Business review of The Linde Group
Revenue fell in the first quarter of 2016 by 3.1 percent to EUR 4.262 bn, when compared with the figure for the first quarter of 2015 of EUR 4.398 bn. Operating profit dropped by 1.9 percent to EUR 991 m (2015: EUR 1.010 bn). The main factors leading to this decrease were adverse exchange rate effects and the lower contribution made to revenue and earnings by the Engineering Division in line with expectations. The initial impact of price reductions on revenue in the Healthcare business in North America as a result of government tenders was offset by the consolidation for the first time of American HomePatient. After adjusting for exchange rate effects arising solely on the translation of local currencies into the euro, Group revenue was 0.3 percent below the figure for the prior-year period. After adjusting for exchange rate effects, Group operating profit rose by 0.6 percent, a slight increase on the figure for the first three months of 2015.
The Group operating margin for the first three months of 2016 was 23.3 percent, which was slightly higher than the figure of 23.0 percent for the first three months of 2015.
Cost of sales decreased in the reporting period by EUR 132 m to EUR 2.720 bn (2015: EUR 2.852 bn). Gross profit on sales of EUR 1.542 bn was 0.3 percent lower than the figure for the first quarter of 2015 of EUR 1.546 bn. The gross margin increased to 36.2 percent (2015: 35.2 percent).
EBIT in the three months to 31 March 2016 was EUR 530 m, slightly above the figure for the first quarter of 2015 of EUR 523 m. The net financial expense in the first three months of 2016 was EUR 89 m (2015: EUR 98 m). Linde therefore generated a profit before tax in the first quarter of 2016 of EUR 441 m (2015: EUR 425 m).
The income tax expense was EUR 108 m (2015: EUR 101 m). This gives an income tax rate of 24.5 percent (2015: 23.8 percent). In the first three months of 2016, Linde’s profit for the period (after deducting the tax expense) was EUR 333 m (2015: EUR 324 m).
After adjusting for non-controlling interests, profit for the period attributable to Linde AG shareholders was EUR 306 m (2015: EUR 300 m), giving earnings per share of EUR 1.65 (2015: EUR 1.62).