Linde (LIN) 27 Jul 232023 Q2 Earnings call transcript

Company Profile

Participants

Juan Pelaez	Head, Investor Relations
Sanjiv Lamba	Chief Executive Officer
Matt White	Chief Financial Officer
Duffy Fischer	Goldman Sachs
Mike Leithead	Barclays
Jeff Zekauskas	JPMorgan
Nicola Tang	BNP
David Begleiter	Deutsche Bank
Peter Clark	Société Générale
Michael Sison	Wells Fargo
Vincent Andrews	Morgan Stanley
Patrick Cunningham	Citi
Kevin McCarthy	Vertical Research Partners
Laurence Alexander	Jefferies
Steve Byrne	Bank of America
John McNulty	BMO Capital Markets

Call transcript

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Operator

Ladies and gentlemen, good day, and thank you for standing by. Welcome to the Linde Second Quarter 2023 Earnings Teleconference and Webcast. At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded. After the speaker's presentation, there will be a question-and-answer session.

like the now Mr. over would I to conference hand to And Pelaez, Relations. of Juan Investor Head ahead, go Please sir.

Juan Pelaez

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

the turn call to Sanjiv. now me Let over

Sanjiv Lamba

Thank environment. delivered once the strong despite morning, and challenging very The again Linde results a you, everyone. Juan, team good

which and rhythm, regardless XX%, proud employees XX,XXX These quarter, For all and economy. expanded capital on require are creating we that quarter culture we've how happen of They I'm ex-FX ensures demonstrated shareholder a don't grew basis the on towards execution value. points the operating this strong of after aligned resilience just second XX.X%. EPS, increased results margins quarter, by return XXX to their own.

data. as stag nato evidenced some end, this by start [ph] economies To to are seeing soften recent we

do year. Linde on is is one and the continue for future deliver the because our knows. that to reflected I confidence what you with our to predict Now But control will commitments, I'm can and in going going tell guidance try can no manage we not some really what to which

managing operating trends. by are energy structure cost are market while increases part inflation we securing is contractually of contractual through This key variances spread For adds and example, local this, top the and we've which price costs a we initiatives. with passing between aligned cost, our it's demonstrated On decades. for value. through discipline price of robust Ultimately, which continuously that compound productivity optimize consistently

that, to executing and We're that time project $X.X on on backlog Add budget. our fuels currently growth. backlog our billion

healthy For contains quality returns with is me, backlog customers secured and constantly turning a over.

months valued to XX last the alone, close billion, XX XX $X.X while $X In billion. up at winning valued started projects new projects we

rest risk. expect assured add next we'll the progress in projects win commensurate on we of $X $XX opportunities, Looking in can to to $XX billion which be to I value energy decided ahead, billion of with years. good mind, that billion investors continue the few clean With make this

long-standing to financial and adhering capital proven returns. policy, shareholder consistently and also which performance We're allocation has the demonstrated industry-leading

United States. continue enhancing to growth opportunities strategy. to Linde's the gas well ahead fast-growing our nexAir, performing of I'm our in We made it's This happy largest packaged presence acquisition business. and Southeastern with tuck-in history acquisition gases further we within year, traditional industrial validates see significantly the in our quality expectations say ample

also stock orders both capital discipline. reward In through addition, ensure to repurchases returned increasing we and consistently and dividends, investment

X. with you Starting which Let find of end with me can up markets, overview consumer-related now quick markets. wrap a Slide on

sequential subject growth Note, organic We price year-on-year primarily to by driven trends positive seasonality. increases. have are

freezing applications itself mid-single and warmer aquaculture. care see you'll is see for more and Health we So respiratory expand as beverage expected, care as less months. food but and digit carbonation growing continues beverage more health food during to

appear see versus fabs, volumes although to and packaged lower sales merchant up is While electronics the year, sequential from onsite some we into prior be softness stable.

metals and commercial and manufacturing as industrial led the and battery well space in growing mining production, steel. price both X%, as carbon are For improvements strength by markets,

and growing that at for States, can demand I U.S. lower turnarounds European demand the energy X%, customers second as only is customer number the chemicals the it's up, how develop. the well see in since primarily but and least difficult as in Europe. United You will a of project driven to already expect back this by improve half is to

these mitigated. You by underpinned profit is will recall our are impact contracts so fixed payments, that

conditions. business the well adapt as continues Overall, market we to to perform local

track energy EPS and fact, constraints, per of was XXXX today. in decades. and of increase confidence grown pandemic, our backdrop XX% double-digit EPS military a supply to of against an global I our In largest average inflation continue average, This the execution grow environment. conflict the will daily have record since of merger, It's to employees, year on this achieved the because economic Linde and crisis, we've percent regardless chain of dedicated from a

I'll the now the numbers. over walk Matt turn through call financial you to to

Matt White

of overview FX engineering, down results. Sales are but some in an provides of to translation, year, $X.X billion X comparison last sequentially. X% timing, cost The divestitures and related flat Slide quarter movements Sanjiv. to second project has Thanks, noise pass-through.

we As to through cause energy pass which variances, revenue, can but dollars. to have impact fluctuations contractually you profit no know,

year X% Excluding quarter. underlying and these up price prior versus X% volume are items, and versus first

in countries expect deflation. I'd representative with sales X% we're sequentially. developed If some lap of disinflation going trends our Consistent disinflation across we of the And seeing not forward, the versus operation. underlying with an persists, weighted pricing year the especially regions, are of as price seeing main increases moderating we're more years, while prices comps. XXXX prior increase inflation prior and of are Higher rates X% growth driver

expected sequential U.S. volume anticipate relates growth we customers lower contributing than volume took are trends to project down is into the but perspective, despite where contribution a positive and two decline. as running, quarter base year. Coast, from to sequential X% year-over-year X% with QX. last volumes There played out seasonal a outages the backlog. are on-site About up more customers in a the From volume improvement, Gulf so factors Most back

XXX XX% profit to an primarily The $X.X of decline a Despite by operating fixed an X% remaining volumes, representing margin higher This points when lower volume which structure. increase billion of led contracts from had decrease decline of XX.X%, pass-through. achieved payment pricing, of XXX excluding a stable cost resulted relates in and combination operating growth year-over-year profit points on-site cost to basis increased customers. basis or a was mitigate and the volume EMEA,

effects. basis triple-digit when EPS excluding increases achieved excluding cost from $X.XX the currency. region Every year of or pass-through prior margin XX% rose effects of point when XX%

double-digit remain to we ability in As an growth percent. average our Sanjiv deliver EPS mentioned, rate confident of

backlog, to continue. from increasing I larger expect of gas a Project trend sale the is CapEx

However, than at despite our at reached NOPAT capital XX.X% CapEx, continues another rate faster return the capital higher grow base. a the on new to high as

Slide color cash including on more capital X trends. provides management,

OCF expected the so closer of the year Second the year almost These cash expect second of ratio will which low higher the and half, cash EBITDA unfavorable billion only quarter operating to outflows $XXX balance for This XX% to in increased flow despite is quarter. for to due be I the tax X% from million $X.X range. was stabilize earnings. last up the timing, to the

capital in thus we remained generated investments, and CapEx more quarter cash X little healthy capital not pursue And capital operating the to less pie policy, believe clear, growth and chart. billion months, our than back are provides our which flow, returned half a way. we at constrained we thus, ample be balance we'll to the Through meet base which into Available billion while all $X.X allocation $X.X which quality We criteria. owners. can shareholders growth liquidity the steady OCF to this And any as while of to define a see investing business. pursue achieve per is you ratio rewarding in

on XXXX. for with of Slide to X. figure results, the of end on assumption This the last $XX to range the year the full attributed primarily XX% $X.XX guidance end XX% of up consistent growth wrap year. $XX.XX second on $XX represents I'll remainder increase The while Therefore, is is an the bottom raising or end. the the We're $X.XX new and to a half assumes top guidance no QX quarter. top with economic improvement better to increase over

greater increased contractions business forward. view, default, Consistent and represent the tightened for our of with economic end from is going volumes does manage more irrespective guidance, assumption, the happens, prior economic the negative but bottom accordingly. baseline assumes in more year. the what as bottom we By The the not we'll range end rather confidence this the

but quarter of year conditions. assumption, no to is to $X.XX the an the year. with third XX% Note to assumes full tailwind prior XX% the year. and for full a more below FX up quarter, $X.XX, that we're X% the impact economy a flat implies guidance top EPS For the Consistent third end range recessionary that providing versus has

Linde or of do regardless up, opinion world's value. will part the latest on we're best, and rhetoric it what sum long-term in, do engineering gas continue of leading what company, employees the they efficiently run To creating while industrial compounding to shareholder economic the cycle

over the turn now to call Q&A. I'll

Operator

from Instructions] Thank take Fischer And [Operator our you. Sachs. with we will Duffy question first Goldman

Your is open. line

Duffy Fischer

end guys. we been of to double nice morning, maybe that to do towards kind in grow of drops increase numbers, a of Good how pricing that if historic Yes. really you XX-year environment? off Question may line cycle back trend what's pricing comment be kind that getting an of the Matt's continue digits

Matt White

Sure, Duffy. is This Matt.

with, start and as the pricing, as know, this we inflation, as be average inflation. you will to I our and a think mentioned, I always weighted of function first, well view globally

post starting function right even been our higher disinflation you if will when before, not back it's where tell we look XX-year a So arguably with in XXXX, It's deflation think be. think of will those that, XX, especially significant what least what you clearly we inflation at won't is years. when be. And and you definitely than I more now think trend, I pricing inflation saw

line the at which remain that developed we seen in I XX the expect continue are to our in while perspective, higher overall to from to we what last markets, we've will and inflation, expect still with pricing price inflation, least continue than overall disinflation expect years. would in be I seeing to So

Aside lot we, other from factors, of that, backlog a know, have you as our startup. including

continue strategy, We strong see for things to have abate back. everything mentioned. to probably And in inflation now, do acquisitions that with from volume. we'll come if see to flow we'll - start lot you theory, right see roll-up free volumes in have like Sanjiv stock some we a deploy of happens like cash a we'll But repurchases could what

over as So see forward. production what overall, and we've several happens way, that's that the with pricing and we'll inflation, last going the industrial seen other what also trends could you decades, may have the economy moves go and

Duffy Fischer

those being passed. numbers on about kind And Sanjiv a two that what then decade a may when billion we're come of last in enough. shape into to that decade would look Fair period. with of billion inflation those a as kind what maybe over of CapEx more Act would fruition, to of And numbers, If And out projects and maximum then of look backlog come kind period, get global the roll different like $XX over kind through of you the how backlog? like? Reduction you've that we long kind $XX year now scope the times number the number fall, couple

Sanjiv Lamba

Sure.

end traditional then but backlog. So piece. just interesting other and tends piece, energy a to IRA incentives you the parts the we'll clean the on energy well. seeing growth with where around start briefly little talk But quickly and I'll which get clean pipeline as about we are bit, and also which the project we there the see referring let's market, are world to forgotten are to two Duffy the cover

on that that's And developing way we that look feeding just what the the in grow likely increasing grow. like see. result I relative answer are at next amount the continue backlog and it I at We'd to backlog really, pace for that question, X this see basis brief, think, a activity we and think of into is X of future in see to potential the to year-on-year, backlog to I is looking over backlog. the The that's what at is years, today we'll your to currently

pursuing about went I'd I've that say IRA the we before. think driving referenced in and U.S., the you as we make made told billion over those We is a XX $XX us, on we are where we forward. backlog still And that potential for about next decisions certainly project pipeline move to projects XXX out see the years. you, as decisions reflect I get

kind the U.S., months of East cycles most project well. say These progressing extremely well tend to in seeing Canada to and actually happy Middle Europe we outside the call, I in prefeasibility there's development that are also the decision. those I'm that in then of our projects anywhere as and even get bit to XX investment little time or between the to a final last in to longer. lead feed a a down explained take between XX to earnings feasibility

a So forward. the bit be as but little we timing that tends see you'll to move happen lumpy,

I'll few terms are billion, billion of which years, the are also next tangible reiterate to I over around $XX in that expect projects currently getting developed. $X more that decisions

All of once backlog. the that happen those then decisions translates into

little Duffy, the I'll traditional well. on bit just on a markets go on and flavor add as

energy, end decaptivation And metals, here, strong and just Our few amount that referred for fair end markets chemicals as this is The across markets all pipeline many traditional we us proposal to. opportunities of with opportunity a activity. starting includes decarbonization are electronics, the seeing includes a spread well.

our backlog Singapore billion billion. after is for gas the That's $X.X the know, about for we you of sale adjusted current project. As $X.X

see we probably for towards are a starting there. ramp number. expect our the and as end that the About XX% backlog end out backlog So be to we continued markets, billion potential traditional to of took to is in up closer growth that around $X about year we the today of I that on already.

Duffy Fischer

Great. guys. Thank you,

Operator

Mike our And question next Leithead from Barclays. take we'll with

Your line is open.

Mike Leithead

Good you. morning, Thank Hey. guys.

continued just economic This well business quite I fairly ask First, grow to on chemical European EMEA. earnings indicators remain wanted has weak. and while to

it you what's broader -- and of comfort just sort we about growth outpace of earnings sustainability the the you market European talk of to economy remains the around how in as if just the you is your level or of the can So context today. assume enabled sort

Sanjiv Lamba

Mike. Sure,

stage, intended a felt back any war through what's of base. go went to let's really holding essentially that But got a obviously about today. in in their Russia cost couple in or that At just to large we of bit time. couldn't restructure was base. cost the reasonably EMEA that. we've reset that's So that the look on crisis we or time that little energy years us it reset business the A step good And at ago,

of essential et costs, business well, to lot And actions, Obviously, very embraced productivity entire good what deeply pricing paying happened period as a which is productively dividends. was this that today they've obviously, managed out absolutely given disciplined across energy over cetera.

EMEA and the a continue to margins I our order would fantastic slightly that job. holding move see has you managing performance see up EMEA see and or forward. to business. continuing performance, from to make done in hopefully I them team expect go I sure hold their as business

Mike Leithead

believe Would an Great. Arizona just for their fab year Thank on about you. TSMC housekeeping by your delayed delay a then also electronics. so. amount? I of or Thanks. start question briefly, that And by site a the that sales equivalent

Sanjiv Lamba

lot to place of make sure the start a starts tested tools the is in before actually TSMC year, is and we first product are out. will half the expectation second even My of fab this plant needed

has having suspect were to go negotiations progresses and probably its a process that of I they than in start-up ramp. of the other related TSMC's through rather All how terms fab actual fabs the announcements process. were So it ramp started.

Mike Leithead

you, Thank guys. Great.

Operator

Zekauskas We'll take from Jeff with our next JPMorgan. question

Your line is open.

Jeff Zekauskas

oil their the a companies we're because a outsourcing produce returns gas over they tax of multinational has higher been multinational industrial longer time, gas. that wanting hydrogen. have to the Thanks for beginning credit. returns period and for drilling to their oil Reduction companies rise own producing because the been they in capital them hydrogen that now The And very oil passed, on get see much. hydrogen are capital believed Inflation production to companies But on Act for

So the traditional in when out will dynamic see think your that you your opinion, expect probably customers over you do XX lower integrate? back to look hydrogen different. next Or the years, from do you is hydrogen demand

Sanjiv Lamba

perspective you've different. drill looks the bit that hypothesis bit to from of say And dynamic laid little little kind out. into down I'm a So you to Jeff, our going I'd a the

And to at let's following we a say perspective, as out hydrogen. from see it related you, perspective. So plays it Linde to I'd our look the

went sit back right. are refinery time core absolutely of We a our economics was said, assets plants and processes you or complex, We those in business. know and by look, outsourced, whereas and And manage that fact those get it's - from the the themselves well. optimized. that's bread-and-butter a of chemical in part large it really our hydrogen in the outsourced do reason not extremely well. Now those well, a data Linde they're past the It's the handles

a is suspect the like well. I the decaptivation will there Linde as value happened that a how But and operator bringing into past, that's by happen competent mix. the So unlocked in future very gets in it

let's portfolio, piece to and of if of in I'd to And from three plays you far the role that a Linde you if access put managed And market, will, a into hydrogen the buy cake. part ability a you creates about Linde huge that now our much actual tap - grown, because talk thus that the is hypothesis forward. say fuel to hydrogen has advantage. and a perspective. larger which a has The was things One, happened now

XX expectation $X to anywhere is entire trillion. grow you is hydrogen XX to look the fuel to about itself, will market billion $XXX number $X the the The years. maybe over between next at if market billion Again,

Linde makes a it very perspective. interesting So a that buy small from even slice of

to now in So some we have a new ways. that's market us opening available

I'd leverage for you place requirements. merchant hydrogen production that to say other is The to

to. is network referring of it's to say hooked you're if which of NOC assets. I'd pipelines, those and that necessary describe obviously IOC customers advantage. contracted pipelines installed base create on is that what a the the Let's from an It's perspective, that's what

The up would of that getting mentioned obviously that hydrogen us reason economic not a Linde because that surplus that on basis. that has the into I network, in refiners to addition to and scale and provide be has pipeline asset advantage returns is ensuring significant all a put to hydrogen and ability taken providing available stand-alone

risk degree point couple using risk the the ago, Gulf the the is that third operational either debt. sites that value carries And forward. have which Jeff, the for customers the U.S. benefit Linde as they onto plants. that say, will really of that single using saw, Coast, has hooked network, reducing the Coast, I network large that think multiple there Linde all I'd a as network, with we The we or provides a valuable weeks value to move in we that and they even more the again, high around And will will be they advantage redundancy in today. of And continue assets again, enormously -- that you [ph], Gulf cavelon over U.S. expand

All looking competitive of we're at. the advantage those provide

greater in many and far However, there those about accrue those our cases, to I I'll operate providing of ask from network accept period as the either that will and Linde XX point well, the owning but that years, again, into some IRAs think assets, manage will XX opportunity people either of for benefits own that it there financial as for us. incorporate be as assets might to and/or a

many to of a from is the Gulf perspective, hydrogen other essentially that world. replicated parts kind You going future the of think look the that's U.S. together, I like what in put Coast

Jeff Zekauskas

Okay. for that. Thank you

you the Your comment offset slides helpful where costs by corporate other in you are business. being line, had helium your this said

$XXX back lose line - million other XXXX, used XXXX. in The XXXX to

breakeven, going million over really we've that prices positive $XXX time continue come mostly does that, delta is So forward? that that that to mean helium

Sanjiv Lamba

not the today. is should that you math Matt the line it to where and than is, say through let walk bigger be just I'll other happy with I'm it

Matt White

Hey, Jeff.

good So just with in is That's what start maybe to start. probably a to Other, right? place

PST. is what's formerly Technology in currently, Materials So Other business, called our

what or wholesale coatings call recall co-helium It the may business. we business. has our You inter

it type globally We it where we we then for make of with regions. it the end that. an since very, So intercompany more and a the company this Therefore, and and global sell. source all that intercompany, structure regions un-priced regions of into it's it source we we an helium. it pricing few one have to eliminate in is products very buy is their sell the we obviously, And the they that get then of

global all a to it as And has Linde corporate then manage of whole. costs plc our

As there, you That well know, that we GIST. used to be divested in gone. is

forma fit there in That of forma a point, today. the years in transition as pro was, as of grain with elements kind segments salt. at always we've that to that And the would you was So we for to needed that's take thing is into a time some were one That know, XXXX and didn't exact your particularly year. many I what's that did There a number. go of section merger. pro said

XXXX So point starting consistency more there. as across I the because use merger what when better would that say, I'd the had, we post was is in

make sure And they're of also costs think businesses going in continue the we've a is organization. segments our it, businesses combination expect performance, appropriately in improving going of the industrial it's what's seeing world to it's offset a light noncore when cost to corporate absolutely which the said more gas And global we combination about businesses their other, support. in not And and are which this than on see we're on that, our of to these and what's doing. you corporate And that. of managing core and that the goal can we always

to value but other think to we're in the in going segment create other to forward. about that, continue do segment like we any to anywhere how going look else that's So

Jeff Zekauskas

you. Thank Okay.

Operator

with Tang Nicola from question next BNP. our take we'll And

is open line Your

Nicola Tang

Hi, everyone.

for but talk wondering more I further how level, Just see a of could next kind you you out play margin would me bit that if into understand perspective. upside a at margins. about regional was a year I on one group from

margins? but drive from over European then region margins takes pricing there's Europe, there a normalization down if thinking here, actually group situation to I'm trend where in So another is

Sanjiv Lamba

Nicola, asked consistently. margins on questions we've

expectation obviously, As that's about margins basis that XX and said, your I've trend to we by expectation look, always the to you'll is see our of happen. recall, will want year-on-year kind XX quarter it's and kind we significantly base the expand points. that pricing driven And you delivered segments, all And by that continued is business great this as and deliver across outcomes. of And to and good. and than know, higher productivity

A couple That's beating of say, highlights at We've is level, on the hitting EMEA I'd sure are XX-plus regional good margin. that, got that make and APAC a percent to a America point. to America. looking ahead

they for us at have they've since rest. quarter grown So points, of They've right, kind you're about to highlight and the a grown baseline, the X,XXX they've margins, the consistently. grown basis EMEA set target also in over XXXX for XX.X%. now

the were point try margin and that cost improvement basis. and hold earlier me the of pushing fact made we continue that to productivity and the around year-on-year that margin try I gives level we reset EMEA, for base look we on will that that in So suggested on and pricing our I that fact that lot a confidence a

As far X,XXX period. again, APAC that's development points. that we've margin XX%, good basis fairly they're consistent of seen since where we XXXX of baseline today. kind up is been about that also concerned, as And are At over to

with we that margin every So points I to on of fully to our XX basis to work expect will XX work intent year. delivering that continue

Nicola Tang

All right. impressive. Thank you. Its

Operator

Deutsche with Bank. And our David from we'll take question Begleiter next

open. is line Your

David Begleiter

Sanjiv, a should number Can year remind year. year? quantified of that this been has key as next similar us earnings you growth that you, morning, what And good driver be number Thank it well? productivity this

Sanjiv Lamba

in is earnings calls know we the And you essentially, business, So base XX,XXX that about as previously I'll you at last productivity XXXX. something sits that projects manage the our tell in of well. that how of mentioned David, had I right year one we heart

this we of first have For X,XXX half projects. the an excess of year,

thing we us continue is fact good single isn't a deliver. is is move that projects productivity There through do that of there work no bullet. we pretty actually big the actually and a pipeline continuous results forward. X,XXX-plus aggregation feel deliver to There of about I So for the silver that projects these as that

look it on way productivity that actually think kind its The about leverages number on we of at cost is impact the off. base to the

So that to range then at stand, of we we line as between a tax, work measure into through. things to of cost that that and the what of a cost as kind X% stack we percentage flows and look X% bottom that's

David Begleiter

Very market you're about clean opportunity, of period is on over energy just the that thinking should good. there And a Linde longer time? share attain a

Sanjiv Lamba

us investment honest, be clean and that energy that think giving leverage allow about - opportunity the we terms we market meet high-quality don't selecting in of terms of asset portfolio give projects think us the in base to To the We share. the or criteria have advantage. that our competitive us and that network

make and to the and ensuring through billion move And opportunity And when across I'd that forward. as market about really, we're business like a think driven proper team then we really These go are is to it be $XX be. of in set. that decade U.S. $XX what right we that's that all The focusing around the the for around and brings process honest, Really feed opportunities to world that. the actually well, we a likely decisions them about went develop advantages over FID well. execute choosing down substantive be us. We our on engineering will in terms gave of the have will share We you thinking do billion how some of that. numbers and

David Begleiter

you. Thank

Operator

question with next Jones take our Tony Redburn. will We from

open. Société Générale. response, to move next shut line with And we line Jones Your is your our question will please your from is open, hearing Peter no Mr. mute And button. Clark

open. is line Your

Peter Clark

two you Hopefully, you. Yes. Thank can me. hear questions. got I've

discussion The still at first pricing, the it inflation feels thing, quarter. least the on to into one, third got like I've the but momentum listened you've the

sequential QX. price from than the about third wondering see into we'll just I'm So quarter

assuming I'm got you've something. So

And then I'm margin rightly [ph] EMEA on on-site discussion, obviously harder. the thinking was hit

So margin little helped the mix. bit presumably on that a

a how costs cylinders a one both in second more bit competitors on on-site on given the because And very the comp soft more Just second with is now comp. confidence and half in the obviously, of on-site Europe energy bit in a the the see EMEA lot lower year-on-year in about half you wondering confident your are customer.

So things? how you. you see those Thank

Sanjiv Lamba

deliver Linde. Peter, you on a for got provided I'll think believe refer an pricing. between on positive back out coming pricing X% you've that say us the pricing comment us X%. of QX we inflation for that to is globally earlier Linde's and established was long-term inflation X% and weighted In of history saw to proxy great globally go Matt We weighted

ahead slightly momentum we've player said I good inflation, with around that. we'll continue that. he built really are a and is progress of and That that inflation, we the that we're talk about, on to think, So

is pricing pricing what for just that rely to continues product about relying also than don't a grow term. we of where on really mention action. proactively mean pricing set - rather longer impact work indices, and to on sure all really on is management And through. I'll sustainable expanded. I We surcharges pricing that's make that pricing comes

forward. as our really, be the And that deep been would you see that from I for is some what different you've is us, margin to into running the EMEA margin really pricing that, getting enhanced without mix portfolio out very, say, impactful productivity will think EMEA. coming between driven really for. we will now of I not we've spectacular concerned, in the quality overall, the of margin margins businesses, around mix split of detail And fully EMEA looking organization. It's deliver as far some As how I'd expect impact that we're that move seen we and I in that say in will business of continue the

and another make as say benchmarking. and also of might that's for of business even point that using. I the think is about by me one an the this constantly And just obsessed things -- reminding before, were that we of kind you've to as out using often I'll very I folks margin, that remind the I'm heard just kind lay numbers because organization. we benchmark XXXX be baseline them just We

more to getting in the margins segments, than APAC within target well. margins we've lot mentioned than in more are get EMEA about, In internal driving of the the when The XX% improving that I the at of the you had behavior of internally that our got segments benchmark as just take drives XX reason ourselves are overall XXXX rest aggregate sure XX Europe set excess that by talked XX%. had make to XX%. for margin which Americas that countries But XX% countries that about kind or a numbers, and I X we that because than to Americas, and more is these we margins of to countries margin

Peter Clark

Do on you you. second bit the think be Thank the in EMEA? site in will half yourself a better

Sanjiv Lamba

in will difficult what It's what on-site comments on said do. do particularly in predict this the I It's predict to very to difficult will energy. very I do uptick an on-site my at moment, well. as opening see chemicals Europe metals. and

And what predict it to a do. energy chemicals in difficult to what So factors, happens I is energy will going be and and metals of also momentum, the but it's terms prices, weather. the do multiple but winter including believe of by to that that show driven continue will

Peter Clark

Okay. Thank you.

Operator

our take next Michael will Fargo. Wells Sison with We question from

is line open. Your

Michael Sison

of X%, growth of and our you're a drove guys. some growth pretty and Historically, EBIT volume morning, able generate your EPS to portion sort volumes profit adjusted are impressive growth. operating Good good yes, of -- down still

support So leverage Or if of that positive, volume do, growth? you does to sort volumes your some here? cost add whenever aren't get better have they do of from to

Sanjiv Lamba

The EPS way said before, at our how there that. drive really And you to right? look think we've or if that think are two growth this about three components about this we algorithm, is

right? to our set X% a between anywhere expect that for that, deliver EPS growth. of of X% that percent business base part Our drives base talk We business target that XX-plus about, to of growth we've the ourselves large EPS we

We grow would probably end, higher to now between Backlog, given to see. backlog backlog growth EPS growth. that forward, that with the at going X% or the X% top you X% provide that the between you backlog probably will range in backlog moment, going CapEx to at probably continues see that's X% expect to past, given of to the

remain share which little about And of then buybacks, an X%. largely from uplift we'll will consistent have bit a

a XX-plus The all base add up, percent. delivering in of algorithm gets X%. the There's the kind about base business. it You to mix of you that business to X%

you more. as productivity productivity you'll period manage pricing, well. do see very pick pricing volumes a but and through But up, see volume. volumes hard and down, When very, You'll little that to in, come some productivity see are see have we obviously, of we bit cost

X% the to be base growth about. mix it's thinking EPS you should X% to contribution of that So business, of kind that

Michael Sison

quarter? second know And to Are Understood. this. missed second volumes stay improve are to if I a similar half, I they the to your the then going apologize they -- for Are going And to mentioned better. on get will I new from in bit how volume going projects 'XX? then you it you basis? sequential, a I growth be year-over-year much think little was

Sanjiv Lamba

piece. and we happened. in $X that large up half. starting billion. second the all year, the this as this said up the about So before, of balance A That of through already are in ramping the That's projects for portion Singapore we course will year, happen was is

contributions So second some of backlog half. you'll the the course see through

Broadly you, I'm walk wall a on of you expect quick sense do don't across of I what say I'd a and to just the in expectations. give volumes, -- terms I seeing around why

ramping softer at were rare for mainly and So flat come Coast for largely production. QX, customers kind U.S. the in Americas, if have and gases. they're on look in you quarter outages up largely the Coast we some U.S. electronics Gulf back sales Gulf adjusted of The customer

I volume that. So expect sequentially positive result a as of

since flattish. recovery but probably overall COVID. think Much that we say expect you forget, sometimes I be has it's Remember, the I'd to important, of shown Americas sales, business steady to

above are levels pre-COVID. We at well

somewhat and So I'm we that of a out watermark, flatten high a is. are bit, that and little good we seeing where about at pretty feel

the package upside that Hard bit little As electronic goods is we saw for of QX in be go on grow. the would business are offset into a we softer saw far say by Expectations, bag. wire, sales cetera, saw as We say, saw We flattish a QX. Manufacturing concerned, -- consumables, being mid-single-digit I'd a we and U.S. side. then is little business sales down in bit equipment QX, a package were some mixed I'd as bit. growth. U.S. come the rare et gases

some I'd upside in, U.S. but from that, all Coast, say beyond the business, So Gulf HyCO probably flat volumes.

year-on-year as the you QX, China. I'd are, know, China, I as volumes demand see a lot chemicals, mean, a As in the of that momentum a continuing. grow, be getting lunar soft. detail softer [ph] story of China you, on because X%, a than were ASEAN, largely I second of of I rest growth be we've APAC it's to say up India, what Asia. seen. will but is sequentially, there's flat Asia, in far as QX little then based to will bit story really, particularly, a think I'm see the to expect growth flattish, without well. highlights on year to to I softer there half and I The of volumes rest electronics concerned, seeing, was still And be probably continues

for a the that end stimulation be seasonal that will the But example, for anything second week, in that The of and of flattish consumption. see in improvement of an half. see announced we we'll towards an XX visible with et you fact, then impact government on has believe volumes. that And see adjusted QX, a significant suggests as can't us economy really to for earlier left EMEA the are of cetera, any large consistent. economy size variations, I volumes, And EMEA. this I in I year. probably see the expect, intent will

Michael Sison

you. Thank

Operator

We Vincent Stanley. our will take with from next question Morgan Andrews

is open. line Your

Vincent Andrews

little this maybe the overthinking assumed your guidance you understand historically, better everyone. and could midpoint assumes but Matt, morning, had good and high you just economic me end economic Thank bit, help no growth I might a now no growth. be

So framework? of caused to sort you what change that

Matt White

Vince. Yes,

- end, back we as will into function play It bounced of little put sometimes going go end. We numbers bit high what just gets have to around a on and when if together have middle a that, also many of we that on left we sort far and you enough, see we well. quarters have and how trends sequential the the we sometimes

resulted. exact this so we're out much put say, is that. -- to your do we we and continue how So yes, guidance how beyond the just together. end, now, I improve And going numbers know, And underlying point, assumptions the the right further are range have that's the now, wouldn't base what to guidance do it. as the to I'd you That's look those are high try on to there. But right well

Vincent Andrews

help way a of quarter? you initiatives second prior third can of enough. of you just a about you're to the I equation. pricing that? How the much could price the Is and Is that much expecting the of is there achieve implementation in think quarter new lapping us think that Fair we the through there how maybe achieved is versus If Okay. way ask can on initiatives? what price of sort in

Matt White

It's local, They're have Sure, on They around you done are individual the the is all XXX Vince. individual This countries our incredibly remember, world, always to of is all right? Matt. around contracts. the in and There's world. pricing almost based initiatives.

actions, always in any adjustments, at there And occurring are times. at the price point all so in everywhere adjustments world time, inflation contractual

the that see. given so into And to going you're X it's carries quarters that, X to quarters, next always what component or that's have a and going

when because a clearly, structures. That's a and price So lapping on what but other see going on inflation the developed point, disinflation, items do developed are contract global to comps tougher. we're then seeing than of little the nations, lap normal, you simply high get in That's your some basis, yes, you periods natural. -- the of as that, continuous there the especially

to So say into I would year. absolutely carry next we expect

double-digit going now. there And inflation seeing remember, still on are have today. right are actions that We countries still many

so approach. And it's consider very a that have again, to local you because, well as

Vincent Andrews

helpful. Very Okay.

usual, As appreciate really it. I

Operator

question our will Patrick We next with take Citi. Cunningham from

line Your open. is

Patrick Cunningham

that of and to you,. for Thanks backlog future terms Good additional for the the announced my my market? for the question. to taking taking Asia, of are need standpoint? ASUs in morning. In there both addressable include you decaptivating opportunities with agnostic And for potential contracts Thank future in decaptivate June, in decarbonization ASUs you size in investments Thanks or you Wanhua question. Linde, would from can terms investment

Sanjiv Lamba

can didn't your -- quite well me and question, on first second me but question. that maybe I second then let decap So you Patrick, get answer repeat the let as

Let's start with Wanhua.

of we what decap a ASUs. was So announced

Now long-term a over the last gas that customers of with most comfortable decaps XX the supply ASU contract years, with. feel we've running probably we large done

that the large So to decap I say are we is market I'd a you there side. that work don't see think on to out expecting

don't for customer. where market our providing customers. necessarily makes way integration deeper in where density particular greater that's decap of mix to a together, into is want to and sense When us us. a there use It's a we financing a for as Remember, decap high-quality that comes

So we have are pursuing. that selective we opportunities

me around I should into that. backlog say a your that the expect a significant second But Remind pipeline of question have going you you opportunity again. We to levels consequence. wouldn't as of

Patrick Cunningham

but on additional is Thanks, you in for part there if density investment decarbonization. would just know are you opportunities? my that's that And the Wanhua And I it. question, mentioned – hard of future got look again. included decarbonization Yes, network know second Yes. investments I in agreement the there,

Sanjiv Lamba

skill side, set we we Where our operating incumbent and we customers. decarbonization, wheelhouse. with say, I'd On the are Patrick, incumbent the technology on where the with right think Yes. that's either in industrial that customers and we have portfolio

We capture work is partner can sync have that combination great and carbon to we technology utilize. or helpful. sequestration either chemical can with, We find a that really a

continue that. do So we to

reduction example, emission going where economic there on the case and That's are making an power. moving from using to grid about well renewable as easier to in better to to China as a turbine-driven steam that think we're moving actually cases most I sure scope as just some decarbonization it's cases. in equipment

execute as nice look win-win really I be we those projects. out So and turns want to a

Patrick Cunningham

you. Thank helpful. Very

Operator

take McCarthy We Partners. will from Vertical next our Research Kevin question with

Your is open. line

Kevin McCarthy

On morning. year you and speak how over the those to next provide good could speak Yes, XX, two. charts expect your just you wonder would or you composition that so backlog pies helpful pie to if slide to some evolve

in curious would how projects clean For traction? for and understandable seeing mix you're well? example, grow as that EMEA discussions to But you versus more the expect evolve has clean been materially quite as Asia there small, energy historically, anyway history of your that within you traditional is gain would energy what Pacific, projects expect to that reasons. And recent

Sanjiv Lamba

Thanks, Kevin.

itself So grow is understood. let address that's that the two will backlog, me make One, points. of continue kind pie to on it that my that, to expectation sure just

about bit talk Let's mix then. the a little

piece, we decarbonization numbers billion saying $XX the decade went billion globally. on that about over a $XX know, you the in and As out expect you gave U.S. some we guys and about

expect. ratio So that a that decarbonization Americas around U.S. be the and I I be that is to expect XX% APAC. I pie, or the EMEA of between to and expect balance

on EMEA. larger will part the share that as pretty Middle that. expect them that a more XX% balance We're feel do progressing as think I I good about Europe are in expect in and it of EMEA than of do its number of that that, were, I East fair working well. have I projects And

Americas years of away in projects extent, projects are scale X the X EMEA you as the and some scale. this years getting and that point. add see probably I that Asia are also smaller those number I'll I And on They that behind by a yet. slower. and effort see Americas and much EMEA terms Pac to suspect of And they at not decarbonization is the tell to I do of in

Kevin McCarthy

Okay. much. Thank you very

Operator

will We Laurence Alexander our Jefferies. take from with next question

Your open. line is

Laurence Alexander

gases. to How evolving of in ahead sort fees been is it up inflation the on rental regardless of Or moving the single-digit background compared U.S. of and question you in Europe rate just low environment? it have Is housekeeping a pricing moving inflation? for packaged a Just at inflation?

Sanjiv Lamba

very over the as and years. U.S. Laurence pricing few actions in been package have Europe the large, So both [ph] reasonably And rental you happened that know. are our last we've consistent businesses

of and ensure continue that. have around that than we a policy is very inflation, more we recovery So to I consistent think there

Laurence Alexander

you. Okay. Thank

Operator

our take will Bank of we And America. with Byrne next question from Steve

line Your open, is

Steve Byrne

Yes.

what that bulk? in business? and of gases continuing packaged U.S. would nexAir that you forth now would so any packaged your outlook on share an for economy? And goods hard how you you question. power the pricing your acquisition, versus on would the And give Post gases for business Just liquid estimate that U.S. trends compare indications

Sanjiv Lamba

Steve. Sure,

me both those let points So separately. address

Let's of investments a talk which lot as strong about acquisition is the lot good extremely nexAir been packaged well. got a footprint The growth U.S., us. for and Southeast gases. We've of incoming a seeing in has

stand. We and that share That's same So going on market specifically. comment where tell high to my share isn't we it tell the My numbers why I feel particularly disclose pretty be market I guys, I'm you good don't thing. would enough. the about

strong have the But years, power footprint that that given over the reflecting over of the business is last the that many many We've demonstrating and pricing into margin pricing years. have, strength actually power. demonstrated consistently we improvement last we

So I feel pretty good about where stand we over there.

bit little a talk goods. Let's about hard

growth. that mixed I is you softening mentioned seeing that bit I right little time today, I was a call I say was of leading mentioned seeing to earnings good you're a is can spoke, last we indicator. in bit, a bit hare this good in out, So pointing bag. last The I a a on we are little was of the seeing and

manufacturing you declines. And far seeing some are have. concerned, and amount on order are as are activity at Why sales is sales, you some of equipment that look positive slightly seeing books is we terms the as of something that consumables that could in growth in whereas

where is season manufacturers remember, take the also breaks. But this many do of a

of that, market. prior we see a to would in the So softening sometimes bit little

what not hold I'm to the see pass I'll going So beyond September. and just yet. judgment happens

Steve Byrne

energy. got roughly And you to blue blue hydrogen question opportunity you energy and a on the you? the Thank Obviously, sizes for Can clean you with - respect of for just sales. you. these buckets a production estimate

have for energy big you green hydrogen. got You oxyfuel But opportunities consumers. also

each size mean a to projects. decarbonization based have other? relative You those How you would

Sanjiv Lamba

So us buckets we traditionally Steve, think that the best that the describe for about opportunity to way to talk three about. is

as capture, or role a plays you not. you first, an tell through example, walk can and carbon I Let where me them

energy that we We track So industrial track or energy carrier, three normally the applications, we mobility. and vector. track buckets

of we but alongside as blue far XX% dominated opportunity have green refilling around that concerned, typically, large tends that pipeline. mobility the that. it's industrial all few As size, projects, in less see hydrogen smaller to blue be Multiple with typically side set package of stations is This is XX% about today on opportunity well, by a more or applications. in our entire is as them cases, carbon projects, green of their we operations with our right many sits sequestration by that the that of customers wheelhouse opportunities. That's in by our and currently providing that the capture industrial in middle hydrogen the XX% opportunity helping some where incumbent -- heart that right we're utilization in heart and/or of -- or providing position the decarbonize and of we see.

that transforming into methanol as ammonia clean cases, and source cases, that And require XX% cases, methanol then products. generating in some those some last ammonia long that to the or an have using then moving access around and hydrogen or and it markets to is energy it ensure really liquefying hydrogen other in and in methanol ammonia distance

of play role a I the see opportunity on sequestration. where opportunity industrial capture as those of broader the that of well out, most in carbon see I how mentioned. subset applications And that's side, as the kind That's energy is a plays both we and for

Steve Byrne

you. Thank

Operator

will And John from McNulty with Markets. Capital now we question our take final BMO

line Your open. is

John McNulty

just are whether make Europe do from it's you Asian the use? energy one I seeing would Sanjiv, the your to the you, you these a demand or see that? question help to or in characterize economics that were for have that. Are think as my I projects some what that And you earlier mentioned taking they East. it's clean subsidies question. if you a sense for answers, how us these? facilitate in guess follow-up opportunities of about had hydrogen Thanks guess Or for can latter, to place, domestic for or clean you Middle export? like would

Sanjiv Lamba

Sure.

John. which So seeing we couple into both of a those opportunities play buckets, are

and It large get seeing the we we capture. we're is at feed that jointly in scope very should where at are working carbon undergoing to Schlumberger opportunity So carbon capture a FID on Aramco the moment. with looking a sequestration of are New Year, early

the capture of phases, year In million first working where in annum a of currently project, being total COX the adding and which XX largest up phase a on are tonnes carbon is fact, per be we sequested. sequestration may of world's COX project out XX to million X tonnes

the -- that's domestic effort really driven of the that's Kingdom So Saudi a that pursuing. domestic Arabia around is decarbonization

and Kingdom We're elsewhere in East development of also the Middle blue the seeing ammonia. the projects around in

Now of coming the very out coming Kingdom the economics broadly more Middle of East the blue or very, of ammonia - out is competitive.

there direct government are although are available, there So provide. will incentives broad no the that incentives specific or project-based

to the probably out particular of third, markets. used split export, of local of serve to blue But that for a comes other one that third third Kingdom East globally. Middle the markets. then in ammonia that about the some and for comes I'd parts And of product product thirds competitive is two is say local very a two out

John McNulty

color. much Got for Thanks very the it.

Operator

additional to Juan remarks. And closing I any or the turn call for to now Pelaez would like back

Juan Pelaez

Thank today's for again participating call. you in

any Take have If to free safe Have care. you reach further day. questions, out. feel a please

Operator

And thank gentlemen, and participation, you may today's and call. your We that ladies now disconnect. conference you for will conclude

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