary
Slide 25: Summary
Summary • Linde is innovative - in technology and finance • Linde is well diversified - cornerstone for a unique stable business model 25
Slide 26: Capital Market Appearance
Summary Capital Market Appearance • Linde in Public Bond Issues a rarity • Linde an asset class of its own due to diversification (no telecommunication, no automotive, no utility) • MTN´s - a professional player - esteemed by investors • Linde cares for its investors - one of the reasons for this in
Slide 27: Appendix
Appendix
Slide 28: Group Sales by Regions
Linde Group Sales by Regions (Total € 8,726 Million) 4,362 4,449 in € m 2,196 2001 2002 1,994 1,675 1,479 641 478 122 163 Germany Rest of Europe Americas Asia Africa/Australia 28
Slide 29: Geographic Revenue 2002 Breakdown
Company Overview Geographic Revenue 2002 Breakdown Gas & Engineering Material Handling Refrigeration South Africa/ North Asia Africa/ Australia Africa/ America South America South 9% Australia Australia North 1% Asia 2% America 0.4% America 2% Germany 5% Germany Asia 1% America 3% Germany 5% 26% 3.6
Slide 30: Linde Gas Figures
Linde Gas Figures In Million € 2001*) 2002*) ∆ Sales 3,875 3,880 + 0.1 % Sales (ex currencies & natural gas) + 4.4 % EBITDA 1,037 1,034 - 0.3 % Margin 26.8 % 26.6 % EBITA 599 606 + 1.2 % Capital employed 6,782 6,256 - 7.8 % ROCE 9.1 % 9.6 % Cashflow 668 756 + 13.2 % Capex 449 410 - 8.7 % *) IAS 30
Slide 31: Linde Engineering Figures
Linde Engineering Figures In Million € 2001*) 2002*) ∆ Sales 1,047 1,036 - 1.1 % EBITDA 67 76 + 13.4 % EBITA (incl. interest income) 52 53 + 1.9 % Margin 5.0 % 5.1 % Capital employed 475 502 + 5.7 % ROCE 14.9 % 13.3 % Cashflow 44 184 Capex 38 29 - 23.7 % *) IAS 31
Slide 32: Material Handling Figures
Material Handling Figures In Million € 2001*) 2002*) ∆ Sales 3,071 2,979 - 3.0 % EBITDA 512 433 - 15.4 % EBITA 240 148 - 38.3 % Margin 7.8 % 5.0 % Capitalemployed 2,016 1,810 - 10.2 % ROCE 13.1 % 8.7 % Cashflow 413 462 + 11.9 % Capex 433 404 - 6.7 % Of which Rental Business 193 245 + 26.9 % *) IAS 3
Slide 33: Refrigeration Figures
Refrigeration Figures In million € 2001*) 2002*) ∆ Sales 887 879 - 0.9 % EBITDA 30 32 + 6.7 % EBITA 10 10 Margin 1.1 % 1.1 % Capital employed 372 370 - 0.5 % ROCE 4.2 % 5.1 % + 21.4 % Cashflow 94 36 - 61.7 % Capex 31 33 + 6.5 % *) IAS 33
Slide 34: Material Handling – Sales Development 1993-2002
Material Handling – Sales Development 1993-2002 3500 Mio. € + 4.0% - 3.0% 3000 + 12.8% + 14.6% 2500 + 12.1% + 7.9% 2000 + 9.1% + 7.7% + 8,5% 1500 1000 500 0 93 94 95 96 97 98 99 00 01* 02* * IFRS 34
Slide 35: Disclaimer
Disclaimer This investor presentation has been prepared independently by Linde AG (“Linde”). The banks named as bookrunners in this presentation have not been involved in the preparation of this presentation and therefore will bear no responsibility for the contents of this presentation. The present
Slide 36: Contact us
Contact us Erhard Wehlen Treasurer Tel. + 49 (0)611 770 342 Fax + 49 (0)611 770 726 erhard.wehlen@linde.de Guenther Jakob Head of Corporate Finance Tel. + 49 (0)611 770 378 Fax + 49 (0)611 770 726 guenther.jakob@linde.de Stefan Hess Manager Group Financing Tel. + 49 (0)611 770 148 Fax + 49 (0)611 77