Linde Reports Full-Year and Fourth-Quarter 2023 Results

• Sales $32.9 billion, down 2%, underlying sales up 5%
• Operating profit $8.0 billion; adjusted operating profit $9.1 billion, up 15%
• Operating profit margin 24.4%; adjusted operating profit margin 27.6%, up 390 basis points versus prior year
• EPS $12.59; adjusted EPS $14.20, up 16%
• Returned $6.4 billion to shareholders through dividends and share repurchases
• Total project backlog of $8.5 billion

Fourth-Quarter Highlights

• Sales $8.3 billion, up 5% YoY, underlying sales up 4%
• Operating profit $2.0 billion, adjusted operating profit $2.3 billion, up 14%
• Operating profit margin 24.4%; adjusted operating profit margin 27.4%, YoY up 210 basis points
• EPS $3.16, up 18%; adjusted EPS $3.59, up 14%

2024 Guidance

• First-quarter 2024 adjusted EPS guidance $3.58 – $3.68, represents 6%-9% growth ex. FX
• Full-year 2024 adjusted EPS guidance $15.25 – $15.65, represents 8%-11% growth ex. FX

Linde plc (Nasdaq: LIN) today reported fourth-quarter 2023 net income of $1,543 million and diluted earnings per share of $3.16, up 16% and 18% respectively. Excluding Linde AG purchase accounting impacts and other charges, adjusted net income was $1,753 million, up 11% versus prior year.  Adjusted earnings per share was $3.59, 14% above prior year.

Linde’s sales for the fourth quarter were $8,302 million, 5% above prior year or 3% above when excluding positive currency impact.  Compared to prior year, underlying sales increased 4% from price attainment and flat volumes.

Fourth-quarter operating profit was $2,028 million.  Adjusted operating profit of $2,272 million was up 14% versus prior year led by higher price and continued productivity initiatives across all segments.  Adjusted operating profit margin of 27.4% was 210 basis points above prior year or 130 basis points higher when excluding the effects of cost pass-through. 

Fourth-quarter operating cash flow of $2,727 million increased 30% versus prior year driven primarily by higher earnings and better working capital.  After capital expenditures of $1,151 million, free cash flow was $1,576 million.  During the quarter, the company returned $1,641 million to shareholders through dividends and stock repurchases, net of issuances.

For full-year 2023, sales were $32.9 billion, 2% below 2022.  Compared to prior year, underlying sales increased 5% from 6% price attainment partially offset by 1% lower volumes. Operating profit was $8.0 billion and adjusted operating profit was $9.1 billion, 15% above prior year.  Adjusted operating profit margin was 27.6% of sales, 390 basis points higher versus 2022, or 310 basis points higher when excluding the effects of cost pass-through.  Diluted earnings per share were $12.59 and adjusted diluted earnings per share were $14.20, up 16% versus prior year.

In 2023, Linde generated strong operating cash flow of $9.3 billion.  The company invested $3.8 billion in capital expenditures and returned $6.4 billion to shareholders in the form of dividends and share buybacks.

Commenting on the financial results and business outlook, Chief Executive Officer Sanjiv Lamba said, “Despite the challenging environment in 2023, the Linde team once again delivered industry leading results including a 25.4% ROC, 27.6% operating margin and EPS growth rate of 16%.  In addition, we closed the year with a strong balance sheet and a high-quality project backlog of $8.5 billion which will contribute earnings growth for years to come.”

Lamba continued, “Looking ahead, the geopolitical and macro environment remain uncertain. However, we are well positioned to win more than our fair share of high-quality projects and again create shareholder value by leveraging all of the opportunities that lie ahead.” 

For the full year 2024, the company expects adjusted diluted earnings per share to be in the range of $15.25 to $15.65, up 7% to 10% versus prior year or 8% to 11% when excluding estimated currency headwinds.  Full-year capital expenditures are expected to range between $4.5 billion and $5.0 billion to support operating and growth requirements, including the contractual sale of gas backlog.  For the first quarter 2024, adjusted earnings per share is expected to be in the range of $3.58 to $3.68, 5% to 8% above prior-year quarter.  This range assumes 1% unfavorable currency.
 

Fourth-Quarter 2023 Results by Segment

Americas sales of $3,583 million grew 5% versus prior-year quarter.  Compared with fourth quarter 2022, underlying sales increased 6% driven by 5% higher pricing and 1% volumes. Operating profit of $1,075 million was 30.0% of sales, 240 basis points above prior year and 100 basis points higher when excluding the effects of cost pass-through. 

APAC (Asia Pacific) sales of $1,639 million were 5% above prior year. Compared to prior year, underlying sales grew 5% driven by 2% price attainment and 3% volume growth, primarily in the chemicals and energy end markets including project start-ups.  Operating profit of $452 million was 27.6% of sales, 110 basis points above prior year.  Year over year cost pass-through was immaterial.

EMEA (Europe, Middle East & Africa) sales of $2,100 million were up 4% versus prior year. Compared with fourth-quarter 2022, underlying sales grew 2%, driven by 6% higher pricing partially offset by 4% lower volumes.  Operating profit of $615 million was 29.3% of sales, 420 basis points above prior year and 350 basis points higher when excluding the effects of cost pass-through. 

Linde Engineering sales were $658 million, 17% above prior year, and operating profit was $119 million or 18.1% of sales.  Order intake for the quarter was $567 million and third-party sale of equipment backlog was $3.6 billion.

Earnings Call

A teleconference on Linde’s fourth-quarter 2023 results is being held today at 9:00 am EST. 

Live conference callUS Toll-Free Dial-In Number: 1 888 770 7292
UK Toll-Free Dial-In Number: 0800 358 0970
Access code: 6877110Live webcast (listen-only)https://investors.linde.com/events-presentations

Materials to be used in the teleconference are also available on the website.

Forward-looking Statements

This document contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are identified by terms and phrases such as: anticipate, believe, intend, estimate, expect, continue, should, could, may, plan, project, predict, will, potential, forecast, and similar expressions. They are based on management’s reasonable expectations and assumptions as of the date the statements are made but involve risks and uncertainties. These risks and uncertainties include, without limitation: the performance of stock markets generally; developments in worldwide and national economies and other international events and circumstances, including trade conflicts and tariffs; changes in foreign currencies and in interest rates; the cost and availability of electric power, natural gas and other raw materials; the ability to achieve price increases to offset cost increases; catastrophic events including natural disasters, epidemics, pandemics such as COVID-19, and acts of war and terrorism; the ability to attract, hire, and retain qualified personnel; the impact of changes in financial accounting standards; the impact of changes in pension plan liabilities; the impact of tax, environmental, healthcare and other legislation and government regulation in jurisdictions in which the company operates; the cost and outcomes of investigations, litigation and regulatory proceedings; the impact of potential unusual or non-recurring items; continued timely development and market acceptance of new products and applications; the impact of competitive products and pricing; future financial and operating performance of major customers and industries served; the impact of information technology system failures, network disruptions and breaches in data security; and the effectiveness and speed of integrating new acquisitions into the business. These risks and uncertainties may cause future results or circumstances to differ materially from adjusted projections, estimates or other forward-looking statements.

Linde plc assumes no obligation to update or provide revisions to any forward-looking statement in response to changing circumstances. The above listed risks and uncertainties are further described in Item 1A. Risk Factors in Linde plc’s Form 10-K for the fiscal year ended December 31, 2022 filed with the SEC on February 28, 2023, which should be reviewed carefully. Please consider Linde plc’s forward-looking statements in light of those risks.