Linde Plc ((LIN)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Linde’s latest earnings call conveyed a positive sentiment, underscoring the company’s robust financial performance and its strides in sustainability, even as it navigates the complexities of foreign exchange challenges and economic uncertainties in regions like EMEA and China. The optimism about continuing to deliver shareholder value was palpable throughout the discussion.
Sustainability Achievements
Linde has made significant headway in its sustainability initiatives, having boosted its low carbon and renewable energy consumption by 19% year-over-year. Impressively, over 40% of its total power consumption is now derived from low carbon sources. Further solidifying its commitment, Linde has been included in the Dow Jones Sustainability World Index for an impressive 22nd consecutive year.
Financial Performance
Linde’s financial performance is leading the industry with a return on capital (ROC) of 25.9%. The company’s EBIT margins have risen by 190 basis points to 29.5%, and earnings per share (EPS) have climbed by 10%, despite foreign exchange headwinds. In a testament to its financial strength, Linde returned $7 billion to shareholders.
Record Backlog and Growth
The company closed the year with a record backlog exceeding $10 billion, which includes a noteworthy $7 billion in gas backlog sales. Among these, a significant $2 billion project win in Canada stands out, marking a milestone in Linde’s growth trajectory.
Small Onsite Contracts
Linde has set a new record for small onsite wins, having signed 59 long-term agreements that will result in the development of 64 plants. This success highlights Linde’s strategic focus on expanding its onsite gas production footprint.
Foreign Exchange Headwinds
Linde faced a 4% foreign exchange translation headwind, primarily due to the strengthening of the U.S. dollar. This challenge has been a significant factor affecting the company’s financial results.
EMEA Volume Decline
In the EMEA region, Linde experienced flat volume growth. The positive contributions from the project backlog in the Americas and APAC were offset by lower base volumes in EMEA, largely attributed to softer demand in metals and mining industries.
Economic Challenges in China
Linde expressed concerns about the economic outlook in China, where a significant recovery is not anticipated until 2025. The company expects industrial volumes to remain stable but flat, with metals and mining likely to experience a year-on-year decline.
Guidance for 2025
Looking forward, Linde’s 2025 guidance includes expectations for EPS growth of over 10%, driven by strategic capital allocations and management actions, despite a continuing 4% FX headwind. The company forecasts a 4% to 7% EPS growth, or 8% to 11% when excluding currency impacts, assuming a flat industrial production environment. Linde also aims to reduce greenhouse gas emissions by 35% by 2035, demonstrating its long-term commitment to sustainability.
In conclusion, Linde’s earnings call painted a picture of a company that is both resilient and forward-thinking. Despite facing economic and currency challenges, it continues to deliver strong financial performance and record growth, all while maintaining a firm commitment to sustainability. Investors and stakeholders can take confidence in Linde’s strategic priorities and optimistic outlook for the future.
