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For the current year, the DAX group is increasingly optimistic thanks to high demand from the health and electronics industry as well as cyclical sectors and has recently raised the bar for annual profit. This is also reflected in the share price. The most important points for the group, what experts say and how things are going for the stock.
THAT’S ON WITH LINDE:
Linde has been the world’s largest supplier of industrial gases since the merger with US competitor Praxair in 2018. The competitor of the French Air Liquide supplies the automotive, oil, chemical and metal industries as well as food manufacturers and hospitals. Linde generates the lion’s share of sales and profits in the Americas region, around 25 percent of sales come from Europe and almost 20 percent from Asia.
Linde has come through the Corona crisis well so far. In the first quarter, the group made more profits and increased the earnings target for the full year 2021. The company benefits above all from high demand from the health and electronics industry as well as cyclical sectors. Thanks to the resilience of the business model and the economic recovery, Linde has once again achieved excellent results, said CEO Steve Angel when presenting the figures for the first quarter. Looking ahead, the manager is confident that the company will continue to create significant value for its shareholders in the years to come.
For 2021, Linde is targeting earnings per share adjusted for one-off effects of between USD 9.60 and 9.80. That was a year-on-year increase of 17 to 19 percent, it said. For the second quarter, the management calculates at 2.50 to 2.55 US dollars. Exchange rate effects should have a rather positive effect.
Former Praxair boss Angel leads Linde the US style: The company pays a dividend every quarter and reports in dollars. In addition, the group started a new share buyback program at the beginning of the year. The group wants to acquire papers for up to five billion dollars by mid-2023. Angel is also one of the DAX bosses with the highest salary.
Since the merger, Angel has been trimming the group for profitability. Linde also benefited from this in 2020. In the gases business alone, the number of jobs in Germany has fallen from almost 3900 to almost 2700 since August 2018 through volunteer programs and vacant positions, according to employees. Now another 500 jobs in Germany are to be cut by the end of 2022. The “Wirtschaftswoche” had previously reported on it. At the end of March 2021, Linde plc had around 72,000 employees worldwide, 9 percent fewer than in the same period of the previous year.
Meanwhile, the Linde boss wants to significantly expand the hydrogen business in the future. According to Angel, the group already generates more than two billion dollars in sales with the production, sale, storage and use of hydrogen. “And given the expected investment project of more than $ 100 billion, I think our hydrogen business could quadruple in the future,” he said a few months ago. Hydrogen will be the first to prevail, especially in large means of transport such as trucks, trains, ferries and buses.
Linde is already preparing for a time without Angel as a boss. If everything goes well, board member Sanjiv Lamba could take over the chair in about a year, wrote the “Handelsblatt” a few months ago, citing people familiar with the matter. Lamba, who was on the Linde Board of Management before the merger with Praxair, has been in charge of operations since January. If he becomes Linde boss, Angel should become chairman of the board of directors.
WHAT THE ANALYSTS SAY:
Most industry experts are positive about Linde shares. Of the experts recorded by dpa-AFX since May 13, 11 recommend the share as a buy. 2 analysts are in favor of holding the papers. No expert recommends selling.
In the first quarter, Linde posted the strongest year-on-year earnings growth since the integration began, wrote analyst Peter Clark from Societe Generale. At the same time, the company has raised the forecast more clearly than expected. Linde plc brings together the best of Praxair and Linde AG. In addition, COVID-19 helped Linde accelerate its high-performance culture. He sees a lot more potential and no structural reason why the EBIT margins and returns in Europe (EMEA) and Asia-Pacific (APAC) should not be able to keep up with those in America.
Analyst Markus Mayer from Baader Bank expects a strong second quarter for the gas manufacturer. Earnings per share should come out slightly above the consensus estimate and the upside potential should be even greater in the second half of the year. The annual targets could possibly be raised again. Analyst Andreas Heine from the investment house Stifel also sees scope for a better outlook due to the business trend in the second quarter. He expects the share to continue its solid development, but with less momentum than in the first half of the year.
2021 should be a strong year for the chemical industry despite the rise in raw material prices, wrote analyst Andrew Stott from the major Swiss bank UBS in an industry study. Investors had already anticipated this, which was also shown by the poor price reactions to key data from BASF, Covestro and Wacker. Manufacturers of industrial gases such as Linde would have what it takes to further outperform broad economic growth.
THE SHARE LAST LAST:
In the wake of the Corona crash, Linde shares had to give up a lot by mid-March in 2020. Within a few weeks, their price dropped by a good 37 percent to around 130 euros. But the break-in is long gone. After industrial companies in particular recovered more quickly than expected from the consequences of the pandemic, Linde shares rose sharply again with small setbacks and recently climbed from one record high to the next.
Most recently, the share cost around 252 euros, almost twice as much as the Corona low in 2020. The shares of Linde Plc have increased by a little more than 70 percent since the merger was completed at the end of October 2018. So far, their development has seamlessly tied in with the profits from the shares in Linde AG. These had risen by almost 40 percent since the summer of 2016, when the two companies first discussed a merger.
With a current market value of a good 130 billion euros, Linde is number two in the DAX after the software group SAP (148 billion euros), ahead of the car group Volkswagen (125 billion euros), Siemens (113 billion euros) and Allianz (87 billion euros). The French competitor Air Liquide currently only has a market value of just under 71 billion euros.
In mid-August 2016 – before the first reports about a merger with Praxair – Linde had a market value of just over 25 billion euros and was thus still in the lower half of the leading German index.
/ mne / zb / he
DANBURY / PULLACH (dpa-AFX)
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Image sources: Linde