Engineering Division

Revenue in the Engineering Division fell in the first nine months of 2016 by 13.1 percent to EUR 1.739 bn (2015: EUR 2.002 bn). Operating profit here also dropped to EUR 146 m (2015: EUR 169 m). The operating margin remained the same at 8.4 percent. This continues to be above the industry average and matched the target of around 8 percent Linde has set itself for the current financial year. The order backlog in the Engineering Division at 30 September 2016 remained solid at EUR 4.269 bn (31 December 2015: EUR 4.541 bn).

Order intake in the nine months to 30 September 2016 was EUR 1.587 bn, which was higher than the figure for the first nine months of 2015 of EUR 1.128 bn. Slack demand continues to be seen in the plant construction sector as a result of the prevailing low price of oil.

Back in 2015, Linde was selected as the licenser for natural gas processing technology in eastern Russia for the Amur-GPP project. The plant will be constructed in five phases and completed in 2024. See 2015 Financial Report, section Engineering Division. Order intake in 2016 includes an amount of just under EUR 500 m which relates to the second phase of the project which began during the reporting period.

Around 25 percent of new orders related to air separation plants. Just over half of these are in-house contracts acquired by the Engineering Division in the reporting period from the Gases Division.

Shell has commissioned the Engineering Division to provide procurement and supply services for the construction of an ethylene plant and two polyethylene plants in Pennsylvania, USA. In addition, Linde Engineering will set up equipment such as process furnaces, plate heat exchangers and a pressure swing adsorption (PSA) plant. The total value of the order is around EUR 340 m, of which around EUR 200 m was included in order intake in the first nine months of 2016. The remaining amount was recognised in 2015.

The Engineering Division has also been commissioned by its customer JSC “Grodno Azot” in Belarus to build two air separation plants, each with a capacity of 9,000 normal cubic metres of oxygen per hour. Linde is responsible for the engineering and the procurement. The value of the contract is around EUR 30 m. The plants are due to be completed in the second quarter of 2018.

In the third quarter of 2016, Linde’s Gases Division gave the Engineering Division the contract to build two air separation plants for the newly-formed joint venture between Linde and PETRONAS. See also Gases Division. The contract is for the engineering, procurement, construction and commissioning of the plants (EPCC). In the reporting period, Engineering Division order intake in relation to this project was over EUR 100 m.

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Engineering Division

 

 

3rd Quarter

 

January to September

in € million

 

2016

 

2015

 

2016

 

2015

Revenue

 

654

 

651

 

1,739

 

2,002

Order intake

 

869

 

404

 

1,587

 

1,128

Order backlog at 30.09./31.12.

 

 

 

4,269

 

4,541

Operating profit

 

57

 

55

 

146

 

169

Operating margin

 

8.7%

 

8.4%

 

8.4%

 

8.4%

 (XLS:) Download
Engineering Division: Order intake by plant type

 

 

January to September

in € million

 

2016

 

in percent

 

2015

 

in percent

Natural gas plants

 

604

 

38.1

 

312

 

27.7

Air separation plants

 

402

 

25.3

 

204

 

18.1

Olefin plants

 

309

 

19.5

 

217

 

19.2

Hydrogen and synthesis gas plants

 

154

 

9.7

 

176

 

15.6

Other

 

118

 

7.4

 

219

 

19.4

Engineering Division

 

1,587

 

100.0

 

1,128

 

100.0

 (XLS:) Download
Engineering Division: Order intake by plant type

 

 

3rd Quarter

in € million

 

2016

 

in percent

 

2015

 

in percent

Natural gas plants

 

523

 

60.2

 

89

 

22.0

Air separation plants

 

203

 

23.4

 

125

 

30.9

Olefin plants

 

62

 

7.1

 

75

 

18.6

Hydrogen and synthesis gas plants

 

46

 

5.3

 

37

 

9.2

Other

 

35

 

4.0

 

78

 

19.3

Engineering Division

 

869

 

100.0

 

404

 

100.0