10-QPeriod: Q2 FY2023

LINDE PLC Quarterly Report for Q2 Ended Jun 30, 2023

Filed July 27, 2023For Securities:LIN

Summary

Linde plc reported strong second quarter 2023 results, demonstrating resilience and operational efficiency. Despite a slight decrease in reported sales due to factors like currency fluctuations and divestitures, the company's adjusted operating profit increased by a notable 15% year-over-year. This growth was primarily driven by effective pricing strategies and productivity initiatives, which more than offset rising costs and unfavorable currency movements. The company also saw a significant increase in reported net income and diluted EPS, largely due to the absence of substantial charges incurred in the prior year related to the conflict in Ukraine. From a segment perspective, the Americas, EMEA, and APAC regions all showed robust growth in operating profit, indicating broad-based strength across its core industrial gases business. While the Engineering segment experienced a sales decline due to project timing, its operating profit remained stable, supported by higher margins on winding down sanctioned Russian projects. Linde's financial position remains strong, with solid cash flow from operations and ample liquidity, supported by significant share repurchase activity and dividend payments.

Financial Highlights

52 data points
Beta

Revenue

$8.20B

Net Income

$1.57B

19.2% Net Margin

EPS (Diluted)

$3.19

Total Assets

$78.72B

Cash & Equivalents

$3.36B

Free Cash Flow

$1.29B

Financial Statements
Beta
Revenue$8.20B
R&D Expenses$35.00M
SG&A Expenses$833.00M
Operating Income$2.01B
Net Income$1.57B
EPS (Basic)$3.22
EPS (Diluted)$3.19
Shares Outstanding (Basic)489.62M
Shares Outstanding (Diluted)493.55M

Key Highlights

  • 1Adjusted operating profit grew 15% year-over-year for Q2 2023, reaching $2,286 million, driven by pricing and productivity.
  • 2Reported net income surged 323% to $1,575 million in Q2 2023, significantly boosted by the absence of prior-year charges related to Russian subsidiaries.
  • 3Reported diluted EPS increased 331% to $3.19 for Q2 2023, reflecting higher net income and reduced share count.
  • 4Sales in the Americas, EMEA, and APAC segments showed positive growth (1-2%) in Q2 2023, with strong operating profit increases (11-18%).
  • 5The company repurchased approximately $2.5 billion of its ordinary shares in Q2 2023 under its $10 billion share repurchase program.
  • 6Cash provided by operating activities for the first six months of 2023 was $4,058 million, a slight decrease from the prior year primarily due to working capital changes.

Frequently Asked Questions

The substantial increase in reported net income and diluted EPS in the second quarter of 2023 was primarily driven by the absence of significant charges incurred in the second quarter of 2022. These charges were related to the deconsolidation and impairment of Russian subsidiaries due to the war in Ukraine and related sanctions. The current quarter's results also benefited from higher pricing and productivity initiatives.

The Americas, EMEA, and APAC segments demonstrated positive sales growth (1-2%) and strong operating profit increases (11-18%) in Q2 2023 compared to the prior year. This performance was attributed to higher pricing, productivity initiatives, and in the Americas, the impact of acquisitions like nexAir, which more than offset cost inflation and, in some regions, currency headwinds and volume decreases.

Currency translation had a negative impact on sales in Q2 2023, decreasing sales by 1% globally, largely due to the weakening of the Chinese yuan and Australian dollar. In the APAC segment, currency translation decreased sales by 5% in the quarter. However, the company's pricing strategies and operational efficiencies helped to mitigate the impact of currency on overall profitability.

Linde continues to actively return capital to shareholders. In the second quarter of 2023, the company repurchased approximately $2.5 billion of its ordinary shares under its ongoing $10 billion share repurchase program. Additionally, cash dividends paid to shareholders increased to $1.246 billion for the first six months of 2023, reflecting a 9% increase in the quarterly dividend per share.