Linde Plc Q4 FY2025 earnings call

• People and communities: Delivered best-in-class safety performance, female representation reached nearly 30%, completed almost 900 community projects.
• Environmental stewardship: Increased active low-carbon power sourcing by 23%, enabling 50% of annual power consumption to be low carbon, reducing absolute CO2 emissions by nearly 2 million metric tons, and two-thirds of backlog supports clean energy projects, with over 90 new gas application wins.
• Financial performance: Achieved annual record levels for EPS, operating cash flow, and operating margins, with a 24.2% return on capital and returned over $7 billion to shareholders.
• Future growth: Project backlog stands at a record $10 billion, including over $500 million for rocket propellants to space launch customers, and remains the anchor supplier for large clean energy and advanced electronics fabs, with a robust M&A pipeline. Initiated additional restructuring actions in the fourth quarter for 2026.

Sales for the fourth quarter were $8.8 billion, up 6% year-over-year and 2% sequentially. Excluding foreign currency translation, underlying sales increased 3%, with 2% from pricing and 1% from volumes. Operating profit was $2.6 billion, up 4% from the prior year, resulting in a 29.5% margin. Full-year operating margin was up 30 basis points. Operating cash flow exceeded $3 billion in the fourth quarter. About $6 billion was invested for growth, and $7.4 billion was returned to owners through dividends or share repurchases.

Full-year EPS is projected in the range of $17.40 to $17.90, or 6% to 9% above 2025, assuming a 1% FX tailwind and 0% base volume change at the midpoint. First quarter FX tailwind is set to 3% due to the strong US dollar baseline in 2025 but aligns with the full-year 1% assumption for the second half.

• Economic environment uncertainty, with some regions showing slow recovery.
• Continued weakness in the European market.
• Impact of helium and China deflationary conditions on pricing.
• Supply chain and market volatility risks.

Q: On Europe, are there signs of progress and pricing expectations for 2026?

A: EMEA has broad-based weakness, but North Europe has growth. Pricing in EMEA is expected to be in line with globally weighted CPI.

Q: Thoughts on global end markets and geographies growth?

A: Slightly more positive on industrial activity for 2026 but cautious, with The Americas resilient, China showing green shoots, India having growth catalysts, and APAC mostly stable.

Q: Trajectory of gas backlog?

A: Expect to head back to the $7 billion mark, with projects coming off and new wins expected.

Q: Restructuring cost and savings ratio?

A: Restructuring paybacks are on average about two years, and 2026 margin will exceed the long-term range.

Q: Space opportunity and CapEx?

A: Space is a secular growth opportunity, with over half a billion dollars invested, and Florida and Texas as major investment hubs, contributing to guidance.