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Linde earnings drop on one-time impacts

July 31/2020

MOSCOW (MRC) -- Linde reported second-quarter 2020 income from continuing operations of USD458 million, down 11% year-on-year (YOY), said the company.

Excluding purchase accounting impacts and one-time charges, income from continuing operations was USD1.0 billion, up 1% YOY as stronger price and cost savings offset volume declines. Adjusted earnings per share were USD1.90, up 4% YOY.

Second-quarter sales were USD6.4 billion, down 5% YOY excluding negative currency translation, cost pass-through and divestitures. Price improved 2% YOY. Volume decreased 7% as growth from project start-ups and engineering was more than offset by the global macroeconomic slowdown as a result of the COVID-19 pandemic.

"Looking ahead, the full effects of COVID-19 and the rate of recovery are uncertain, said Linde CEO Steve Angel. However, the growth opportunities for Linde remain strong from our high-quality project backlog, defensive end markets and leading infrastructure and technology in support of the secular trend in clean energy. Linde said it saw second-quarter YOY volume gains in electronics and healthcare, which awas offset by declines in food and beverage; manufacturing; chemicals and refining; and metals.

Linde expects full-year 2020 adjusted earnings of USD7.60-$7.80/share, up 7%-9% YOY excluding current impacts. It expects third-quarter adjusted earnings of USD1.90-USD1.95/share, up 1%-4% excluding currency impacts. The low-end of the range assumes no economic improvement from the second quarter and the high end of range assumes gradual economic improvement in the second half, Linde says.

Americas sales of USD2.4 billion were down 13% YOY as 2% higher pricing was more than offset by a 9% volume decline led mainly by manufacturing and metals end markets. Americas operating profit of USD662 million, down 4% YOY.

Asia Pacific (APAC) sales of USD1.3 billion were down 13% YOY. Price increased 1% versus prior year but was more than offset by negative 9% volumes driven by lower demand in the manufacturing end market and a prior-year sale of equipment. Operating profit of USD294 million was down 3% YOY.

Europe, Middle East & Africa (EMEA) sales of USD1.5 billion was down 13% YOY as 1% higher pricing was more than offset by negative 7% volumes primarily due to lower demand in the manufacturing and metals end market. Operating profit of USD303 million was down 9% YOY.

Linde Engineering sales were USD810 million, up 8% YOY. Operating profit was USD138 million, up 39% YOY due primarily to strong project execution and productivity initiatives.

As MRC informed before, in February 2020, Linde PLC received a contract to provide technology for PJSC Sibur Holdings cracker at Amur gas chemical complex (GCC). GCC is an integrated 1.5 million tons per year polyethylene and polypropylene production complex to be built near Svobodny in Russias far-east Amur region. The contract was awarded to Linde under a consortium with Sibur subsidiary and project contractor NIPIgazpererabotka (Nipigaz). As per the agreement, Linde will deliver engineering, procurement, and site services based on its proprietary technology for the GCCs cracker.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's DataScope report, PE imports to Russia dropped in January-June 2020 by 7% year on year to 328,000 tonnes. High density polyethylene (HDPE) accounted for the main decrease in imports. At the same time, PP imports into Russia rose in the first six months of 2020 by 21% year on year to 105,300 tonnes. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.
Author:Anna Larionova
Tags:PE, gas processing, Linde Group.
Category:General News
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