10-Q: Linde plc Reports Flat Sales but Increased Operating Profit in Q1 2025

Linde plc's Q1 2025 sales remained flat year-over-year, but operating profit saw a 4% increase driven by pricing and productivity initiatives.

Summary

• Linde plc reported flat sales of $8,112 million for the first quarter of 2025 compared to $8,100 million in the same period last year.
• Sales growth was driven by a 2% increase in price attainment, a 1% increase from cost pass-through, and a 1% increase from acquisitions.
• Currency translation negatively impacted sales by 3%, while volumes decreased sales by 1%.
• Reported operating profit increased by 4% to $2,184 million, with an operating margin of 26.9%.
• Adjusted operating profit also increased by 4% to $2,438 million, with an operating margin of 30.1%.
• Diluted earnings per share (EPS) increased by 5% to $3.51, and adjusted diluted EPS also increased by 5% to $3.95.
• The company's effective tax rate was 23.4%, compared to 22.3% in the first quarter of 2024.
• Cash flow from operations increased by 11% to $2,161 million.
• Capital expenditures were $1,270 million, and the sale of gas backlog of large projects under construction was approximately $7.0 billion.
• The company repurchased $1.1 billion of its ordinary shares and paid cash dividends of $708 million.
• The number of employees decreased to 65,069.
• The company estimates that total 2025 required contributions to its pension plans will be in the range of approximately $25 million to $35 million.

Sentiment

Score: 7

Explanation: The sentiment is neutral to positive. While sales were flat, the company demonstrated improved profitability and cash flow, along with active capital management through share repurchases. However, ongoing legal proceedings and currency headwinds present risks.

Positives

• Operating profit and adjusted operating profit increased by 4%.
• Diluted earnings per share (EPS) and adjusted diluted EPS increased by 5%.
• Cash flow from operations increased by 11%.
• Higher pricing and productivity initiatives drove operating profit growth.
• Engineering segment operating profit increased $14 million, or 14%, in the first quarter compared to the respective 2024 period primarily driven by project timing.

Negatives

• Sales remained flat year-over-year.
• Currency translation negatively impacted sales by 3%.
• Volumes decreased sales by 1%.
• Income from equity investments decreased to $38 million from $48 million in the prior year.
• Other segment operating profit decreased $5 million in the first quarter versus the respective 2024 period.

Risks

• Fluctuations in foreign currency exchange rates could materially impact Linde's results of operations.
• The company is subject to various lawsuits and government investigations.
• Legal proceedings with RusChemAlliance (RCA) and Gazprom Pererabotka Blagoveshchensk LLC ("Gazprom") could result in contingent liabilities.
• The company is exposed to market risks relating to fluctuations in interest rates, foreign currency exchange rates, energy and commodity costs.

Future Outlook

Linde provides quarterly updates on operating results, material trends that may affect financial performance, and financial guidance via quarterly earnings releases and investor teleconferences, available on the company's website.

Industry Context

The document does not provide specific details on how this announcement relates to broader industry trends or competitors.

Legal Proceedings

• During 2009, the Brazilian government published Law 11941/2009 instituting a new voluntary amnesty program (Refis Program) which allowed Brazilian companies to settle certain federal tax disputes at reduced amounts.
• On and after April 23, 2019 former shareholders of Linde AG filed appraisal proceedings at the District Court ( Landgericht ) Munich I (Germany), seeking an increase of the cash consideration paid in connection with the previously completed cash merger squeeze-out of all of Linde AGs minority shareholders for 189.46 per share.
• On May 27, 2022, performance of all Linde Engineering agreements in Russia were lawfully suspended in compliance with applicable sanctions.
• In December 2022, at RusChemAlliances (RCA) request a Russian St. Petersburg court (St. Petersburg Court) issued an injunction preventing sale of Linde Russia subsidiaries and assets.
• In March 2023, RCA filed a claim in St. Petersburg against Linde GmbH for recovery of advance payments under the agreement ('GPP Claim'), and subsequently (i) added Linde and other Linde subsidiaries as defendants, and (ii) is seeking payment of alleged damages from Linde and guarantor banks.
• In March 2024, RCA filed a similar claim for repayment and damages against Linde for alleged breach of contract under the agreement to build a liquefied natural gas plant in Russia entered into in September 2021 (LNG Claim, and together with the GPP Claim, the Russian Claims).
• In February 2024, the St. Petersburg Court decided the GPP Claim in favor of RCA (the GPP Decision) and in October 2024, decided the LNG Claim in favor of RCA (the LNG Decision).
• On October 29, 2024, Gazprom submitted a claim to the Arbitration State Court in the Amur Region, Russia (Amur Court) against Linde claiming damages and lost profits arising from the fire incidents.

Stakeholder Impact

• Shareholders: Increased EPS and continued share repurchases are positive.
• Employees: Cost reduction programs may lead to job losses.
• Customers: Continued supply and innovation in industrial gases.
• Creditors: Strong liquidity and commitment to credit ratings are positive.

Key Dates

Keywords

Linde, financial results, Q1 2025, operating profit, sales, earnings per share, cash flow, industrial gases, engineering, segment performance