First six months of 2009: The Linde Group strengthens operating margin in difficult market environment
The technology group The Linde Group has in the first six months of the 2009 financial year in an ongoing difficult market environment and despite volume reductions caused by global economic conditions stabilised its profitability. At Group level, the operating margin was 20.2 percent in the first six months of the year, compared with 20.1 percent in the comparable prior-year period. Adjusted for one-off restructuring costs of 67 million euro, the operating margin was 21.4 percent. "The measures we have taken to achieve sustainable improvements in productivity are having an effect," said Professor Dr Wolfgang Reitzle, Chief Executive Officer of Linde AG. "At the same time, in our gases business we are beginning to see occasional signs of a slight recovery in demand. However, future global economic developments are beset with uncertainty and the crisis is not yet over. Against this background, we will be unable to achieve in the 2009 financial year the same level of sales and earnings achieved in 2008, a record year. However, provided that the economic recovery stabilises, we expect a better business development in the second half year of 2009 than in the first six month."
In the course of the global economic crisis, Group sales fell by 12.5 percent in the first half of 2009 to 5.476 billion euro, compared with the record figure achieved in the first half of 2008 of 6.256 billion euro. Group operating profit for the six months to 30 June 2009 was 1.104 billion euro, 12.2 percent below the prior year figure of 1.258 billion euro. Taking into account restructuring costs arising from the accelerated implementation of the High Performance Organisation (HPO) programme, the fall in Group operating profit for Linde was only 6.9 percent. With HPO, the integrated programme for process optimisation and increased productivity, the Group is seeking to achieve cost savings of between 650 million euro and 800 million euro in the financial years from 2009 to 2012 and to continue to improve its competitiveness irrespective of the economic situation.
Earnings before taxes on income (EBT) were 365 million euro, a decline of 179 million euro (-32.9 percent) compared to the first half of 2008 (544 million euro). After deducting restructuring costs of 67 million euro and the gains on disposal of businesses of 59 million euro achieved in the first half of 2008 this decline was only 53 million euro (-10.9 percent).
Earnings after tax at 30 June 2009 were 274 million euro (2008: 402 million euro). After taking minority interests into account, earnings attributable to Linde AG shareholders were 248 million euro (2008: 375 million euro), giving earnings per share (EPS) of 1.47 euro (2008: 2.24 euro). Account should be taken here too, when comparing the figures for the first six months of 2009 and 2008, of the one-off restructuring costs charged in 2009 and the gains on the disposal of businesses recognised in 2008. On an adjusted basis, i.e. after adjusting for the effect of the purchase price allocation in the course of the BOC acquisition and the profits on disposal achieved in the prior year, earnings per share in the first half of 2009 stood at 2.06 euro (2008: 2.72 euro). The restructuring costs recognised in the first half of 2009 have not been adjusted for in this calculation. Cash flow from operating activities in the first six months of the year was 841 million euro, a figure which was higher than that for the first six months of 2008 of 816 million euro, despite the fall in earnings. This increase was mainly due to improvements in working capital management, according to the company.
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