Linde achieves record levels and is set for further growth

* 2010 financial year:
Group sales up 14.8 percent to EUR 12.868 bn
Group operating profit* increases at a faster rate than sales, by 22.6 percent to EUR 2.925 bn
22.2 percent rise in proposed dividend to EUR 2.20 per share
* Group outlook for 2011: Increase in sales and operating profit expected
* Medium-term targets for 2014: Group operating profit of at least EUR 4 bn and ROCE of at least 14 percent
* Supervisory Board appoints new member of the Executive Board: Sanjiv Lamba assumes responsibility for the growth market of Asia

Munich - At its meeting yesterday, the Supervisory Board of Linde AG approved the financial statements of the holding company and the Group financial statements for the 2010 financial year. At this meeting, it also appointed Sanjiv Lamba (46) as a new member of the Linde AG Executive Board with immediate effect. Mr Lamba, who is based in Singapore, will be responsible in future for the gases business of the Group in Greater China, South and East Asia and in the South Pacific region. He will also assume responsibility for the Asian joint ventures and for the electronic gases product segment. Mr Lamba’s latest role in the Group was managing Linde’s business in the South and East Asia region, which forms part of the Asia & Eastern Europe operating segment.

“We are delighted that the Supervisory Board has appointed Sanjiv Lamba to the Executive Board. This appointment demonstrates our awareness of the growing importance of the emerging economies of Asia to our Group,” said Professor Dr Wolfgang Reitzle, Chief Executive Officer of Linde AG. “In the 2010 financial year, the Group was already reaping the benefit of its very good position in these markets.” Linde achieved double-digit growth in both sales and operating profit, surpassing its previous best figures posted in the 2008 financial year. “The global economy has grown faster and more vigorously than might have been expected,” the CEO continued. “But our good performance is not just due to the recovery of the global economy. It is also the result of us being in a position to seize growth opportunities as they arise. Our gases and engineering businesses have a global presence. What’s more, we have continued to achieve efficiency gains.”

Linde is looking to the future with confidence. “We have set ourselves new medium-term targets,” explained CEO Reitzle. “We will be aiming to achieve Group operating profit* of at least EUR 4 bn in the 2014 financial year. Our minimum target for return on capital employed for the same year is 14 percent.” This four-year forecast is based on current economic estimates and prevailing exchange rates. “In the 2011 and 2012 financial years, we assume Group sales and Group operating profit* will show continuous improvement.”

In the 2010 financial year, Group sales rose 14.8 percent to EUR 12.868 bn (2009: EUR 11.211 bn). By way of comparison, Linde achieved sales in the 2008 financial year of EUR 12.663 bn. The Group continued to increase its profitability, with Group operating profit* growing at a faster rate than sales, up 22.6 percent to EUR 2.925 bn (2009: EUR 2.385 bn). Group operating profit in 2008 was EUR 2.555 bn. The Group operating margin in the 2010 financial year increased by 140 basis points to 22.7 percent (2009: 21.3 percent). Linde was also able to benefit significantly from the positive impact of its High Performance Organisation (HPO) programme which is designed to achieve sustainable process optimisation and efficiency gains.

Linde saw a 66.9 percent increase in earnings before taxes on income (EBT) to EUR 1.399 bn (2009: EUR 838 m). Earnings after tax rose by 62.9 percent to EUR 1.064 bn (2009: EUR 653 m). The amount attributable to Linde AG shareholders was EUR 1.005 bn (2009: EUR 591 m), giving earnings per share of EUR 5.94 (2009: EUR 3.51). On an adjusted basis, i.e. after adjusting for the effects of the purchase price allocation identified in the course of the BOC acquisition, earnings per share stood at EUR 6.89 (2009: EUR 4.58).

Operating cash flow continued the positive trends seen in the previous quarters. It increased significantly from the prior year, by 13.1 percent to EUR 2.422 bn (2009: EUR 2.142 bn). ROCE (return on capital employed) rose to 12.5 percent (2009: 10.4 percent). Linde reduced its net financial debt by EUR 622 m to EUR 5.497 bn (2009: EUR 6.119 bn).

The Executive Board and Supervisory Board of Linde AG will propose a resolution at the Annual General Meeting to be held on 12 May 2011 that a dividend of EUR 2.20 per share be paid. This is an increase of 22.2 percent compared with the dividend declared in 2010 of EUR 1.80.

Gases Division

The improvement in the general economic climate in the course of the 2010 financial year resulted in a rise in demand in the global gases business. Against this background, Linde achieved a 14.5 percent increase in sales in the Gases Division to EUR 10.228 bn when compared with the figure for 2009 of EUR 8.932 bn. On a comparable basis, i.e. after adjusting for exchange rate effects, changes in the price of natural gas and changes to Group structure, sales grew 5.7 percent. Linde achieved a significant improvement in profitability in the Gases Division, where operating profit rose by 16.3 percent to EUR 2.766 bn (2009: EUR 2.378 bn). The operating margin increased by 40 basis points to 27.0 percent (2009: 26.6 percent). This improvement in profitability was due mainly to the positive impact of the efficiency improvement and process optimisation measures included in HPO.

Business trends in the various operating segments of the Gases Division reflect great regional variations in the pace of the economic recovery. The fastest growth was to be seen in the emerging economies of Asia, especially in China and India, and in South America. In contrast, in the more mature economies, such as the US and Western Europe, economic output grew at a relatively modest rate. Yet even in those regions, demand rose in the course of 2010.

In the Western Europe operating segment, Linde achieved a 6.8 percent increase in sales to EUR 4.021 bn (2009: EUR 3.765 bn). On a comparable basis, sales rose by 3.3 percent. Operating profit grew at a faster rate than sales, by 12.7 percent to EUR 1.184 bn (2009: EUR 1.051 bn). The operating margin rose to 29.4 percent, 150 basis points above the prior-year figure of 27.9 percent.

In the Americas operating segment, sales in the 2010 financial year rose 15.0 percent to EUR 2.279 bn (2009: EUR 1.981 bn). On a comparable basis, the increase in sales was 8.6 percent. In this region too, operating profit grew at a faster rate than sales, rising by 16.3 percent to EUR 499 m (2009: EUR 429 m). The operating margin was 21.9 percent (2009: 21.7 percent).

Against a background of dynamic economic trends in Asia and the economic turnaround in Eastern Europe, Linde achieved significant growth in both sales and operating profit in the Asia & Eastern Europe operating segment. The Group benefited from its leading position in these markets. In the 2010 financial year, sales grew 21.9 percent to EUR 2.239 bn (2009: EUR 1.836 bn). Operating profit was up 19.7 percent to EUR 667 m (2009: EUR 557 m). At 29.8 percent, the operating margin in this operating segment remained very high (2009: 30.3 percent). After adjusting for the dilutive effect of the pass-through of higher natural gas prices, the operating margin was at the same level as in 2009.

In the South Pacific & Africa operating segment, Linde achieved sales growth of 25.8 percent to EUR 1.784 bn (2009: EUR 1.418 bn). This significant increase was due almost entirely to positive exchange rate effects for the Australian dollar and the South African rand. On a comparable basis, the increase in sales was 2.5 percent. Operating profit was also boosted by positive exchange rate effects, increasing by 22.0 percent to EUR 416 m (2009: EUR 341 m). The operating margin in this segment was 23.3 percent (2009: 24.0 percent).

The performance of the various product segments reflects the positive trends in the Gases Division in the 2010 financial year. In the on-site business, where gases are supplied on site to major customers, Linde achieved the highest rate of growth. On a comparable basis, sales in this product segment increased by 9.6 percent to EUR 2.451 bn (2009: EUR 2.237 bn). The Group benefited from the continued improvement in capacity utilisation in existing plants and from new plants coming on stream. In the liquefied gases business, sales on a comparable basis were EUR 2.487 bn. This was a 6.6 percent increase compared with the prior-year figure of EUR 2.333 bn. In the cylinder gas business, Linde achieved a 3.4 percent increase in sales on a comparable basis to EUR 4.160 bn (2009: EUR 4.023 bn). After a slow start, the business picked up steadily in the course of 2010. The Healthcare product segment, which supplies medical gases and provides related after-sales and advisory services, continued to deliver a solid performance, with sales rising 4.2 percent on a comparable basis to EUR 1.130 bn (2009: EUR 1.084 bn).



Gases Division – Outlook

The original target for the gases business has not changed. The Group wants to grow at a faster rate than the market and continue to increase its productivity. In the on-site business, Linde has a healthy project pipeline, which will make a significant contribution to sales and operating profit in the 2011 financial year. The liquefied gases and cylinder gas business should benefit from the continuing general economic recovery. In the Healthcare product segment, Linde expects the positive business trends to continue, with sales growing at a faster rate than in 2010. Against this background, Linde assumes that sales generated by the Gases Division in the 2011 financial year will be higher than in 2010 and that operating profit will increase at a faster rate than sales.

Linde has reorganised the regional responsibilities within the Gases Division and will therefore be adjusting its reporting accordingly. From the first quarter of 2011, Linde will report according to the following operating segments: Americas, EMEA (Western and Eastern Europe, Middle East and Africa) and Asia/Pacific.



Engineering Division

In the international large-scale engineering business, a late-cycle sector, the market climate stabilised in the course of 2010. Linde saw a revival in investment activity, especially for small and medium-sized projects, in its four main lines of business (olefin plants, natural gas plants, air separation plants, hydrogen and synthesis gas plants).

The Engineering Division achieved sales in the 2010 financial year of EUR 2.461 bn, a 6.5 percent increase on the prior-year figure of EUR 2.311 bn. The successful execution of a number of individual projects meant that operating profit grew at a faster rate than sales, by 29.0 percent to EUR 271 m (2009: EUR 210 m). The operating margin rose to 11.0 percent (2009: 9.1 percent), again significantly exceeding the target figure of 8 percent.

Order intake was EUR 2.159 bn at the end of the year (2009: EUR 2.458 bn). When comparing the figures, it should be noted that order intake in 2009 was largely shaped by a small number of major projects. One major contract for the construction of an olefin plant in Abu Dhabi (United Arab Emirates) was alone worth USD 1.075 bn. In 2010, on the other hand, new orders were spread more widely, with numerous contracts for small and medium-sized plants, both from third parties and from the Group’s own Gases Division. Linde has retained its high order backlog. At 31 December 2010, this stood at EUR 3.965 bn (2009: EUR 4.215 bn).



Engineering Division – Outlook

The high order backlog forms a good basis for a solid business performance in the Engineering Division in the next two years. Linde expects sales in its plant construction business in the 2011 financial year to reach the same level as in 2010. The minimum target for the operating margin in the current financial year is 8 percent.

Linde remains well positioned in the global market for olefin plants, natural gas plants, air separation plants and hydrogen and synthesis gas plants. In particular, it stands to gain in the long term from investment in two structural growth areas, energy and the environment.





Note: The 2010 Annual Report of The Linde Group is available on the Internet at www.linde.com.

To coincide with the publication of the annual financial statements, a teleconference for analysts will take place today at 2pm (German time) in English with Professor Dr Wolfgang Reitzle, CEO of Linde AG, and Georg Denoke, CFO of Linde AG. Journalists will have the opportunity to listen to the conference live by dialling +49.69.589.99-0509. Please tell the operator your name and the name of your company. Following the teleconference, you will be able to hear a recording of the event by calling +49.800.101.2111. Please give the following reference number: 890118.

The Linde Group is a world-leading gases and engineering company with around 48,500 employees working in more than 100 countries worldwide. In the 2010 financial year, it achieved sales of EUR 12.868 bn. The strategy of The Linde Group is geared towards long-term profitable growth and focuses on the expansion of its international business with forward-looking products and services. Linde acts responsibly towards its shareholders, business partners, employees, society and the environment – in every one of its business areas, regions and locations across the globe. Linde is committed to technologies and products that unite the goals of customer value and sustainable development.

For more information, see The Linde Group online at http://www.linde.com