Linde Plc · NASDAQ:LIN
Linde — Non-Deal Roadshow (December 2008)
41 slides from Linde's roadshow presentation, December 2008
Slide 1: Ambition counts. Scandinavian Roadshow
Ambition counts. Scandinavian Roadshow. December 2008 Thomas Eisenlohr, Head of Investor Relations
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 Operational performance — Unchanged momentum in underlying sales growth in 9M 2008 — Synergy collection drives further margin increase Very solid financial backbone for the current market environment — After successful deleveraging, strong balance sheet — Well-spread long-term financing, refi
Slide 4: 9M 2008 results Highlights
9M 2008 results Highlights Ongoing strong operational performance — 9M Group sales growth excl. currency of 11.0% to €9.392 bn — 9M Group operating profit* increases by 12.9% excl. currency to €1.910 bn — 9M Adjusted EPS up 16.6% to €4.14 (2007: €3.55) — Operating cash flow improves 11.2% to €1.301
Slide 5: Gases Division, financial track record
Gases Division, financial track record 9M operating performance by operating segment Western Europe in € m, as reported Americas in € m, as reported Sales Operating Profit Operating Margin Sales Operating Profit Operating Margin 3,131 2,995 +4.5% +4.7% 854 27.2% +10 bps 27.3% 338 +100 bps 816 320 1,
Slide 6: Gases Division, sales by product areas
Gases Division, sales by product areas (consolidated) Comparable growth of 8.7% in 9M 2008 in € m, comparable*, 7,157 consolidated 6,585* +8.7% 735 +8.2% Healthcare 679 1,818 +6.9% Tonnage 1,700 +6.2% 1,761 Bulk 1,658 Cylinder 2,548 +11.6% 2,843 *excluding currency, natural gas price and consolidati
Slide 7: 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, € bn 9M order intake by segment Top 1 Top 2 Products: Products: — Oxygen — H2/CO/Syngas — Nitrogen — Ammonia 2.248 2.295 Others Olefin — Rare gas
Slide 8: 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 12.815 Net debt/EBITDA ratio 9.933 4.8 6.427 6.377 Target 2.7 range: 2.0-3.0 € bn 30/09/2006 31/12/2006 31/12/2007 30/09/2008 2006 20
Slide 9: Sound liquidity position, well-spread long-term financing
Sound liquidity position, well-spread long-term financing Refinancing schedules fully covered Balanced maturity profile — €1.8 bn until September 2009 (24% of total gross debt of €7.5 bn) — €2.5 bn between September 2009 and September 2013 (33% of total gross debt), next major maturity in 2011 — €3.
Slide 10: Investments (capex + acquisitions)
Investments (capex + acquisitions) Investing in our growth path Group (∑ = €1,572 m) Gases Division (∑ = €1,587 m) +33.4% 1,035 +31.4% 1,062 +31.4% 1,062 -2.6% 377 776 808 808 Acquisitions 387 Acquisitions +10.4% W. Europe 213 Gases 537 525 + +112.7% 334 Americas 193 + Asia & Eastern Europe 157 +48.
Slide 11: 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 12: Outlook takes into account more difficult economic scenario
Outlook takes into account more difficult economic scenario Mid-term targets remain achievable Group — 2008: Sales increase and over-proportionate growth of operating profit — 2010: Operating profit above €3 bn and adjusted ROCE of at least 13% achievable — Supported by €250 m synergy cost savings (
Slide 13: Industrial gas consumption, USD 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 14: Broad spectrum of end user applications
Broad spectrum of end user applications Selection of key end customer industries Healthcare Food & Environmental Metal Metallurgy Pulp & Beverage Fabrication Paper Oil & Gas Refining Electronics / PV Specialty Gases Chemicals Glass Recovery High diversity and innovation drive stable long-term growth
Slide 15: 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 16: Gases Division – Strong set-up in emerging markets
Gases Division – Strong set-up in emerging markets Market leading positions across all important regions Perfect fit between BOC (esp. Asia/Africa) and Linde (esp. Eastern Europe/South America) Eastern Europe & Middle East #1 Greater #1 China South and #1 East Asia South America #2 #1 South Africa ▸
Slide 17: Gases Division – Focus on Middle East
Gases Division – Focus on Middle East Leveraging our long standing Engineering market presence JV with ADNOC (founded in December 2007) Linde Engineering on the Arabian Peninsula: First contract: ASU in the Ruwais cluster More than 50 plants built over the last decades Serving ADNOC JV Borouge with
Slide 18: 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 19: Gases Division: Growth visibility in our project pipeline
Gases Division Growth visibility in our project pipeline — 59 start-ups will deliver new revenue streams by 2010 (incl. JVs) — Project list remains strong, supported by Emerging Markets and energy applications 10 11 30 22 20 Americas Western Eastern Europe / ME 17 Europe China / South and East Asia
Slide 20: 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 21: 2nd mega trend: Healthcare
2nd mega trend: Healthcare Strong positioning in a structural growth market Structural growth drivers in place: — Aging population, improved diagnostics & treatment (e.g. COPD*, Sleep Therapy) — Growth opportunities driven by benefits for patients, hospitals & health systems *Chronic Obstructive Pul
Slide 22: The Linde Group expands on a strong and stable platform
The Linde Group expands on a strong and stable platform Good set-up for sustainable long-term growth Business still on a solid growth track — Underlying growth carried by all regions and product segments — Balanced profitability profile, synergy program reaching the bottom line — Attractive project
Slide 23: Appendix
Appendix a THE LINDE GROUP
Slide 24: Group: Financial Highlights 9M 2008
Group: Financial Highlights 9M 2008 in € m 9M 2007 9M 2008 Δ in % Sales 8,958 9,392 +4.8 Operating profit 1,770 1,910 +7.9 Margin 19.8% 20.3% +50bps EBIT before special items and PPA depreciation 1,147 1,288 +12.3 Special items 574 59 - PPA depreciation -335 -277 - EBIT 1,386 1,070 - Financial Resul
Slide 25: Group: Financial Highlights Q3/2008
Group: Financial Highlights Q3/2008 in € m Q3/2007 Q3/2008 Δ in % Sales 3,070 3,136 +2.1 Operating profit 612 652 +6.5 Margin 19.9% 20.8% +90 bps EBIT before special items and PPA depreciation 420 446 +6.2 Special items - - - PPA depreciation -134 -92 - EBIT 286 354 - Financial Result -73 -102 - Tax
Slide 26: Group: Sales by Divisions
Group: Sales by Divisions 11.0% growth in Sales excluding currency effects in € m, as reported 8,958 +4.8% 9,392 +4.5% 7,157 Gases Division 6,850 Gases — Comparable* growth of +8.7% (+9.2% in Q3) — 11.6% comparable growth incl. bolt-on acquisitions Engineering Division — Project execution and revenu
Slide 27: Group: Operating Profit by Divisions
Group: Operating Profit by Divisions 12.9% increase in Operating Profit excluding currency effects in € m, 9M 2007 9M 2008 as reported 1,770 +7.9% 1,910 1,819 Gases Division Gases 1,707 — 11.8% operating profit growth excl. currency — Operating margin improvement of 50 bps to 25.4%, despite margin d
Slide 28: Gases Division: Sales bridge
Gases Division: Sales bridge 8.7% comparable growth 11.6% growth including acquisitions in € m +8.7% 7,157 +2.4% -6.2% 6,850 -0.4% 9M 2007 Natural Gas Currency Consolidation Price/Volume 9M 2008 ▸ Appendix 28
Slide 29: Gases Division Joint ventures
Gases Division Joint ventures in € m Proportionate Sales Share of Net Income (not incl. in the Group top-line) (contribution to operating profit) 10 +15.7% 515 44 -2.3% 43 445 (+21.7% (+6.0% excl. forex) excl. forex) 9M 2007 9M 2008 9M 2007 9M 2008 ▸ Appendix 29
Slide 30: Engineering Division Margin remains on high level
Engineering Division Margin remains on high level — Project execution fully on track, order inflow intact Others Olefin 7% 15% — Margin remains industry-leading and above 8% target HyCo 14% — Order backlog standing at €4.632 bn (2007: €4.391 bn) Nat. Gas 6% €2.3 bn ASU 58% in € m 9M 07 9M 08 ∆ yoy O
Slide 31: Group – Cash Flow Statement
Group – Cash Flow Statement Key elements in € m Q1/08 Q2/08 Q3/08 9M 2008 9M 2007 Operating profit 602 656 652 1,910 1,770 Change in working capital -199 17 -59 -241 -11 Other changes -66 -194 -108 -368 -589 Operating Cash flow 337 479 485 1,301 1,170 Investing activities -256 -313 -322 -891 -771 Di
Slide 32: Engineering Division - Leveraging customer relationships
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 33: Operating profit margin improvement
Operating profit margin improvement Synergy impact visible in the bottom-line in € m 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 im
Slide 34: 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 € m) 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 (in
Slide 35: 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 36: 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 in € m 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 PP
Slide 37: 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 in € m 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: l
Slide 38: 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 in € m, as reported 1,742 11.4% € 5.02 10.3% 1,227 € 4.66 2006 2007 2006
Slide 39: 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 9M 2008: €277 m (9M 2007: €335 m) Impact* in 9M 2008: €-95 m (9M 2007: €-101 m) Expected impact FY 2008: €375-425 m Expected impact* FY 2008: €-128 m *(on Sales and EBITDA)
Slide 40: Purchase Price Allocation
Purchase Price Allocation Confirmation of expected Depreciation & Amortisation Development of depreciation and amortisation (in € m) Impact in 2007: €446 m 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 20 20 20 20 ▸
Slide 41: 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 41