Business review of The Linde Group

Linde has started the new financial year with increases in Group revenue and in Group operating profit. Revenue rose in the first quarter of 2015 by 8.7 percent to EUR 4.398 bn, when compared with the figure for the first quarter of 2014 of EUR 4.045 bn. Operating profit increased by 9.0 percent to EUR 1.010 bn (2014: EUR 927 m). Positive exchange rate movements were the most significant factor contributing to the increase. US dollars, British pounds and Chinese renminbi were some of the currencies which gained in value. These effects have arisen purely on the translation of various local currencies into the reporting currency (the euro). After adjusting for exchange rate effects, Group revenue was 0.8 percent below the figure for the prior-year period. Group operating profit fell by 1.2 percent.

The Group operating margin for the first three months of 2015 was 23.0 percent, which was slightly higher than the figure of 22.9 percent for the first three months of 2014.

Cost of sales increased in the reporting period by EUR 230 m to EUR 2.852 bn (2014: EUR 2.622 bn). Gross profit on sales of EUR 1.546 bn was 8.6 percent higher than the figure for the first quarter of 2014 of EUR 1.423 bn. The gross margin was 35.2 percent (2014: 35.2 percent).

Restructuring costs of EUR 20 m were recognised in functional costs. These costs have been classified as a non-recurring item.

EBIT in the three months to 31 March 2015 was EUR 523 m, slightly above the figure for the first quarter of 2014 of EUR 518 m. After adjusting for non-recurring items, EBIT in the reporting period was EUR 543 m. The net financial expense in the first three months of 2015 was EUR 98 m (2014: EUR 96 m). Linde therefore generated a profit before tax in the first quarter of 2015 of EUR 425 m (2014: EUR 422 m).

The income tax expense was EUR 101 m (2014: EUR 101 m). This gives an income tax rate of 23.8 percent (2014: 23.9 percent). In the first three months of 2015, Linde’s profit for the period (after deducting the tax expense) was EUR 324 m (2014: EUR 321 m).

After adjusting for non-controlling interests, profit for the period attributable to Linde AG shareholders was EUR 300 m (2014: EUR 290 m), giving earnings per share of EUR 1.62 (2014: EUR 1.56). Earnings per share before non-recurring items was EUR 1.69.