LIN - Earnings call transcript Q2 2022

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Operator

Good day and thank you for standing by. Welcome to the Linde plc Second Quarter 2022 Earnings Teleconference. At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded. After the speakers' presentation, there will be a question-and-answer session. to conference like to now would hand over the Mr. I for Head or of Pelaez, any Investor Juan Relations additional closing remarks. Please go ahead.

Juan Pelaez

linde.com Good Web quarter White, Officer. are webcast. Sanjiv Lamba, Elaine. Please our Chief and I'm Head Financial you, day, Executive site section. morning you Relations, on in Thank read and on financial that available Thank made up by this disclosure Matt then Page for of we XXXX the Investor second materials performance the reconciliations am are Officer; earnings Today's statement forward-looking I quarter and Q&A. Chief at X presentation joined teleconference. call an this Investors give our which, will Juan Pelaez, of appendix wrap everyone. will this attending applies the statements and of provide the on opening slides presentation. all remarks, Linde's the adjusted second will numbers and in note and to the with update After The it outlook. during to Sanjiv Matt

Let over to me call Sanjiv. the turn

Sanjiv Lamba

I'd take and to to subsidiaries. Juan, assets Russian deconsolidating everyone. something primarily X like this morning, good the our start by related not is Impairing lightly. billion charge Thanks, we addressing quarter,

solid flows X model. pass excluding well with our are divestitures, fully be is and operations. sequentially assets, some these but continues working accounting However, means back and restrictions. we recover resilient performed of defensive it margins And in extraordinary to demonstrates results charge, cost quite potential cash we Russian scale unprecedented the time. pricing, while to safely economically We expanding will will nature in actively current the to non-cash sanctions value quarter situation Slide Russia this second including forward, strong the going deconsolidation through. the the business and take with and and capital Despite year-on-year, intend not for global report

presented around XXXX. Approximately We've of the familiar through as our such may great tremendous during provides to most and in facility fixed history. elements end look protected in XXX and portfolio protection our not. food XXXX. the and over many resiliency healthcare XXXX the through in the second well of but since of thirds were some recession, This now contractual been The world pandemic, for these periods modern demonstrated markets quarter difficult is the times, during does two of business the payments, change, and it and difficult Now crisis, that early years, may XXXX sales model of fees like like and beverage, resilient electronics. downside financial rent, course business

demonstrated with contract. volumes generation management In appears to each as facts addition, benefit And, potential support apply relentless from cash after can a strong the and to recovery of including These be coupled recession. around business. cost our geographic all business there segments, we where investor course, misconceptions price when EMEA, some

else some contractually a in to safely, see can and financial color, run our anywhere in Europe Germany. exposure volatility. EMEA customer our limit you business We right, the additional and in to on So bottom our specifically to matter like exposure the world, reliably,

on in challenges, and in what lie going weather energy ahead. will can opportunities model regarding But happen speculate may we Now our that Europe have I I'm that contracts to not situation. the and confidence we will capitalize business

growth as by segments driven action, underlying a still to to across organic end quite markets hand growth like I before end is exception all X Slide it color I'd provide Matt, shows Now markets positive on with segment. is the are of COVID-related project off by vary our trends healthcare, developing which geographic in is even pricing due backlog, although relatively to volumes oxygen volumes little. Overall base lapping stable by nations. some

been to The most sequentially, seems has it I continue. X%, volumes expect since top base and highly respectively. slightly beverage, stable from and metals Merchant press to down strong and competitive On-site region and price food on offset from Volumes quite pricing while oxygen this EMEA were recently. volumes flat mining a of than tight growth and a COVID lid while package XX% reduction the and with and electronics. be fully and team have costs X% year increased a off a and customer low combination are getting as down done start me keeping last inflation, job Let in contracts. tier manufacturing in great more

June change navigating certain we July, energy from So haven't any in countries challenges. seen their despite far trends, material

won't another quality forward. which the that time, APAC of the saw segment recall end only solid continue why Eurozone trends approximately improved our and no speak will EMEA I markets to time, declined dropped see China. continue sequentially, base. customers from to customer increased shocks quarter, going production steady, X% prices past. China. lockdowns. levels while and XX% XXXX, operating You our all in in similar to economic X%. prior that COVID across EMEA X% including words, had EMEA profit in run lockdowns At COVID that organically since the And grown the in industrial other past And unprecedented XX%. On-site quarter year reason segment navigated We recessions, of the has despite segment roughly X% has The successfully In due second business Volumes X%.

gases to our customers, electronics growth weaker ups was run production second smooth curtailment volumes package merchant merchant China volumes, here. haven't we've levels end the been this rates but as In material volume impact downs seeing, have some expect I and that and other we in more of out helium, used well at but by such merchant been by neon with to xenon. offset recovered the consistent half, normal July, countries, in from was in seeing should higher medium-sized China do COVID the time. partially as as as small especially which specialty Now gas

across and across a South from supply Pacific, supply capability all three growth actions, Aside Southeast South and from our healthy remain course of Asia modes. China, gases of combination startups, pricing project to organic Korea,

for electronics, Americas, reliable our the of had markets segment, growth includes manufacturing, expanded, end best enables year near related last the In term. opportunities all and America customers, beverage, three size growth trends seamless X% U.S., from trends chemicals model energy, price. supply or gas for the excluding and volume and end Latin of the across regardless All by healthcare and to food largest of major X% led modes Organic have Our X% COVID. supply market. all and integrated some and

business the been up up normal progress there U.S. of the projects before our the could largest of close businesses, growing blue year wins been X construction, expect I new for has we one we are the And on from The but to especially hydrogen, backlog Also, continue for as of overall during led prior seasonal met encouraging. In course to aerospace, summer take Coast with sales to slowing fastest have projects, several starting and mark, underlying underlying the fact, in gas close number electronics appears our projects driver, U.S. trend for although sign after fab. even look than gas XX% packaged to report, we July, anywhere the billion more are electronics which year. Gulf this project see else. U.S. holidays. the X in billion stable in current Recent our backlog some opportunities potential sale end, year at expect by

that target view Annual comprehensive Report, of our of on also the XXXX. issued and But recently which XX intensity this XX% reduction reach provides our in XX goal we initiatives reported ahead well like baseline, And to XX% communicated not a last our to GHG emissions projections progress. year, we our realized that versus I'd by goal. see ambitious Now a to Sustainability by our highlight tracks was quarter, XXXX enough. of our that pleased we SDG-based we therefore reduction I'm of our an

As XXXX, becoming way emissions XX% XXXX. year greenhouse on by the neutral reducing absolute by gas you committed we're the know, to climate in

a science-based with team capitalize any you'd investment Paris us aligned and meet target by capability, accord the our and growth goal. As to unrivaled density, quickly our XX our Overall, on culture, criteria. committed expect, that is opportunities technical operating network disciplined allows XX

numbers. investors miss an is they over deliver consistently demonstrate fast or continue come two and EPS this turn one our conclusions while the portfolio is The Linde in its But walk growth to at double-digit This capture businesses has ability profitability. year right-sizing in to world, enabled for a look to ability some our to the is to what well countries no of to our that simultaneously now mistakenly performance through financial will about efficient call manner. suited and the and Now model Matt growth, the growth world I'll changing resilience. us different. in prospects anywhere

Matthew White

Sanjiv. Thanks,

reporting I'd There in to net essentially asset the in due we sanctions of outcome, restrictions. like explain Before financial relates several to Russian detail. months the of activity the more impairments. and I few to jump to into factors the Deconsolidation these the capital almost statements. cease deconsolidation charge last strengthening were XX% any a Note led this ruble. including $XXX have Russian Over means the million severe increased Russian unprecedented our on business assets little that numbers, the

working will back some and to assets while assets. scale industrial these own still we However, continue to divest operations

$X.X to can through that second repatriated was by from the value And but into we prior of of business Russia the continuously we focused X%. as results. X%, billion economic every other X% currency cash extract We will on-site from primarily consolidated Please year, quarter business turn to prior entity. of overview be stated, sequentially. cost-pass for contractual increased from offset and only partially Linde with Sales laser a Versus are this XX% decline increased recognize an a Sanjiv own. translation year X Slide consistent

currency figure remain profit from electronics a billion volumes lower COVID. increases packaged, X% flat, Pricing X%, significant demonstrated and to mostly later sequentially. volumes slide. increased on were so headwind, once Gas was Recall underlying manufacturing, increased and Operating XX.X% relatively project again and were a merchant Base and to anticipated price this beverage in as offset speak ability guidance startups. from the of broad our resulted Foreign which year primarily from represents primarily higher. volumes X% food in by $X I'll inflation of is margin. last X% and healthcare in are price sales Organic environments. extraordinary based, increases to

margins Excluding which quarter effects confirms recovery operating sequentially through, the XXX the lag operating that XX first represents basis This have points improved, row margins second the contractual quarter. of we prior a two basis year. last the discussed quarter to points in from cost-pass expanded and one over year late

of not effects as more the see You to expenses. basis through. quarter, which table segment cost-pass margin trend the the by excluding points margin can incurred operating during repeat. other than America This charges classified one-time will are declined that It's showing XXX important segment, second highlight from

So margins expansion margin APAC versus I periods return fully expect to the to continue continue cost in America's run normal the solid rate and improve and third management quality. price EMEA quarter. show Separately, all as to business to

global segment the see You'll appendix had other operating in positive how income.

we on of XX%, XX% the non-core from one-time for And As higher aerospace process headwinds, of management. during committed you're to seeing corporate base generate at business steady well to quarter. capital this a economic double-digit with in operating volatile going forward. cash disciplined midterm XXXX which market lower flow level. XX%, profit our operating we charges cash volumes from Note on maintenance FX. mentioned details last continues non-contractual held in last all per as of GIST result will the various or increased of environment. the sales more X we in commitment. during accomplished deployment, growth, flow, CapEx EPS reached for earnings billion which almost $X.X segment the the define growth, quarter, cash Despite merger was lower the capital generation EPS coatings provides benefit QX business. Slide our excess from XXXX year, capital strong has costs less or had Available Return that coupled the baseline in now operating doubling which used This geopolitical the and and $X.XX excluding divesting highly are lacked. business is

updated This $X business deployed dividends remainder capital approach the into quarter shareholders of X. with repurchases. Slide one second have reliable with flow, trait the alone, up and quarter distributed approximately only During an to cash on possible invested and steady back as these with the we outlook a valuable days. highly wrap is I'll and to billion

growth headwind. year-over-year based represents when a few FX $X.XX excluding assumption to $X.XX from FX on spot XX% weeks to X% of of The range to guidance quarter Third rates was estimated or XX% an X% X% ago.

growth QX some EPS top end of the FX $X.XX the reflects by is from QX it the of devaluations. $X.XX of sequential no This but from the our So this decline base conditions below with the recessionary to economy, $X.XX this in figures. assumes driven is rather at the deconsolidation Russia. range recent range of prior end of assumption used and Therefore, that. top guidance, the prediction of an not Consistent with

You better, business range. XX% does $XX.XX was from more mitigating And impact. EPS translation your actions relentlessly guidance range prior Irrespective headwind. we'll This currency economy. we'll own to improved if when last the $XX.XX we can If insert worse, above year offset FX of does view than is or XX% and it year, geopolitical of this larger to be XX% outperform actions. business XX% above will to take expectations. the to it landscape, take since X% the of performance improve the excluding range quarter negative increased the Full

stated, I challenges, our stock in cash deploying towards while I'll to of long-term the fully we'll stronger overcome emerge to the crises, Sanjiv than business expect continue Consistent Q&A. And only turn call we've growth may but markets for with to underprice the while doing all now over over before. even pursue from repurchases, excess temporarily been this financial a prior an As stock reward model, to century. these not effort shareholders. quality misperceptions

Operator

Instructions]. Thank you. [Operator

question Our comes Fischer go from today of Sachs. Please ahead. Goldman Duffy first

Duffy Fischer

quarter. Yes. nice Good a Congrats morning. on

should you is question is quarters, taken cost? non-pass enough just out on cost two look around versus have positive versus When price price through already the you next First quarters? sequentially on a price see you've do your one we to that the And next much the cost. to that those over visibility over how two spread continue that

Sanjiv Lamba

Thanks, Duffy.

the reiterate just about about industry inflation how us in cost back go over of we and buckets. maybe many Essentially, our staying quarters? last and me managing in pricing think let for that three So and key we how you are ahead our pricing think

energy the got You've bucket.

the fuels got You've bucket.

then back pricing travel course the have visibility to lot we've the lag a essentially two Through kilometers we keep last positive which history we know, last and over quarters able you shown of As quarters. cost if quite That's demonstrated And got of you we've over quarters had. managed we've The wages years, We've of the been actively. delivering of XX products. that go into the bucket about last inflation. ahead period. four talked we to a of kind one four

is look on And one visibility. monthly quarters quite that's at margin to see have And organization. cetera, aware quarters that expand, that you're all over able on to good covered you we've know have segments. in continue we you to visibility how we two as the the within been to that two show margins do fact versus pursue into we We manage same reflecting the the lag pricing of our last something being across that and spread, Duffy fully And actively et actively with point, that your that We reviews, of. inflation. expansion

Duffy Fischer

have customers Fair that a if so on of think your prices you're you Europe enough. And whole walking say, to your dig bit, kind $XX or XX%, it business contract, high, in long-term that X%, Thank of energy stay in around on customers would or percent but higher? XX%? of your may if, remain Is customer head? What then do And a gas number natural in just may struggle you. what just have issue? be Do it let's percent pay take to that MMBtu little viable? you in made isn't be a it

Sanjiv Lamba

point. just So Duffy, QX, just starting take maybe what talk good I don't we in and markets saw step because a a back about that's the why in

higher this been for energy peaked certainly know, not while. prices is in this This year. only you As have hasn't a --

modes, distribution also look way all as EMEA, fact, that's and in through Across COVID healthcare sales distribution volumes move at pricing, and we at think see well markets, just across our forward. year the customers. the modes, that Europe package, markets to stable look which before about are we of I saw And you talked the but I saw across all the war growing or In itself. I end at Eastern other particularly obviously sales by started lapping last grow on-site, held and continue merchant East. profile to about Middle the expecting stay the it when If pass healthcare we well; end the referenced, strong volumes,

a think people this So outlook, the trend the isn't point them we in closely that are good the But managing I at, we're with kind is we pricing cost lot at of are I'll looking at changing which about and operate seeing people example anything get we suggesting programs not measures is are how actively to costs Yes, I'll savings them that industries also you my fundamentally that most of how example how challenges. understanding save working of the are quick looking look there we at done. are serve. they where in when are view clearly. a that their of give you a time, give very are across that or running. to of own

of are EMEA traction their particular, are help as this where they with gas prices efficient, the the energy first That's look but the obviously, where and processes as had a reducing that good are And year, a in you A at across offer some points consumption in proposals we're they to the is the and working our raised. example that base are, by first got of part customers on. substituting other oxygen we've of consequence. at to people half while where but with injecting gases of throughput XX natural oxyfuel XX course already we using helping clearly now industrial people in of well So that to address help that that. more them wins least good of them costs to have. we do air, increase their natural cost in improve their gas also lot half. recently, example gases a starting manage industrial in We've given being become world, XX

Duffy Fischer

you, Thank Great. guys.

Operator

Thank you.

Next, Vincent Morgan we move Stanley. to go ahead. Andrews from Please

Vincent Andrews

morning, of Good the everyone. your gas you. you situation particular, contracts yourself would a sort months Europe. And and about they couple what unable Thank supply work are issue there's Maybe if lot how in get Obviously pay to last give questions work? over in a you your want just operate of or take the a the how state-of-the-art us would facilities? if on of maybe in to electricity happen

Sanjiv Lamba

Sure, Vincent.

it's to an Slide going issue you the on Germany we over and as business, Germany at when of everyone's the defensiveness this be I'm exposure attention showed -- the we have So we to moment. use we right, and seems you to address that's tried example, where And there. kind because showed of our X

about by by got that. facility place we've Germany's we I'll underpinned and would company underpinned are there. business what of fee or being We Germany as rentals using I The is said X% So you When contracts, in German of we two thirds of the call supplying sales talk about to six an or defensive, remind markets. those talk the through over the moment sales. protected contracts at our thirds that example, about two resilient

to sales. now X.X% left you at our [ph], that's look what's X% If overall of about

that Linde to the within is case, we recover the that to of make components use, natural Coming X% that overall So allows a to perspective a sure magnitude essentially operations example fixed them, two about to of I through and we about our kind want that Germany to limited and the that us pass X.X% through the actually we're just contract our have the in the from talking structures passes that volatility of basically themselves, gas. then of fee feedstock on contracts do capital this element in revenues. the our

quality the contracts within very is that we like those and are protect customers of and confident serve, on this, contracts because have equally of important quality of we fixed on the contract us. that We times the in the but fees our those both that quite enforceability

Vincent Andrews

your What operate about would in the your event you not be able that contracts would to work? How facility?

Sanjiv Lamba

should yes, that I cover Actually, part.

about allocations how point. about right? essentially the Obviously, you the to around our we now just of government want the on, I with very talked happen. business So make are intense electricity kind And in you're electricity talking energy atmospheric earlier if and conversations German will

are critical our one key Just all quick as gases. safety the Germany, and medical of a reminder, in including countries, players process gases we producing

For one but very the preferential or the perspective, really German if produce operations, nitrogen down government, operations, a or if us from and to need turn being you instance, as able miniscule. part shut critical, you a illustrated safety others for Because not event gases, safety which medical therefore, Even of basis operate, unlikely priority down purposes. are well, even is you Vincent, that. allocate nitrogen very, to need we you of us either on as process

confidence kind operating. provides continue will the is of, we what that from operations perspective, our with that to So those be have

Matthew White

just the reliability Matt. is more is why in add one industry, This Vince, bring in this. And, tremendous events density thing density so to this helps I critical is because like that. would this

So assets. have to run to the we your question, ability other

large platform, course, you'd can recovered critical you other density that areas you can distribution bring still would to either higher leverage via have option mechanisms. that costs, you when those that itself But would surcharging you also of Now, need and presents which distribution be a have gases. have higher

distribution penalty, supply. but reliability you will that still recovery, which to need have at ensure it clearly, you to be Now, a the

so models So like of that is another density enable why element critical times our to these. this we view

Vincent Andrews

the all helpful. really Thanks guys. It was very for much detail,

Operator

Exane go Paribas Please has our BNP next ahead. from Tang question. Nicola you. Thank

Nicola Tang

rethink not first about bit of Thanks. was just Are up term. longer European follow specifically thinking but of shorter Actually, term Hi, a situation, the you high/volatile see of or a cost sort energy Europe, in the on or customers any trends investment no, the everyone. question potential customers sorry, environment? -- would to make you given rethink the your expect whether to decisions

Sanjiv Lamba

European walking more will are you I at as picks and at Nicola, the you transition that the And energy which to right their at as investments. giving from suggests our investments. their wouldn't from investing What also around we constantly that their that customers can on is looking I'm Absolutely looking see in will kind as criteria today, risks. and investment then that they that benefit but use would you how that risk understand I But investments say obviously a customers not answer up I you are risks I'm diversifying a of in Europe. our expect at if seeing minimize a customers they to to I'm think stop guess would that not, momentum, seeing look conversation that profile. Europe. those now and and they customers looking risk basis straight would understand at want to away what about will people around go look try the see

Nicola Tang

was wondering could moment if place rightsize, guess, the a mentioned the talking was trying and your bit was to measures you've particular put reduction Reuters could All think business? in more in headcount maybe sort talk on, that That's I I you past. Sanjiv to engineering I great. comment right, you're at about the about, article comments in think I in rightsizing, of think there second recent you a which there you clear. talked that about in And little question, the I

Sanjiv Lamba

Sure, Nicola.

about just the talk a over engineering. So spending I'm with there personal time of let's lot team.

and that So kind through quarter know walk and we completed in to said process engineering, I and steps sanctions Step that projects down team around you that of illustrates it of three has went through that. would there compliance we so are. last just gone we one, guys with you where kind the out our We've obviously over want wind beyond. maybe to you

told that to was that a very the to change this set in drop business. for their cost reduction they for Now and case And digit their we engineering a any that term. that also significant achieve dramatic in ensure their last clearly the expected through resetting backlog of that margins team that remain quarter, reset for there base business goes the we've backlog competitive needs longer to are target that margins, which putting you together cost kind base, them, mid is to that means double plans low in

the in So that. that that process restructuring they doing of on are have in of we now And organization months be the a course plan in will play.

at quarter, want about we're say, billion. order very though, we do may, intake just add, to last because I really if encouraging on I Now, $X the engineering, to I was pleased saw in that

projects. see see those was typically that with on of fronts of managing ensuring businesses we rebuilding kind rightsizing base how both longer short-term the backlog And term, to competitive our and that we're actively, that their to Linde we team cost good in work also it organization, seeing wants the is while quality again, operate. are So remain high

Nicola Tang

terms anything in of rightsizing in parts is business? And other do there of to your

Sanjiv Lamba

rightsizing. and are segments. that And is in best benchmark We actively et the apply of one practices that and cetera, I've is we this and per you those. because are productivity for best understand to constantly constantly and across one we try We've comments Nicola, my the are individual the get ratios do the we per things we the quarters, where reasons might want within said where benchmark where employee, terms employee, of sales we previous operating profit before, of segments in recall said

So are our at businesses. the processes across in moment APAC. place in are programs doing we there all And actively

well. EMEA. announced similar charge a across we progress And that of in are You're similarly, a That's last as already reduce going were of Americas that We our in took to German we when we benchmarking today. the number aware program undertaking in year exercise business. significant heads

us, a a basis. do constant that's for an special We call program. that ongoing So on that We don't process.

Nicola Tang

Thank you.

Operator

Thank has question. you. Please from Barclays next Leithead go our Mike ahead.

Michael Leithead

morning, guys. Thanks. Good Great.

First question up the I give maybe XXX XQ. million confirm. for that Americas And to are of just what Those color follow one-time Matt, maybe quarter. the just was you was? hoping I could charges EBITDA in on to on wanted in secondly, little wanted the a included in bit more just

So that Is quarter, of EBIT if higher. that hold fair? I some equal, back theoretically you all if else would get next be

Matthew White

included the on little on all clarify Yes, in reference way Mike, would to have. maybe first in that's the that you your Slide the correct. I And on help, numbers, These slides appendix investor segment, all a simple of everything XX a question, so might second yes, we're that more it are you're showing the included.

at XX, adjusted on what you that's this you'll If called income look is consolidated see, level, and is the something Slide other expense.

obviously but part of these that they and results things it It's not our are expense. we are current give part the give adjusted you. other indicative you. of profit. income that our is we of other operating this And of generally kind normal are part that EPS of are adjusted So costs And that represents operations,

type is and would It the history this can things that above or line for you like And sale of accruals. when a number, of legal at include it kind tax a of can and like like they of various up us. pattern items normal down. this the company large multinational is loss include So on type assets. things gain have And look

XX million on ranged last if outflow positive, look we from fact, any could million of be it XX is million, an I'd year, XX at expense million, given tend you lumpy. say anywhere to X be quarter. but year, in it average of to In net income

normal was And the of expense. which you when look So XX this were charges year, I QX we million there talking this actually that it about, at in a a American will QX back than concerns no But was rates. Americas is in greater margin bounce we're this few, even one-off. aggregate have fully expect number. the the back And profile. here run absolutely over to

Sanjiv Lamba

kind I just Americas for growing, couple that of that. -- guess I that case. confuse the And of to that a [indiscernible] read reports seem underlying underlying the Mike, is margin in

Michael Leithead

Yes.

Sanjiv, business. about X%-ish And If I look, Okay. your think your to only it secondly, up No, it's great. current your XX% but on makes about of want of I maybe outlook. then current electronics kind touch of backlog, just for just that's I

you So your are towards that. increasing spend obviously

So about over, the could maybe just market the end you of say, that attractiveness talk next few for there? years Linde

Sanjiv Lamba

Absolutely.

amount last as resilient we of the are that grown the won has massive that Mike, happening. years, the few making it grown we market, So new business, a probably that fab now and we and seen you've position, call investments is investment significant having clearly over have

different For deal ways. attractiveness the One, we in that. on lies industry of us the three best in with the customers quality some

GLOBALFOUNDRIES, TSMC, to are good cetera. customers So our others, largest some have. mix and Intel, Samsung, of Micron, a That's et

customers our diversified risk, but We technology. top have over great with tier there with

So that helps.

are that for to new the technology We our to have offering we crew very able unique the suited a the are able in fabs up. best create sense engineering coming that leverage be to

working winning fair advantage, with So we able coming of more for projects leverage are alongside to our operating technology new our a share that expertise decades believe we terms and up. we have than of the in now. We're are fabs that closely

a a the translating over good around us. the offering competitive we positions about Again, last technology then advantage calls, gases talked electronics. piece So there. on available into strong is there And previous In et cetera. we have about for we neon, piece visibly feel is specialty

for those the in of gases not as positioned able us use well those having we of electronics and strong to space our those driver growth a well. as are the we fact to positions integrated some be Our a and are chains to internally for source lot in that supply externally,

our feel customers good that we about overall, we're more feel are winning with. than really feel share pretty about it, and where and the fair the industry is So here dealing good

Michael Leithead

Thank Great. you.

Operator

Please move you. of McNulty ahead. Capital go John Thank BMO We to Markets.

John McNulty

the post there maybe a the to more for my there either if are what maybe to you're a are bit bit upside you you give that to lockdowns, color surprising maybe markets a that are question. us little would Thanks any seeing end China, start, be helpful? just little color taking as specific Sanjiv, can in maybe little and more slower

Sanjiv Lamba

John. Absolutely,

modes, that's just little what because a about So best distribution kind break seeing granular. volume from way I'm probably let talk by of it me our down that more perspective, a address the to

through good then of kind et customers volumes transportation, expect process, we've were to second down terms as on-site quality obviously, volumes, initially. the high what through we June, On-site are steady. bit piece including volumes, in at important the saw were and By talk volumes pre-lockdown held concerned. markets, you'd the seen period, that at been look outlook. little let's volumes lockdown through right volumes as in we there a So I'll on-site cetera, quarter, move across Merchant merchant back that stable restrictions note given of have It's as been end end lockdown. far distribution, have an merchant levels

of reasonably quarter recovery we So back end well. that saw the quick the towards as

see remain I on-site those expect stable. Now as ahead, I look volumes to

steel think area would volatility. about we thinking view I I be I'm is volatility, am movement, And where see watching industry the that I that expect some see if I one if any closely. will that's my the

course you'll kind my and the people that in volume the in As China. But come we the because million see all side. asymptomatic concerned, levels bit lockdowns and is volumes bit for merchant of get far half, might normal over of little ups the they tested of merchant you volumes read part, variability largely sorted back a of little four And on see out. downs, are those or achieved a in cases back you'll about know, expectation merchant press, see and have of X might second you as out most and on as growth

John McNulty

maybe based might the how gases be or a -- characterize stride then on guess quarters couple specialty broad a had of we've I pricing, Got of you that? trajectory than last or terms just it. thinking higher the in the decent initiatives, what question that looks because couple And a that's there what before. on one-offs juicing like about seen would are kind pricing of -- a those APAC over it's hitting be we as numbers? that Is That's that what you've helpful. really have and of should you're you

Sanjiv Lamba

the that most know around specialties number. broad you specialties across a John, broad in couple based. pricing and Obviously, across part, of you is that is electronics based markets. we But tell Asia and that that all Pacific end I'll helped piece all for for in have there most geographies part

John McNulty

it. for the Got color. very Thanks much

Operator

JPMorgan. move of Zekauskas Thank to you. We go ahead. Please Jeff

is open. Your line

Jeff Zekauskas

roughly Linde levered. much. is very Thanks Xx

and know, could don't that of billion leverage level that you capital levered, know you've decarbonisation another Do you put you if I So I were, got Xx XX have a work. large to is goal? projects some subsidies. government how Where you going next couple go acquisitions level your I to going think know you're pending, these leverage do don't of make over the are why are. to years?

Matthew White

that Hi, handle It's can Matt. I Jeff. one.

that and after resiliency just acquisitions, may And which And probably of every environment, to as the grow our the rating And that stock mandate put to the So on us the of that. probably left our times, to on continue model maintain dividend in single of And overriding is includes that I to our through really capital but credit an that growth. restate, good from with all allocation to you then repurchases. relevant business. that is enables mandate. the those basically investing for is rating. we quickly A year in projects, whatever and base follow priority policy, it includes includes think follow for We towards irrespective is macro then recall, us our our call, recession invest defensiveness cash, a the that the times, starts

absolutely probably your an levered. you're X.X to it specific And answer, question, rating we're will right. maybe the So what is. be A Right now,

EBITDA. job balance debt the euro-based good think a our euro-based with did team I to

on suppressed. We grow continue which continuing metric that our operating growth and to which is income, our a EBITDA double strong is to digit enabling keep and

So we are deploying capital.

back We are shares. buying

probably be meets in into growth. investment But every If if an no going acquisition, we're it a on As doing I or means criteria, a to opportunity. decap our don't care We're going billion. to we're are [ph], by growth saw, you project. constrained it's go ever it. we excess base year-to-date, project of $X capital

And of so deployment under perform very saving there's the but model, to capital It's no continual or just waiting. a well. business continues this

we're And just effort so to an it's this all generating. deploy ongoing capital

Jeff Zekauskas

Okay.

rate, of at are industrial your some year-over-year is grow the One growing that differences some gas are at digit low companies and Linde your growing between competitors, a a other SG&A the and is don't But probably other expenses levels. high that's I Linde the SG&A depressing competitively? versus single gas digit rate. industrial currencies difference? differentiating what's And the Linde What doing are companies what is doing or that get double itself

Sanjiv Lamba

had And you question going try I'm and ahead of that answer last down. preempt But was that I the as quarter and Jeff, same your conversations our that. that. attempt are to asking to to well. going to I'd already say answer We expenses

benefit the primarily, there. around managing actively concerned. it you month, really SG&A far there SG&A a the as there. drivers our our action key as in As And numbers which can every FX keeps impact what see, are there But is comes is is two from

productivity more we've using active tools, program. very our got automation a very And program. a recently, have We active digital

running can including You times, we simpler ensuring and line heads where thousands that out many that. just projects see productive I'll the we this I've examples each every of And illustrate into addressed. of benefits of level. before and look at gets processes, said those take item should, at line two flowing of And a that kind every you item give and couple concrete to programs

number the day, TCFC, challenges reviewed That's our businesses line that with don't We productivity the times. processes. a that's we faces. business where cost has So you at item every total month. get them. every that Every costs. and a And looking We target. that has opportunities level you every at our how owner cash other are We that what those find that owner, It's base, gets it call of do that we essentially, running wastage, month. a that And have good across duplication, month And do something Europe. to find focus for moment down. every fixed external you I every you review recognize it our an improve don't in that's program -- attention we find cost that continuously. when do happens recession. is We

Jeff Zekauskas

Okay, you. great. Thank

Operator

to of you. Roberts Suisse. go Thank ahead. Please John We move Credit

John Roberts

after-tax of plant with capital high on The record return compare can How does of customers how returns it new before go instead? to XX% And do is still quarter. Nice start of that it's at sale gas and you. going projects? on higher. shifting think sale you Thank levels,

Matthew White

Hi, John. It's Matt.

And the continues -- this hopefully reason, our maybe much. business, need enabling much. think [indiscernible] getting of a our also our what returns the about changed changed cash getting very that your much generating this hasn't on-site our the to I for capital this is And then rate, risk be we're will projects, question. packaged why better. strong base. the that includes merchant denominator, reward is non-capital business, at is what our growing even to we includes expectation reason is model way and metric we're numerator, might intensive call address the are on is growing the capital. returns our I is I'll and And The businesses XX% reason engineering improve, integrated hasn't think which when the very business, The global than other of faster obvious some businesses, that's explain without probably our help have and that happening the which

growth, model create value to important deem return stable how and way cash view performance, a a the So This we density on capital it's this which enabling and that so why return space. the what profitable is is project. the rather than return is generation continual expectation singular capital we integration model this single a on of of in a view for is is on

return density our what's the of the model. than really non-capital driving And intensive lot to contribute It's a it. that's So us the model. changing expectations. continuing it's businesses integrated It's rather

John Roberts

I the and benefit savings. yields actually get think the keep at those prices do and gas then improving energy higher secondly, the constantly to you're plants, hydrogen And you I efficiencies business? think your

are efficiency more with these small, So prices. they're super lot of gains now gas even a the kinds worth though high

material? becoming is that So

Sanjiv Lamba

there ways suggest I'd then a and internal view is is there two to are John, think view. customer this. There about the

price, in. the when internal obviously benefit higher productivity or the on programs, flows you efficiency expansion, our You're where actions the view expansion of on we consequence of of take into factored absolutely clearly, And margin is margin we at actions, all on and that the pricing a get take gas that from falls our that productivity, program more in. gets we right looking kind and

this, I'd picking first the The had I perspective the gas up we which prices? who customers in is example was seeing gave that there half, is just to offer is -- XX that. higher is the wins. piece other another happening their of what are oxyfuel with momentum is wins that That on

applications Here at we into where what and applications try an tends substitute and volumes play well. that placed, costs, we able as ways to get reduce to ensure where on those contracts long-term we're our could to consequence and see the also that that we growth understand to then happen looking some both our can are come as to up, customers those is but then to put of as have want be upside our of that's gas to a moves pricing opportunity mid natural happen in sustain where

John Roberts

you. Great. Thank

Operator

go of ahead. Please Thank you. Clark Générale. We move Société to Peter

Peter Clark

Yes. Good everyone. morning,

and winning the I in you you industrial actually side Just packaged on gases on great that there. the for wanted just share. the packaged that obviously growth has been of U.S. you've gas a check been to still gas got business, which business have

electronics, and some in saw the the because So quarter. think second actually softening I'm I healthcare one number excluding I'm excluding

question. first the that's So

Sanjiv Lamba

So gases is a to your point, very business, Peter the strong U.S. packaged business.

I volume tend before. packaged are that high side, to You've well, space. right? on segments hard have seeing and heard good we are that continuing gases to still to digit mid in we pricing our this me talk growth double both growing reasonably talk And we When the and say into goods. growth strong about about And gases business, separate

Peter Clark

crack question, then had AG GIST. to this Got Then on a Linde at ago up. give done had it. second Obviously a well and six years

from expect and the going obviously profitability UK happen, So logistics. the don't to think from you given definitely outlook a big windfall it's I'm we reading this, it, but in

Sanjiv Lamba

That's correct.

business, you this. we've As you -- digit get while, it rid to margins the been challenge single non-core to no as for point Linde trying on out, of trying know, of AG a had

So but and of we'll of a off, us it that. perspective, it sales kind will see out some from drag profitability come help was a get

Peter Clark

Got it. you. Thank

Operator

your Mizuho ahead. move next Christopher question. to go We now of for you. Please Thank Parkinson

Christopher Parkinson

years. just I'd market my in update the how just very term Thank your the you Can the very given Thank just question. the helium much. very long few past next over the quick you hear taking intermediate on Great. curious Russia, over much to to viewing a you're we sale be perspectives BLM? for so events the of get

Sanjiv Lamba

Helium business. global Thanks, is Chris. a very

you in it's traditional different As many gases. ways that know, The diversify ability to industrial more have and our sources to multiple helps.

There that's market and a sources an sources when you about its you. lead look balance. to was new say three might sources set say And in tight. into ahead which I I'd expect come available to of you up. to two you level years should Obviously, to more online. there, coming and of overall I'd see of short that be very As would to to level, market some you kind the come Longer in anywhere with midterm the on the on, between largely broadly everything in tight, challenges, mid-term, at I that's have tight is for the in term remain there is the own online in and of why half Russia time term, that that kind going industry come a short until to come you think sources get happening three, usually then back fully over to intermediate say ramped expectation

As far by a poorly. as little Everyone's that, run been as BLM know. tragedy. It's is impacted concerned, of bit so been it's a you

large years be We going the new probably over to Middle we're over East grow being a over potential BLM having of to expect seeing many some has source, already government traction that comes really forward BLM there'll relief do kind as source from substantive the will goes decision some We forward, therefore but sources declined on the how for and be there that. not on see a very there, and us.

Christopher Parkinson

back as digits, helpful. follow in very it the I up, an even the a to perhaps quick that, just the And growing billion high turning low X and market electronics semiconductors guess doubles. within market That's single gets

flow outlook, competitive especially the your really that given everything can on-site facets you. multiple bulk Just out how exposure to Thank much advantage, and given just Asia? across that of geographies in in spec, the outside turning be to there, of is a

Sanjiv Lamba

Taiwan. recent So was their and for in that our the both ability fabs, I'd of existing win a out relationship to U.S. TSMC offer in of TSMC our in leverage our first, the say couple with technology

technology have feel which upside. I super a spec fabs competitive operating So we our an expertise reliability earlier that highly from high that and a on. we was experience their of But we this important kind given technology what of a advantage mentioned confidence view, we that in for is I able them operating do is to given leverage on were bring with and offer. point product. something

these And look we every drives and to time new lot their engineering at. have have our that advantage, plants, division own extremely given innovation meet of spec R&D ability advantage You the of competitive our drives our some be that where reliable. you on to a and that's do to and competitive

is win. relationships technology expertise we with that feel point that then, the advantage a the I there we we operating So for tipping course, have. And advantage customers becomes that carry, have and to around us the of

Christopher Parkinson

Thank you very much.

Operator

David Please Begleiter Deutsche now to We go you. Thank move ahead. of Bank.

David Begleiter

your gas natural is you about the Thank or given Matt, in into an Sanjiv -- hedging next you. talk strategy prices And hedging roll as there? Europe? morning. you you're there over can Good headwind higher earnings year,

Sanjiv Lamba

both really contracts we Matt natural hedges. as electricity to is sourcing we don't talk in you concerned, Matt, and essentially let But hedge. it? place we on want comment David, have which gas. the source around about based far do financial I'll as

Matthew White

agree. point, contractual just It's for of And our consequence, for have We pass right. absolutely we of customers structures purchase utilize hedges To would have with materiality. any through. contracts. then we any financial I Sanjiv's commodity don't commodities

is how how So manage it. that's around that we'll world. the it continue we And manage to

David Begleiter

the you guys to and take to do to the paid just question base in can't go facility if back or on fee? you curtailments, pay Germany, And operate gas Europe still Understood. due get contracts first natural your

Sanjiv Lamba

Yes.

contracts So we the get despite LNG or our our a ensure facility conditions volatility very clearly paid piece, around that disruptions -- fee. base ensure

David Begleiter

very much. you Excellent. Thank

Operator

you. Thank

final from Partners. go Vertical Kevin Our ahead. Research of today Please question comes McCarthy

Kevin McCarthy

How flow a Yes. or you probability Good pipeline morning. opportunities progressing basis. particular? meaningful the X past the for do And you? of will you update when You've project with with billion an Sanjiv, provide on think the activity? talked potential become in are XX in can customers your clean adjusted XXX things more about into industrial that and hydrogen billion to on Linde projects

Sanjiv Lamba

Kevin. Thanks,

about a and me just progress the then talk bit that's little let first happening. So headline that

there are we with the but And more skin have looking and them the of industrial on. only or This who we so they off-takers work we of to to on off-take around where space, level, see who on wheelhouse. we down focus large or to to They export see in piece, I have there's larger that Again, headline to between work and projects, XXX come some projects, those mobility, in in in is space. relative et right participating work are will be working areas And lot agreements projects, which XXX us our the specific seeing game. at some tend cetera. is projects larger the smaller again, we've blue what we substance. fewer project as mobility energy projects A the the the potential with customers a you, said move those number you green projects side. tend So at say with of extensively I'd development. either got before, ammonia, we're to then hydrogen that I've chain in or on number this what I of want see

For in we that us, we our that's projects for criteria to critical that undertake define in investment very want how space.

projects the the these progress, the in have long tend they a the terms have talking piece typically, lead Kevin, In -- and I'm to industrial now driven MG long export of around and about what particular, timelines They the take could pre-feed technical look the process beyond a that, the project have And putting they undertake make have get and try to between in and like. fact to and take that deploying of pre-feed is. and what or two they a into then years. a a that then the would move to half understanding that It's of and anywhere FID itself That study our you when a to start better typically solution feed try it scope decisions between decision a FID. and that investment and do we're to understand a able backlog. forward FID actually to three

that a industrial number constantly and refueling the moving they great small or And smaller feel seeing projects has the and there course, emerge that and you these across some around hydrogen. here are set electrolyzer side. on about projects they I a stations energy hydrogen. mobility, and good the a I've feel the small technology. Linde of good So, are of see liquid of of We're progress that. moving, pretty on projects are outlined the I also to hydrogen whole about good liquid new export I

that that liquid feeling again, network advantage going quite for well. deploying ecosystem competitive as hydrogen we technology important is to that a have We in are And us be and a creating space.

through. but well, in that's pace working further that see up as that So we're looking projects the to develop as well catching

probably I'd that's On time terms projects the billion. looking of XX this mentioned total higher than point at. overall piece, in of at you that we're that say in landscape the

Kevin McCarthy

like guidance for south that range? at the where negative And range? of some in the the occurred? new And are end may activity secondly, amidst you It color. your that are can of all Matt, Thank embedded you also, baking you're for you macro level sounds your in volatility marking that's I to of EPS speak some if assumptions currency

Matthew White

you spot of weeks Sure, what just guidance itself, Kevin. I'll took at each the end rates the supposed obviously GAAP. a few We'll book period start used the with But the FX U.S. we we are side. like average for rates to for ago.

more took right so come Now looking back, better. been at the bit little we probably has it now where least at rates what point, a looks have like bottom

what had will was they're time we rates we But assumption, assumption just tell. an and So put make in. what are we that will when book Obviously, to the completed.

ago, to weeks three rates. right was now, a point in two this probably time, spot So

The no some the there puts right. assumptions essentially volume as and has growth. now, you're far top As it have macro, real end The takes. right

be you would have do sequential some some just what's So there. decline going we given EMEA like in natural of the effects, for places expect also to holiday -- on

You to predicting. may essentially is what go as have volume some that's increases and this And mentioned, in we're as then areas lower baked you other growing, guidance. the just no down, what's just some assumptions. not I nets from certain that mostly It's And out growth. project or contribution

we it upside. One seen Right so And things quarter. see. out. June be have changes a better, negative we'll far now, And so would be plays to month haven't make from through if how but out much we'll see turn that really July to doesn't

Kevin McCarthy

very much. Okay. Thank you

Operator

or Pelaez call additional Thank Juan Mr. closing like the you. remarks. turn over to for back I'd to any

Juan Pelaez

you much for very Thank everyone attending.

guys feel you have your to any a day. Have If of questions, free further guys. reach rest great out. Thanks,

Operator

Thank gentlemen, Thank conference participation. for that will you conclude Ladies your and today's call. you.

may You now disconnect.

Linde (LIN) 28 Jul 222022 Q2 Earnings call transcript