Linde Plc
Brief Company Overview
Linde Plc (FWB:LIN, NYSE:LIN) is an international industrial gas company established in 1879 in Germany and currently headquartered in Ireland with principal offices in the United Kingdom and the United States. Its primary products in its industrial gases business are atmospheric gases (oxygen, nitrogen, argon, and rare gases) and process gases (carbon dioxide, helium, hydrogen, electronic gases, specialty gases, and acetylene). The company also designs and builds equipment that produces industrial gases and offers customers a wide range of gas production and processing services such as olefin plants, natural gas plants, air separation plants, hydrogen and synthesis gas plants and other types of plants. Linde serves a diverse group of industries including healthcare, chemicals and energy, manufacturing, metals and mining, food and beverage, and electronics. The company employs approximately 80,000 people globally (65,273 full-time employees1) and serves customers in more than 100 countries worldwide.2
The company's reported segments are divided into four parts - Americas, EMEA (Europe, Middle East & Africa), APAC (Asia, Pacific), and Global other.
Linde plc is dual listed on the New York Stock Exchange and Frankfurt Stock Exchange (Prime Standard) with the ticker symbol LIN.3 As on January 30, 2023, the company is trading at USD 324.26 and EURO 299.85. Market cap of the company is $159.93 billion with about 492 million shares outstanding. Basic earnings per share (EPS) of the company during the previous financial year was $7.40 and in the quarter ended September 30, 2022 is $2.31.
Financial Analysis
Q3'22 Analysis
The company has reported sales of $8,797 million during the quarter ended on September 30, 2022, which was $7,668 million a year earlier. Sales increased $1,129 million, or 15%, for the third quarter of 2022 and increased $2,970 million, or 13% for the nine months ended September 30, 2022 versus the respective 2021 periods. Volume growth in all end markets, except healthcare, and project startups increased sales by 3% in the quarter and 2% in the year-to-date period. Higher pricing across all geographic segments contributed 8% to sales in the quarter and 7% in the year-to-date period. Cost passthrough increased sales by 8% in the quarter and 7% in the year-to-date period with minimal impact on operating profit. Currency translation decreased sales by 7% in the quarter and 5% in the year-to-date period, largely in EMEA, APAC and Engineering, driven by the weakening of the Euro, Chinese yuan, British pound and Australian dollar against the U.S. dollar. The impact of divestitures decreased sales by 1% in the quarter. Engineering increased sales by 4% in the quarter and 2% in the year-to-date period.
Cost of goods sold reported is $5,285 million, increased from $4,368 million during the same quarter a year earlier. Cost of sales, exclusive of depreciation and amortization increased $917 million, or 21%, for the third quarter of 2022 and increased $2,407 million, or 19% for the nine months ended September 30, 2022 primarily due to inflation and higher volumes, partially offset by productivity gains and currency effects.
Reported depreciation and amortization expense decreased $118 million, or 10%, for the third quarter of 2022 and decreased $252 million, or 7%, for the nine months ended September 30, 2022. The decrease is related primarily to lower depreciation and amortization of intangible assets acquired in the merger and currency impacts.
Russia-Ukraine conflict and other charges were $15 million and $1,004 million for the third quarter and nine months ended September 30, 2022, respectively. The charge recorded in the third quarter of 2022 is primarily driven by the sale of the GIST business. The charge for the nine months ended September 30, 2022 relates primarily to the deconsolidation and impairment of Russian subsidiaries resulting from the ongoing war in Ukraine and related sanctions recorded as of June 30, 2022. 2021 charges of $26 million and $222 million, for the quarter and year-to-date periods respectively, relate to cost reduction program and other charges, primarily severance.
Net income of the company during the period is $1,273 million, up from $979 million. Reported income from continuing operations increased $295 million, or 30%, for the third quarter of 2022 and increased $22 million, or 1%, for the nine months ended September 30, 2022 versus the respective 2021 periods. On an adjusted basis, which excludes the impacts of purchase accounting and Russia-Ukraine conflict and other charges, income from continuing operations increased $134 million, or 9%, for the quarter and increased $473 million, or 11%, for the nine months ended September 30, 2022 versus the respective 2021 periods. On both a reported and adjusted basis, the increase was driven by higher operating profit.
Cash & cash equivalent for the company reported is $3,756 million on September 30, 2022, which was $2,823 million on December 31, 2021. The cash position of the company has depleted during this time period. Accounts receivable net of reserves were $4,599 million at September 30, 2022 and $4,499 million at December 31, 2021. Allowances for expected credit losses were $377 million at September 30, 2022 and $405 million at December 31, 2021. Provisions for expected credit losses were $112 million and $101 million for the nine months ended September 30, 2022 and 2021, respectively. The company has reported $2,954 million commercial paper on September 30, 2022, up from $278 million at the end of previous financial year. Bank borrowing of the company during the same period has decreased from $885 million to $225 million. Total reported long-term debt of the company on September 30, 2022 is $10,608 million, down from $11,335 million on December 31, 2021.
