Linde Plc · NASDAQ:LIN
Linde — Non-Deal Roadshow (September 2009)
52 slides from Linde's roadshow presentation, Sep 3, 2009
Slide 1: Staying on Track. London Roadshow
Staying on Track. London Roadshow September 3-4, 2009 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: Agenda
Agenda 1. Operational Performance 2. Financial Position 3. Strategic Set-up and HPO Appendix 3
Slide 4: Highlights
Highlights H1 operational performance Group sales of € 5.476 bn (-12.5%), Group operating profit of € 1.104 bn (-12.2%) Before restructuring charges, Group operating profit down 6.9% and adjusted EPS down 13.6% Ongoing strong cash flow generation: Operating cash flow increased to € 841 m (H1 08: € 8
Slide 5: Group, H1 operational performance
Group, H1 operational performance Group operating profit excl. restructuring charges down 6.9% in € m, Sales Operating Profit* as reported H1 2008 H1 2009 H1 2008 H1 2009 6,256 1,258 -12.2% -12.5% 1,104 5,476 4,709 -7.6% 4,350 Gases 1,194 -4.7% 1,138 1,411 -21.1% 1,113 Engineering 126 -28.6% 90 62 O
Slide 6: Gases Division, quarterly focus
Gases Division, quarterly focus Sequential improvement in Q2 2009 Q2 09 vs Q1 09 (€ m) Return to sequential growth +1.7% +8.4% +170 bps — Slight sales increase from Q1 09 2,157 2,193 592 27.0% 546 25.3% — Driven by first recovery steps in Emerging Markets — Stabilisation of sales run rates in mature
Slide 7: Gases Division, sales by product areas
Gases Division, sales by product areas (consolidated) Sequential improvement in Q2 2009 in € m 4,664* -6.7% 4,350 +1.7% 2,193 481 2,157 +5.6% 508 Healthcare 251 +2.4% 257 1,046 -5.4% 989 Tonnage 499 -1.8% 490 1,181 -9.1% 1,074 Bulk 536 +0.4% 538 1,956 -9.0% 1,779 908 Cylinder 871 +4.2% H1 2008 H1 20
Slide 8: Gases Division, Q2 performance by operating segment
Gases Division, Q2 performance by operating segment Sequential improvement driven by emerging market regions Western Europe Americas -2.2% +190 bps -1.8% +70 bps 935 914 28.3% 501 492 21.5% 26.4% 20.8% Q1/09 Q2/09 Q1/09 Q2/09 Q1/09 Q2/09 Q1/09 Q2/09 Sales (€ m) Operating margin Sales (€ m) Operating
Slide 9: Gases Division, emerging market set-up
Gases Division, emerging market set-up Already more than 30% of sales in emerging markets Total Gases Sales Emerging Market Sales by region (excl. JVs and Embedded Finance Lease) Non Emerging E. Europe /M. East Markets Emerging Markets Asia H1 09: <70% >30% € 4.35 bn S. America Africa ▸ Operational
Slide 10: Gases Division, project pipeline
Gases Division, project pipeline Stable customer commitment — Total project number unchanged: 64 start-ups by 2011 (incl. JVs) — Overall still lower activity in new contract signings, but the structural growth potential remains strong, especially in Emerging Markets and energy applications 12 13 33
Slide 11: Group, business synergies between Gases and Engineering
Group, business synergies between Gases and Engineering Leverage common customer relationships ADNOC (Abu Dhabi National Oil Corporation) Engineering - customer relationship in Gases and Engineering: – strong footprint on the Arabian Peninsula: ADNOC - long-term customer of our Engineering Division
Slide 12: 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 H1 09 order intake by segment Top 1 Top 2 Products: Products: — Oxygen — H2/CO/Syngas 1.557 Others — Nitrogen — Ammonia 1.299 HyCo 6% — Rare
Slide 13: Outlook 2009
Outlook 2009 Economic background: — Moderate recovery expected in H2, based on stabilisation at the end of H1 — 2009 global economic output to be significantly below 2008 Group — Further recovery in the second half-year compared to the first half as the economic improvement takes hold — Based on the
Slide 14: Agenda
Agenda 1. Operational Performance 2. Financial Position 3. Strategic Set-up and HPO Appendix 14
Slide 15: Group, cash flow statement
Group, cash flow statement Continued strong cash flow generation in € million H1 08 H1 09 Operating Profit 1,258 1,104 Change in Working Capital -182 10 Other changes -260 -273 Operating Cash Flow 816 841 Investment in tangibles/ intangibles -569 -543 Acquisitions -54 -69 Other 199 76 Investment Cas
Slide 16: Group, financial position
Group, financial position Well spread maturity profile with strong liquidity reserve Net debt, in € bn Cash position & credit facility cover all financial maturities Net debt/EBITDA of 2.5x in FY 2008 within target range of 2-3x until end of 2010 € 2 bn credit facility available until March 2011:: 1
Slide 17: Agenda
Agenda 1. Operational Performance 2. Financial Position 3. Strategic Set-up and HPO Appendix 17
Slide 18: High Performance Organisation (HPO)
High Performance Organisation (HPO) Implementing the next step of our continuous optimisation BOC Acquisition Integration Synergies HPO Transformation The Linde Group Direct merger savings Continuous improvement — Pure play — New operating model — G&A — Process excellence — Portfolio — One culture —
Slide 19: Gases Division, customer industries
Gases Division, customer industries Stability driven by a broad customer base 2008: Split by end-customer groups Others 7% Chemistry & Retail Energy 11% 22% Electronics 5% Metallurgy & Manufacturing Glass 21% 16% Healthcare Food & 11% Beverages 8% ▸ Operational Performance | ▸ Financial Position | ▸
Slide 20: Gases Division, customer industries: Bulk
Gases Division, customer industries Stability driven by a broad customer base 2008: Split of product areas by major end-customer groups Retail Other Electronics Chemistry & Energy Manufacturing Bulk Metallurgy & Glass Tonnage Chemistry & Energy Metallurgy & Glass Food & Beverages Electronics Other F
Slide 21: Gases Division, local business model
Gases Division, local business model 70% of revenues come from a leading market position In bulk & cylinder: >70% of revenues from >30% market share positions Sales split by market shares Market leader in 46 of the 70 major countries, #2 Player in another 10 €9.5 bn <30% ≥ 30% ≥ 40% 70% ≥ 60% Market
Slide 22: Gases Division, local business model: emerging markets
Gases Division, local business model Strong set-up in emerging markets Market leader in 4 out of 5 emerging market regions Eastern Europe & Middle East #1 Greater #1 China South and #1 East Asia South America #2 #1 South Africa ▸ Operational Performance | ▸ Financial Position | ▸ Strategic Set-up &
Slide 23: Industrial gases market, consumption by region
Industrial gases market, consumption by region Wide diversity between mature and developing 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 mark
Slide 24: Engineering Division, footprint in China
Engineering Division, footprint in China Strong established customer base Heilongjiang Jilin Xinjiang Liaoning Beijing Dalian Ningxia Tianjin Shanxi Shandong Jiangsu Gansu Shaanxi Henan Anhui Shanghai Taipei Hubei Taichung Sichuan Zhejiang Jiangxi Hunan Fujian Mai Liao Air separation units Guizhou T
Slide 25: Long term growth drivers: Energy/Environmental Mega-Trend
Long term growth drivers remain intact Energy/Environmental Mega-Trend Our Gases & Engineering solutions address structural challenges: Higher returns on existing fields Enhanced Oil & Gas recovery Nitrogen/CO2 Limited resources / environmental protection Sourer crude / lower emissions Refinery fuel
Slide 26: Long term growth drivers: Healthcare Mega-Trend
Long term growth drivers remain intact Healthcare Mega-Trend Global healthcare systems face structural trends: — MORE patients Increasing consumption of Hospital Care (ageing population) traditional healthcare gases — HIGHER expectations New diagnostics f.ex. COPD*, (quality of life) & therapies Sle
Slide 27: Summary
Summary H1 operational performance relatively stable Profitability strengthened in difficult market environment, ongoing strong cash flow generation Competitive set-up in an uncertain market environment in 2009 Focus on Gases & Engineering business model, supported by structural mega-trends Financia
Slide 28: Agenda
Agenda 1. Operational Performance 2. Financial Position 3. Strategic Set-up and HPO Appendix 28
Slide 29: Gases & Engineering technology portfolio
Energy Mega-Trend Gases & Engineering technology portfolio 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 gas applications Fossil Frac Enhanced Oil
Slide 30: Group Financial Highlights
Group Financial Highlights in € million H1 08 H1 09 ∆ in % Sales 6,256 5,476 -12.5 Operating profit 1,258 1,104 -12.2 Margin 20,1 20,2 +10 bp Operating profit excluding restructuring charges 1,258 1,171 -6.9 Margin 20,1 21,4 +130 bp EBIT before special items and PPA depreciation 842 669 -20.5 Specia
Slide 31: Group Financial Highlights
Group Financial Highlights in € million H1 08 H1 09 ∆ in % Net income - Part of shareholders Linde AG 375 248 -33.9 + depreciation/amortisation from purchase price allocation +185 146 + special items -59 - - net of tax -46 -47 Adjusted Net Income 455 347 -23.7 - Restructuring costs - +67 + net of ta
Slide 32: Gases Division, operating segments: Western Europe
Gases Division, operating segments Western Europe in € million, as reported Sales Operating Profit Operating Margin -11.2% 575 -12.0% 2,083 1,849 506 27.6% -20 bps 27.4% H1 2008 H1 2009 H1 2008 H1 2009 H1 2008 H1 2009 H1 highlights — Comparable sales development of -6.0%, continued currency effect f
Slide 33: Gases Division, operating segments: Americas
Gases Division, operating segments Americas in € million, as reported Sales Operating Profit Operating Margin 1,082 -8.2% 206 +1.9% 210 +210 bps 21.1% 993 19.0% H1 2008 H1 2009 H1 2008 H1 2009 H1 2008 H1 2009 H1 highlights — Comparable sales development of -8.4% — Stabilisation but no recovery of sa
Slide 34: Gases Division, operating segments: Asia & Eastern Europe
Gases Division, operating segments Asia & Eastern Europe in € million, as reported Sales Operating Profit Operating Margin 945 -7.2% 877 269 -1.1% 266 28.5% +180 bps 30.3% H1 2008 H1 2009 H1 2008 H1 2009 H1 2008 H1 2009 H1 highlights — Comparable sales development of -7.4% — First indications of a s
Slide 35: Gases Division, operating segments: South Pacific & Africa
Gases Division, operating segments South Pacific & Africa in € million, as reported Sales Operating Profit Operating Margin 632 +5.4% 666 +8.3% 156 144 22.8% +60 bps 23.4% H1 2008 H1 2009 H1 2008 H1 2009 H1 2008 H1 2009 H1 highlights — Comparable sales development of -4.6% — South Pacific remains ro
Slide 36: Gases Division, sales bridge
Gases Division, sales bridge Sales -6.7% on comparable basis in € million +3.3% -1.4% -2.8% 4,709 -6.7% 4,350 H1 2008 Consolidation Currency Natural Gas Price/Volume H1 2009 ▸ Operational Performance | ▸ Financial Position | ▸ Strategic Set-up & HPO | ▸ Appendix 36
Slide 37: Gases Division, Joint Ventures
Gases Division, Joint Ventures Consolidation effect, but strong operational performance in € million Proportionate Sales Share of Net Income (not incl. in the Group top-line) (contribution to operating profit) 10 Reduction due to full Driven by new plant 302 consolidation of former start-ups, esp. i
Slide 38: Engineering Division
Engineering Division Backlog above € 4 bn, new olefin order in Abu Dhabi Others — Order intake close to strong previous year level: USD 1.075 bn HyCo 6% Nat. 6% order for new ethane cracker in Abu Dhabi from Borouge JV Gas 7% — Order backlog of € 4.381 bn (year-end 2008: € 4.436 bn) Order ASU 9% int
Slide 39: Group, FY 2008 Key P&L items
Group, FY 2008 Key P&L items in € million 2007 2008 Δ in % Sales 12,306 12,663 +2.9 Operating profit 2,424 2,555 +5.4 Margin 19.7% 20.2% +50bps EBIT before special items and PPA depreciation 1,591 1,703 +7.0 Special items 607 59 - PPA depreciation -446 -371 - EBIT 1,752 1,391 - Financial Result -377
Slide 40: Group, FY 2008 Financial key indicators
Group, FY 2008 Financial key indicators Further improvement in all our three key financial indicators Profitable growth for our shareholders: adjusted EPS increase of 8.8% Further improvement in capital returns: ROCE improvement of 210 bps Strong cash flow generation maintained in weakening environm
Slide 41: Group, FY 2008 Adjusted ROCE
Group, FY 2008 Adjusted ROCE in € million Capital Employed Adj. ROCE Adj. ROCE (B/S date) 10.3% 12.4% 15,490 13,884 13,508 7,878 13,696 7,116 Adj. Equity 7,445 7,330 1,703 + Financial debt 1,591 Adj. EBIT + Net pension obligation 403 681 Avg. CE - Net financial services -824 -712 - Cash -903 -1,022
Slide 42: Group, FY 2008 Cash flow statement
Group, FY 2008 Cash flow statement in € million Q1/08 Q2/08 Q3/08 Q4/08 2008 2007 Operating Profit 602 656 652 645 2,555 2,424 Change in Working Capital -199 17 -59 44 -197 -114 Funds from operations 403 673 593 689 2,358 2,310 Paid taxes -38 -77 -86 -28 -229 -336 Other changes -28 -117 -22 -86 -253
Slide 43: Group, FY 2008 Free cash flow after investments
Group, FY 2008 Free cash flow after investments Operating Cash flow in € million -225 337 Free Cash flow Q1 112 Cash Flow from investing activities -199 Q2 479 280 -292 Q3 485 193 -556 Q4 575 19 -1,272 1,876 Total 604 — Strong development of operating CF in Q4 — High investment activties in Q4 for b
Slide 44: Group, FY 2008 Capital expenditure and acquisitions
Group, FY 2008 Capital expenditure and acquisitions Cash Flow from investing activities CAPEX Acquisitions 42.0% in € million -1,272 2,086 -1,683 -1,611 1,470 1,451 1,035 CAPEX/ 576 Acquisitions 1,062 +36.6% Gases 213 Other* -21 -31 Engineering 46 +15.2% 53 -73 -34 Other Proceeds 3,781 442 2007 2008
Slide 45: Gases Division, FY 2008 Capital expenditure
Gases Division, FY 2008 Capital expenditure in € million +36.6% 1,451 506 1,062 +34.2% Western Europe 377 295 +38.5% Americas 213 505 Asia & Eastern Europe 334 +51.2% 145 213 South Pacific & Africa 138 +5.1% 2007 2008 ▸ Operational Performance | ▸ Financial Position | ▸ Strategic Set-up & HPO | ▸ Ap
Slide 46: Group Tax rate
Group Tax rate 39.7% 27.6% 2009 target Range: 25–27% 22.9% 2006 2007 2008 — Post-acquisition restructuring fully effective in 2008 — Positive impact of tax rate changes — Strong performance of the Group in countries with lower tax rates ▸ Operational Performance | ▸ Financial Position | ▸ Strategic
Slide 47: Group Dividend
Group Dividend Consistent dividend policy: dividend development in line with growth of operating profit +5.9% €1.80 +13.3% €1.70 €1.50 2006 2007 2008 ▸ Operational Performance | ▸ Financial Position | ▸ Strategic Set-up & HPO | ▸ Appendix 47
Slide 48: Group, FY 2008 Pensions
Group, FY 2008 Pensions Net obligation increases due to Further actuarial losses of approx. € 400 m actuarial gains/losses avoided due to early optimization of the plan assets portfolio structure DBO Plan Net in € million 45% 28% Shares asset obligation 01.01.2008 5,152 4,813 339 Service costs 106 1
Slide 49: Group, Purchase Price Allocation
Group, Purchase Price Allocation Expected depreciation & amortisation Development of depreciation and amortisation (in € million) Impact in 2008: € 371 million Expected range 500 2009 > 275 – 325 2010 > 200 – 250 400 2011 > 175 – 225 300 … 200 2022 < 100 100 0 15 21 07 09 11 20 20 20 20 20 ▸ Operati
Slide 50: Accounting considerations
Accounting considerations Impact of PPA and EFL Purchase Price Allocation (PPA) IFRIC 4: Embedded Finance Lease (EFL) Impact in H1 2009: € 146 m (H1 08: € 185 m) Impact* in H1 2009: € -63 m (H1 08: € -64 m) Expected impact FY 2009: € 275-325 m Expected impact* FY 2009: €-118 m *(on Sales and EBITDA)
Slide 51: Group Definition of financial key indicators
Group Definition of financial key indicators 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. depreciat
Slide 52: 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 +49 89 357 57 1332 robert.schneider@linde.com 52