BUSINESS OVERVIEW

Linde is a leading global industrial gases and engineering company. Its primary products include atmospheric gases like oxygen, nitrogen, and argon, as well as process gases like hydrogen, helium, and carbon dioxide. Linde also designs and builds equipment that produces industrial gases.

Linde’s industrial gas operations are managed geographically across three main regions: Americas, EMEA (Europe, Middle East, Africa), and APAC (Asia Pacific). These regions account for 89% of Linde’s total sales, with the remaining 11% coming from the Engineering segment and other smaller businesses.

Linde serves a diverse range of industries including healthcare, chemicals, manufacturing, metals, food, and electronics. This diversification helps provide financial stability through different business cycles. Linde has strong market positions and extensive production and distribution networks in its key geographies, which is a competitive advantage.

FINANCIAL RESULTS & OUTLOOK

In 2024, Linde reported:

• Sales of $33,005 million, flat compared to 2023
• Reported operating profit of $8,635 million, up 8%
• Adjusted operating profit of $9,720 million, up 7%
• Net income of $6,565 million, up 6%
• Adjusted net income of $7,475 million, up 7%
• Diluted earnings per share of $13.62, up 8%
• Adjusted diluted earnings per share of $15.51, up 9%

The increase in operating profit and net income was driven by higher pricing and productivity initiatives, which offset cost inflation and currency headwinds. Cash flow from operations was $9,423 million, up $118 million from 2023.

Looking ahead, Linde expects to provide quarterly updates on its financial performance and guidance. The company remains focused on managing costs, driving productivity, and capitalizing on growth opportunities in its key end markets and geographies.

CONSOLIDATED RESULTS

Sales were flat in 2024 compared to 2023, as 2% higher pricing was offset by flat volumes and 1% decreases from cost pass-through and currency translation.

Cost of sales, excluding depreciation and amortization, decreased 2% due to lower cost pass-through and productivity gains, more than offsetting cost inflation. As a percentage of sales, cost of sales improved from 53.2% to 51.9%.

Selling, general and administrative (SG&A) expenses increased 1% but remained flat at 10.1% of sales.

Reported depreciation and amortization expense decreased 1%, while adjusted depreciation and amortization increased 1% excluding purchase accounting impacts.

Reported operating profit increased 8%, and adjusted operating profit increased 7%, driven by higher pricing and productivity savings.

Interest expense increased 28% due to higher outstanding borrowings and interest rates. The effective tax rate was 23.4% on both a reported and adjusted basis.

Reported net income increased 6%, and adjusted net income increased 7%, primarily due to the higher operating profit. Reported diluted EPS increased 8%, and adjusted diluted EPS increased 9%.

SEGMENT PERFORMANCE

Americas

• Sales increased 1%, with 3% higher pricing partially offset by 1% decreases from cost pass-through and currency
• Operating profit increased 7%, driven by higher pricing, productivity, and a supplier settlement gain

EMEA

• Sales decreased 2%, with 3% higher pricing more than offset by 4% lower cost pass-through
• Operating profit increased 12%, due to higher pricing and productivity

APAC

• Sales increased 1%, with 2% volume growth partially offset by 2% currency headwinds
• Operating profit increased 6%, driven by volume growth and productivity

Engineering

• Sales increased 8% on project timing
• Operating profit decreased 16% due to lower margins on certain projects in the prior year

LIQUIDITY AND CAPITAL RESOURCES

Cash flow from operations was $9,423 million in 2024, up $118 million from 2023, driven by higher net income partially offset by higher working capital needs.

Capital expenditures were $4,497 million, up $710 million, primarily for new plant and production equipment. Linde’s sale of gas backlog of large projects under construction was approximately $7.1 billion at the end of 2024.

Linde’s net debt increased $2,064 million to $16,773 million, with $21,140 million in public securities and $483 million in bank borrowings, offset by $4,850 million in cash. The company’s global effective borrowing rate was approximately 2.5%.

Linde maintains strong credit ratings of A-1/P-1 for short-term debt and A/A2 for long-term debt. The company has $5 billion and $1.5 billion in undrawn revolving credit facilities.

ANALYSIS AND OUTLOOK

Linde delivered solid financial results in 2024, with growth in operating profit, net income, and earnings per share despite a challenging macro environment. The company’s diversified end markets, strong market positions, and focus on productivity helped offset headwinds from cost inflation and currency.

A key strength is Linde’s global footprint and integrated supply chain, which allows it to efficiently serve customers across its three main geographic segments. The company’s ability to pass through energy and other cost increases to customers through long-term contracts also provides stability.

Looking ahead, Linde is well-positioned to capitalize on growth opportunities in areas like healthcare, chemicals, and electronics. The company’s investments in new projects and equipment should support future volume growth. Linde’s commitment to innovation and sustainability also presents potential upside, as demand increases for industrial gases that enable decarbonization and environmental solutions.

Potential risks include further cost inflation, currency volatility, and the impact of any economic slowdown on industrial demand. However, Linde’s diversification, pricing power, and operational efficiency should allow it to navigate these challenges.

Overall, Linde delivered a solid performance in 2024 and appears well-equipped to continue generating value for shareholders through disciplined execution of its strategic priorities. The company’s strong cash flow and balance sheet provide flexibility to invest in growth initiatives while also returning capital to shareholders.