Linde today (28th July) reported yet another ‘strong’ set of financials, with its second quarter (Q2) 2022 results highlighting sales of $8.5bn, 12% above Q2 2021.
Despite supply chain headwinds, and the ongoing Russia-Ukraine crisis, the industrial gas giant also reported income from continuing operations of $372m and diluted earnings per share of $0.74.
Excluding charges primarily from the deconsolidation and impairment of Russian subsidiaries and purchase accounting impacts from the Linde AG merger, adjusted income from continuing operations was $1.6bn, up 11% versus the prior year.
Operating profit for the quarter was $589m, with adjusted operating profit of $2bn led by higher price, strong volumes and continued productivity initiatives across all segments.
Q2 operating cash flow of $2.1bn more than covered capital expenditures of $826m, resulting in a free cash flow of $1.7bn.
“Linde employees delivered another strong quarter with EPS increasing 15% versus prior year or 20% excluding currency translation,” Sanjiv Lamba, CEO of Linde said.
“Furthermore, return on capital reached a new record of 20% and operating margins expanded 100 basis points excluding cost-pass through.”
“Despite the macroeconomic challenges, Linde once again demonstrated its resiliency and the ability to generate shareholder value in any environment.”
Results by segment
Americas sales of $3.5bn grew 16% versus prior-year quarter and 9% sequentially.
Compared with second quarter 2021, underlying sales increased 9% driven by 6% higher pricing and 3% higher volume, primarily in the manufacturing, chemicals and energy end markets.
Sequentially, underlying sales grew 4%, with pricing and volume each up 2%.
Operating profit of $910m was 25.9% of sales, 290 basis points below prior year or 90 basis points lower when excluding the effects of cost pass-through.
Asia Pacific sales of $1.7bn were 7% above prior year and up 3% sequentially.
Compared to prior year, underlying sales grew 8% driven by 5% price attainment and 3% volume growth, primarily from project start-ups in the electronics, chemicals and energy end markets.
Sequentially, underlying sales grew 6% with pricing up 1% and volume growing 5%.
Operating profit of $426m was 25.8% of sales, 60 basis points above prior year or 160 basis points higher when excluding the effects of cost pass-through.
Europe, Middle East & Africa sales of $2.1bn were up 14% versus prior year and flat sequentially.
Compared with second-quarter 2021, underlying sales grew 11%, led by 12% higher pricing.
Sequentially, underlying sales grew 3% driven by pricing.
Operating profit of $536m was 25.0% of sales, 100 basis points below prior year or 220 basis points higher when excluding the effects of cost pass-through.
Linde Engineering sales were $644m, flat versus prior year, and operating profit was $105m or 16.3% of sales.
Order intake for the quarter was $1bn and third-party sale of plant backlog increased to $2.9bn.
Outlook
For the third quarter (Q3) 2022, Linde expects adjusted diluted earnings per share in the range of $2.85 to $2.95, up 4% to 8% versus prior-year quarter.
Such guidance assumes a currency headwind of 6% year-over-year and 3% sequentially.
Looking at the full year 2022, adjusted diluted earnings per share are expected to be in the range of $11.73 to $11.93, up 10% to 12% versus prior year or 15% to 17% excluding currency headwind.
Lamba concluded, “Looking ahead, the geopolitical and macro environment continues to be very uncertain. Regardless, I have confidence the company will continue to deliver on its commitments to shareholders.”
