UpdateGermany's Linde Q3 net profit rises 8%, targets €900m savings

29 October 2012 11:06  [Source: ICIS news]

(adds third-quarter earnings)

Linde Head Office, MunichLONDON (ICIS)--Germany-based industrial gases producer Linde reported an 8% year-on-year increase in net profit for the third quarter of 2012 to €313m ($406m), bolstered by the acquisition of US healthcare gases company Lincare earlier this year, the company said on Monday.

Revenue during the third quarter rose 13% year on year to €3.9bn.

However, the group noted that global economic growth had been slower in the first months of 2012 than over the same period in 2011, and announced plans to reduce gross costs by €750m-900m between 2013 and 2016.

“This will help to reinforce our high level of profitability even in a challenging environment," said Lincare CEO Wolfgang Reitzle.

Operating profit for the company’s gas division increased to €885m for the quarter from €771m in the third quarter of 2011, with profit increases generated in all regions. The strongest growth was generated in the Americas, where operating profit increased from €135m in the third-quarter 2011 to €210m over the same period in 2012.

Operating profit was up €16m year on year to €244m for the Asia Pacific region, and Europe, Middle East and Africa (EMEA) region operating profit was up €23m to €431m, the company said.

“On the basis of its global footprint and well-balanced spread across different sectors, Linde is able to compensate better for faltering demand in some markets or the weakness of certain currencies than companies which do not have such a broad international base,” the company said in a statement.

The company reported a 5.6% year-on-year increase in net profits for the first nine months of the year to €904m today, on the back of an 8.4% increase in group sales over the period to €11.1bn. Operating profit was up 8.5% to €2.56bn over the period, the company said.

In a note released following the publication of Linde’s quarterly results today, investment bank JP Morgan stated that the positive results are a sign that the company is currently outperforming many of its rivals in the industrial gases market, and that its high performance organisation (HPO) efficiency drive has increased its earnings before interest and taxes (EBIT) margin from 10.5% in 2008 to 14.1% in 2012

Linde has reported strong 3Q [third-quarter] results, particularly in the context of the underwhelming performance of some of its industrial gases peers,” JP Morgan said.

“Importantly, the [company’s] new (€750-900m) efficiency measures are targeting a much greater level of cost savings than we had anticipated,” it added.

Financial analysts at Bernstein Research rated Linde ‘market perform’ following the publication of its results, with a target share price of €135. At 09:19 GMT, Linde shares were trading at €131.90 on Germany’s Xetra stock exchange.

($1 = €0.77)

Additional reporting by Nurluqman Suratman

By: Tom Brown
+44 208 652 3214

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