Linde reports Q3 2022 results; exceeds Wall Street expectations

Linde has delivered another ‘strong quarter’ with the release of its third quarter (Q3) financial results, highlighting a Sales increase of $8.8bn – up 15% compared with Q3 2021.

The company reported an income from continuing operations of $1.27bn and diluted earnings per share of $2.54, a significant increase of 30% and 35% year-on-year. Earnings per share adjusted for non-recurring costs were $3.10, surpassing Wall Street expectations. According to Zacks Investment Research, the average estimate of seven surveyed analysts was for earnings of $2.94 per share.

Excluding Linde AG purchase accounting impacts and other charges, adjusted income from continuing operations was $1.55bn, up 9% versus the prior year.

Operating profit for the quarter was $1.6bn, with adjusted operating profits of $2bn led by higher price, volumes and continued productivity across all segments.

It was also revealed that the company’s Q3 operating cash flow of $2.63bn more than covered capital expenditures of $762m, resulting in a free cash flow of $1.87bn.

“Linde employees delivered another strong quarter of financial results with EPS increasing 14% despite 7% currency headwinds,” said Sanjiv Lamba, CEO of Linde.

“Furthermore, operating margins expanded 90 basis points when excluding cost pass-through – all underpinned by strong operation cash flow of $2.6bn and record ROC of $21.8bn.”

Results by segment

Americas sales of $3.7bn grew 20% versus prior-year quarter and 5% sequentially.

Compared with third quarter 2021, underlying sales increased 13% driven by 6% higher pricing and 7% higher volume, with double-digit growth in all end markets except healthcare.

Sequentially, underlying sales grew 4%, from 1% higher pricing and 3% volume.

Operating profit of $974m was 26.4% of sales, 140 basis points below prior year or 50 basis points higher when excluding the effects of cost pass-through.

Asia Pacific sales of $1.66bn were 6% above prior year and up 1% sequentially.

Compared to prior year, underlying sales grew 12% driven by 7% price attainment and 5% volume growth, with growth across all end markets except healthcare.

Sequentially, underlying sales grew 6% with pricing up 2% and volume growing 4%.

Operating profit of $429m was 25.8% of sales, 140 basis points above prior year or 180 basis points higher when excluding the effects of cost pass-through.

Europe, Middle East & Africa sales of $2.1bn were up 11% versus prior year and down 1% sequentially.

Compared with third-quarter 2021, underlying sales grew 11%, driven by 14% higher pricing and 3% lower volumes. Sales grew across all end markets except healthcare.

Sequentially, underlying sales grew 1% driven by 4% higher pricing and 3% lower volumes.

Operating profit of $465m was 21.9% of sales, 300 basis points below prior year or 60 basis points higher when excluding the effects of cost pass-through.

Linde Engineering sales were $828m, up 38% versus prior year, and operating profit was $150m or 18.1% of sales.

Order intake for the quarter was $1bn and third-party sale of plant backlog increased to $3.1bn.

Outlook

For the fourth quarter of 2022, Linde expects adjusted diluted earnings per share in the range of $2.80 to $2.90, up 1% to 5% versus prior-year quarter, including an assumed currency headwind of 8% year-over-year and 2% sequentially.

For the full year 2022, the company expects adjusted diluted earnings per share to be in the range of $11.93 to $12.03, up 12% to 13% versus prior year or 17% to 18% excluding currency headwind.

Full-year capital expenditures are expected to be in the range of $3bn to $3.4bn to support growth and maintenance requirements including the $3.7bn contractual sale of gas project backlog.

“Irrespective of the macro-economic uncertainty, I have confidence in our business model and high-performance culture to continue creating shareholder value for years to come,” Lamba added..