Linde Reports First-Quarter 2023 Results

• Sales $8.2 billion, flat YoY, up 3% ex. FX
• Operating profit $1.9 billion, adjusted operating profit $2.2 billion, up 16%
• Operating profit margin 23.6%; adjusted operating profit margin 26.9%, up 370 basis points
• EPS $3.06, up 33%; adjusted EPS $3.42, up 17% YoY or 20% ex. FX
• Increased full-year 2023 adjusted EPS guidance to $13.45 – $13.85, represents 9% to 13% growth year-over-year

Linde plc (NYSE: LIN) today reported first-quarter 2023 net income of $1,516 million and diluted earnings per share of $3.06, up 29% and 33% respectively. Excluding Linde AG purchase accounting impacts and other charges, adjusted net income was $1,693 million, up 13% versus prior year.  Adjusted earnings per share was $3.42, 17% above prior year.

Linde’s sales for the first quarter were $8,193 million, flat versus prior year or 3% above when excluding negative currency impact.  Compared to prior year, underlying sales increased 8% from price attainment.

First-quarter operating profit was $1,933 million.  Adjusted operating profit of $2,206 million was up 16% versus prior year led by higher price and continued productivity initiatives across all segments.  Adjusted operating profit margin of 26.9% was 370 basis points above prior year and 360 basis points higher when excluding the effects of cost pass-through. 

First-quarter operating cash flow of $1,908 million decreased 5% versus prior year driven primarily by lower engineering project prepayments.  After capital expenditures of $829 million, free cash flow was $1,079 million.  During the quarter, the company returned $1,469 million to shareholders through dividends and stock repurchases, net of issuances.

Commenting on the financial results and business outlook, Chief Executive Officer Sanjiv Lamba said, “Linde employees delivered another set of strong results in the first quarter, including record ROC of 24.0%, expanding operating margin to 26.9% and a tenth consecutive quarter of 20% or more EPS growth ex. FX.  This performance is a result of our unwavering focus to optimize the base business, capitalize on high-quality growth opportunities and leverage our asset network to increase density, all while maintaining rigorous capital discipline.”

Lamba continued, “Looking ahead, the geopolitical and macro environment continues to remain uncertain.  Regardless, we will continue to create shareholder value in any economic scenario.” 

For the second quarter of 2023, Linde expects adjusted diluted earnings per share in the range of $3.40 to $3.50, up 10% to 13% versus prior-year quarter.  This guidance assumes a currency headwind of 1% year-over-year and flat sequentially. 

For the full year 2023, the company expects adjusted diluted earnings per share to be in the range of $13.45 to $13.85, up 9% to 13% versus prior year and assumes no currency impact.  Full-year capital expenditures are expected to be in the range of $3.5 billion to $4.0 billion to support growth and maintenance requirements including the $4.2 billion contractual sale of gas project backlog.

First-Quarter 2023 Results by Segment

Americas sales of $3,551 million grew 10% versus prior-year quarter.  Compared with first quarter 2022, underlying sales increased 8% driven by 7% higher pricing and 1% volume growth, primarily in the manufacturing and food and beverage end markets.  Operating profit of $1,025 million was 28.9% of sales, 100 basis points above prior year and 60 basis points higher when excluding the effects of cost pass-through. 

APAC (Asia Pacific) sales of $1,598 million were flat versus prior year.  Compared with first quarter 2022, underlying sales grew 6% driven by 5% price attainment and 1% volume growth, primarily in the electronics, chemicals and energy end markets including project start-ups.  Operating profit of $423 million was 26.5% of sales, 160 basis points above prior year.  Year over year cost pass-through was immaterial.

EMEA (Europe, Middle East & Africa) sales of $2,177 million were up 1% versus prior year. Compared with first quarter 2022, underlying sales grew 10%, driven by 13% higher pricing partially offset by 3% lower volumes.  Operating profit of $607 million was 27.9% of sales, 450 basis points above prior year and 470 basis points higher when excluding the effects of cost pass-through. 

Linde Engineering sales were $540 million, 26% below prior year, and operating profit was $149 million or 27.6% of sales.  Order intake for the quarter was $478 million and third-party sale of equipment backlog was $3.5 billion.