Linde Reports Full-Year & 4th Quarter 2020 Results

Source: www.gulfoilandgas.com 2/5/2021, Location: Europe

Full-Year Highlights
-Sales $27.2 billion, down 3%
- Operating profit $3.3 billion, adjusted operating profit $5.8 billion, up 10%
- Operating profit margin 12.2%; adjusted operating profit margin 21.3%, up 260 basis points versus prior year
- EPS $4.70; adjusted EPS $8.23, up 12%
- Strong operating cash flow $7.4 billion, up 21%
- Returned $4.4 billion to shareholders through dividends and share repurchases
- Reduced GHG emissions intensity by 16% versus 2018; target of 35% reduction by 2028

Fourth-Quarter Highlights
- Sales $7.3 billion, up 3% YoY
- Operating profit $1.0 billion, adjusted operating profit $1.6 billion, up 20%
- Operating profit margin 14.2%; adjusted operating profit margin 22.2%, up 320 basis points
- EPS $1.45; adjusted EPS $2.30, up 22%
- Strong operating cash flow $2.4 billion, up 12%

2021
- First-quarter 2021 adjusted EPS guidance $2.20 - $2.25, represents 16% - 19% growth
- Full-year 2021 adjusted EPS guidance $9.10 - $9.30, represents 11% - 13% growth
- Increased annual dividend 10% and announced new $5 billion share repurchase program

Linde plc reported fourth-quarter 2020 income from continuing operations of $769 million and diluted earnings per share of $1.45. Excluding Linde AG purchase accounting impacts and other charges, adjusted income from continuing operations was $1,217 million, up 19% versus prior year and 7% sequentially. Adjusted earnings per share was $2.30, 22% above prior year and 7% higher sequentially.

Linde's sales for the fourth quarter were $7,272 million, 3% above prior year and 6% sequentially. Compared to prior year, underlying sales increased 3% from 2% price attainment and 1% higher volumes, largely due to project start-ups. Sequentially, underlying sales increased 2%, mainly driven by higher volumes across all segments.

Fourth-quarter operating profit was $1,029 million. Adjusted operating profit of $1,613 million was up 20% versus prior year led by higher price and continued productivity initiatives across all segments. Adjusted operating margin of 22.2% expanded 320 basis points versus prior year and 10 basis points sequentially.

Fourth-quarter operating cash flow of $2,434 million increased 12% versus prior year and 29% sequentially. After capital expenditures of $1,027 million, free cash flow was $1,407 million, up 21% versus prior year. During the quarter, the company returned $926 million to shareholders through dividends and stock repurchases, net of issuance.

For full-year 2020, sales were $27.2 billion, 3% below 2019. Price improved 2% as all geographic segments attained price increases. Volume decreased 2% as growth from project start-ups was more than offset by the global macroeconomic slowdown as a result of the COVID-19 pandemic. Operating profit was $3.3 billion and adjusted operating profit was $5.8 billion, 21.3% of sales, and increased 10% versus 2019. Diluted earnings per share were $4.70 and adjusted diluted earnings per share were $8.23, up 12% versus prior year.

In 2020, Linde generated strong operating cash flow of $7.4 billion, up 21% versus prior year. The company invested $3.4 billion in capital expenditures and paid dividends of $2.0 billion. In addition, Linde repurchased $2.4 billion of stock, net of issuances.

Commenting on the financial results and business outlook, Chief Executive Officer Steve Angel said, "I want to personally thank all our dedicated Linde employees for ensuring a safe and reliable supply of critical gases and services to our customers and patients worldwide. The company responded exceptionally well in a challenging year dominated by the COVID-19 pandemic and I couldn't be more proud of what we accomplished and continue to do for our shareholders and society at large. Despite all the headwinds we faced throughout the year, Linde grew EPS 12%, operating cash flow 21%, and increased ROC to 13.4% - all while improving our sustainability performance."

Angel continued, "Looking ahead, the near-term economic outlook remains uncertain. However, I have confidence in our ability to grow EPS double-digit percent irrespective of the macro environment while also leveraging any economic recovery. In addition, I expect to capture more than our fair share of quality growth opportunities in secular markets like healthcare, electronics and clean energy."

For the full year, the company expects adjusted diluted earnings per share to be in the range of $9.10 to $9.30, up 11% to 13% versus prior year and 10% to 12% when excluding estimated currency tailwinds. Full-year capital expenditures are expected to range between $3.0 billion to $3.5 billion to support operating and growth requirements including the $3.6 billion contractual sale of gas project backlog.

Fourth-Quarter 2020 Results by Segment
Americas sales of $2,724 million were flat versus prior-year quarter, but increased 3% sequentially. Compared with fourth quarter 2019, underlying sales increased 3% driven by 2% higher pricing and 1% higher volume, primarily in the healthcare end market. Sequentially, price was stable and volumes grew 2%, led by higher demand in metals and manufacturing end markets. Operating profit of $748 million was 27.5% of sales, up 280 basis points versus prior year.

APAC (Asia Pacific) sales of $1,572 million were 12% above prior year and up 6% sequentially. Compared to prior year, underlying sales grew 8% driven by 1% price attainment and 7% volume growth, primarily in the electronics end market and project start-ups. Sequentially, price was steady and volumes grew 3% led by higher demand in the electronics and metals end markets. Operating profit of $365 million was 23.2% of sales, up 190 basis points versus prior year.

EMEA (Europe, Middle East & Africa) sales of $1,746 million were up 6% versus prior year and grew 8% sequentially. Compared with fourth quarter 2019, underlying sales grew 4%, primarily led by 3% higher pricing. Sequentially, underlying sales grew 5% driven by 2% higher pricing and 3% volume growth, mainly in the healthcare end market. Operating profit of $437 million was 25.0% of sales, up 370 basis points versus prior year.

Linde Engineering sales were $755 million, 2% below prior year, and operating profit was $100 million or 13.2% of sales. Order intake for the quarter was $355 million and third-party sale of equipment backlog was $4.7 billion.


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