Linde plc
CEO : Mr. Sanjiv Lamba
Quarterly earnings growth(YoY,%)
| Period | Revenue | Operating Income | EPS | Release Date |
|---|---|---|---|---|
| 2022 Q4 | -4.8% YoY | 28.3% | 34.5% | 2023-02-07 |
Sanjiv Lamba says,
Financial Performance
- Operating margin, EPS, and ROC all reached record highs for Q4 and full year
- 9th consecutive quarter of growing EPS ex FX by 20% or more
- $7 billion returned to owners in dividends and share repurchases
Environmental Progress
- Added 50 additional zero-waste sites, reaching 760 sites globally
- Reduced absolute Scope 1 and Scope 2 greenhouse gas emissions by over 1 million tons of CO2 versus 2021
- Stated goal of reducing 35% greenhouse gas emissions by 2035 recently validated by the science-based targets initiative
Human Capital Performance
- Best in class safety performance with double-digit improvement over 2021
- 28% gender diversity and aiming to exceed 30% by 2030
- Over 500 community engagement projects and more than $10 million donated to charitable and STEM programs
Backlog and Growth Opportunities
- $9.2 billion project backlog with secure returns, increased $2.4 billion versus Q3
- Expect to invest almost $5 billion in CapEx and acquisitions in 2023
- Expect to start up over $2 billion in sale of gas projects this year
- Securing high-quality growth through partnerships with global leaders and sticking to core of management of industrial gases
Overall Assessment and Future Outlook
- Confident in delivering strong results irrespective of economic and geopolitical climate
- Fourth year in a row of double-digit EPS growth
- Expect to win more than fair share of high-quality projects across energy transition spectrum
Matt White says,
Overview of Q4 Results
- Sales decreased by 5% YoY and 10% sequentially.
- Underlying sales increased by 7% YoY but decreased by 2% sequentially.
- Cost pass-through trends are starting to stabilize with a 2% increase over last year but 3% drop sequentially.
- Volume is down 1% from last year and 4% sequentially.
- Pricing actions remain robust with an 8% increase from 2021 and 2% from the third quarter.
Operating Profit and Margin
- Operating profit of $2 billion resulted in a record 25.3% operating margin.
- Excluding pass-through, operating margins expanded both sequentially and YoY in all gas segments as pricing effects net of cost inflation continue to improve underlying business quality.
- The engineering segment had an abnormally high operating margin this quarter due to favorable project timing.
- EPS of $3.16 increased 14% from last year or 20% excluding FX.
Guidance
- For Q1, the EPS range is $3.05 to $3.15, an increase of 4% to 8% versus prior year or 9% to 13%, when excluding FX.
- Full-year guidance is expected in the range of $13.15 to $13.55, representing an increase of 7% to 10% or 9% to 12% when excluding an estimated 2% FX headwind.
- Both ranges assume no material change in economic conditions at the midpoint.
Capital Management
- Operating cash flow was $9 billion for 2022 or 82% of EBITDA, consistent with our multiyear average.
- During the year, we invested $3.3 billion while returning $7.5 billion back to shareholders.
- We anticipate a meaningful step up in 2023 for new business investments while raising the dividend and maintaining a healthy share repurchase program.
Q & A sessions,
OCI Project as a Partnership with Linde
- Linde’s EPC capability and successful track record executing complex projects
- Linde’s reliability and strong operational expertise in managing the ATR ASU complex
- Linde’s hydrogen pipeline and ability to store excess hydrogen
- Linde seen as a complementary partner by ammonia players
- Double-digit unlevered post-tax returns expected from the project
APAC Business Performance
- Solid pricing and record operating margins, up at 26.5%
- Strong sales in electronics, chemicals, energy, and manufacturing
- Weakness in steel and automotive in China; expecting moderated growth in China
Technology and Commercial Viability of Ammonia
- Linde has good technology around backtracking and is running pilots on new catalysts
- Direct ammonia usage makes more sense than back-cracking due to the amount of energy loss in the process
Update on Projects and Carbon Sequestration
- Reasonably confident about getting OCI project up and running in 2025
- Working with multiple partners for the project and have date certain contracts to protect investments
- Talking to world-class companies that are experts in carbon sequestration, and discussions are progressing well
Performance in Americas, EMEA, and Hydrogen Pricing
- Recovered from customer outages due to winter storm in U.S. and January trends look good
- Lower economic activity and volatility on energy costs impacted on-site business in EMEA
- Sentiment improving in Europe, and waiting to see how volume shapes up
- Hydrogen pricing based on double-digit unlevered post-tax IRRs and competitive in the market
No bad stock 