Release Date: February 06, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Linde PLC (LIN, Financial) achieved a record $7 billion in sale of gas backlog, indicating strong future growth potential.
• The company increased its low-carbon renewable energy consumption by 19% year-over-year, with over 40% of total power consumption now low-carbon based.
• Linde PLC (LIN) returned $7 billion to shareholders through dividends and stock repurchases, demonstrating strong capital management.
• The company signed 59 long-term agreements for small on-site projects, enhancing its network density and reliability.
• Linde PLC (LIN) maintained industry-leading financial metrics, including a 25.9% ROC and a 29.5% EBIT margin, showcasing operational efficiency.

Negative Points

• Foreign currency translation posed a 4% headwind, impacting earnings and creating uncertainty in financial projections.
• The company faces challenges in Europe with expected continued softening in industrial sectors, particularly in metals and chemicals.
• Linde PLC (LIN) anticipates flat industrial production growth, which could limit base volume growth and impact earnings.
• The macroeconomic environment, including potential tariff impacts and regulatory uncertainties, could affect project timelines and profitability.
• The company's cash flow from operations grew only 1% despite a 10% increase in EPS, indicating potential inefficiencies in cash conversion.

Q & A Highlights

Q: How have discussions with potential project partners evolved given the current political climate and regulatory uncertainties? A: Sanjiv Lamba, CEO, explained that while there is some uncertainty around regulatory frameworks, particularly with the new administration, discussions have not significantly slowed. He emphasized the importance of the 45Q IRS provision, which predates the IRA and is a key incentive for over 90% of their U.S. projects. Linde remains confident in their project pipeline and expects to continue announcing new projects, particularly in clean energy.

Q: Will Americas' margins gain ground in 2025, and how does this compare to other regions? A: Sanjiv Lamba, CEO, stated that there is no impediment to improving margins across all regions, including the Americas and APAC. He expects margin expansion in 2025, typically ranging from 20 to 50 basis points. Linde encourages each segment to learn from high-margin businesses within the company to bridge any gaps.

Q: What is the impact of industrial production (IP) on Linde's earnings, and what are the global IP trends? A: Sanjiv Lamba, CEO, noted that base volumes are closely tied to IP, with higher leverage in developing countries. Globally, IP is close to zero, with variations across regions. The Americas show solid performance, while Europe is experiencing softening. In China, no significant recovery is expected in 2025, but electronics are a growth area.

Q: How does Linde view market share in the industrial gas market, and are there any shifts? A: Sanjiv Lamba, CEO, emphasized that Linde focuses more on network density rather than market share. The company has a record sale of gas backlog, indicating strong market positioning. Linde's strategy is to maintain strong customer relationships and margin expansion through network density.

Q: What is the contribution of pricing versus productivity and cost management in Linde's guidance? A: Matthew White, CFO, explained that the guidance assumes a roughly 50-50 split between management actions and capital allocation for the 10% EPS growth target. The focus is on maintaining a positive spread between price and cost inflation, which is crucial for long-term margin expansion.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.