Fiscal 2005: Linde improves in all its divisions and presents a positive outlook

Fiscal 2005: Linde improves in all its divisions and presents a positive outlook: Operating profit up 18 percent to 913 million euro - Sales up 7.3 percent to 9.501 billion euro - Net financial debt further reduced by around 500 million euro - Proposed increase in dividend from 1.25 euro to 1.40 euro per share - Outlook for 2006: Further improvement in sales and earnings expected
The technology group Linde has continued successfully on its earnings-based growth course in fiscal 2005 and presented a positive outlook for the current fiscal year.

"We became significantly stronger in fiscal 2005", said Professor Dr. Wolfgang Reitzle, President of the Executive Board of Linde AG on the publication of the financial statements. "We have achieved our objectives in full and are very confident about the tasks which lie before us. We expect Group sales and earnings in the current fiscal year 2006 to once again exceed the prior year figures."

Against the background of a generally positive economic environment, Linde achieved in fiscal 2005 a 7.3 percent increase in Group sales on a comparable basis* to 9.501 billion euro (2004: 8.856 billion euro) and a 23.4 percent increase in incoming orders to 11.008 billion euro (2004: 8.917 billion euro). Operating profit (EBITA) improved by 18.0 percent to 913 million euro (2004: 774 million euro) and earnings before taxes on income (EBT) climbed from 622 million euro to 789 million euro, while net income after minority interests was 501 million euro (2004: 380 million euro). As a result, earnings per share rose to 4.19 euro (2004: 3.19 euro).

Cash flow from operating activities at 1.435 billion euro was 14.3 percent above the prior year figure of 1.255 billion euro. Free cash flow improved by 16.8 percent to 612 million euro (2004: 524 million euro). Return on capital employed (ROCE), the most important indicator of Linde’s value-based management, was 12.5 percent in 2005, significantly exceeding the target figure of 10 percent.

The Group has also continued to improve its balance sheet structure, reducing its net financial debt by 463 million euro to around 1.5 billion euro. This means that in the past four years, Linde has succeeded in lowering its net financial liabilities by around 2 billion euro. In accordance with the earnings-oriented dividend policy of the Group, the Executive Board and Supervisory Board recommend the proposal of a resolution at the Shareholders’ Meeting on May 4, 2006 to increase the dividend from 1.25 euro to 1.40 euro per share. All the divisions contributed to the good business performance of the Group in 2005.

Linde Gas
Linde Gas achieved sales of 4.438 billion euro, exceeding the prior year figure by 10.9 percent. The division reported increases in all its product segments, with the strongest growth being shown in the on-site segment, with a 23 percent rise in sales to 1.010 billion euro. There were also significant increases in the Healthcare segment, our medical gases business. Sales here reached 711 million euro, which represented a growth rate of 12.1 percent. On the income side, our gases business also improved considerably. EBITA in this segment rose by 12.8 percent to 721 million euro, while the ROCE performance indicator (return on capital employed) climbed from 10.9 percent to 11.8 percent. Contributing to this increase in earning power was the GAP (Growth and Performance) optimization program, which was launched successfully in fiscal 2005. GAP comprises measures which focus on the continuing expansion of our activities in the growth markets of Asia and Eastern Europe and the development of new gases applications.

Linde Gas - Outlook
Linde expects positive market trends to continue in the current year in the gases business across the world. The greatest impetus should continue to come from Asia, while it is anticipated that there will be moderate rates of growth in Europe and the United States. Given this industry background, the Linde Gas division continues to assume that it will achieve an increase in sales and earnings in fiscal 2006. The onsite and Healthcare segments are expected to have the greatest impact on these figures.

Linde Engineering
In fiscal 2005, the dynamic trends in Linde Engineering continued, especially in terms of operating profit and incoming orders. While sales increased by 2.7 percent to 1.623 billion euro (2004: 1.581 billion euro), EBITA improved by 30.9 percent to 89 million euro (2004: 68 million euro). Bolstered by high demand in all the main product segments, natural gas, ethylene, hydrogen and air separation plants, incoming orders reached a new record level of 2.913 billion euro (2004: 1.525 billion euro). Orders on hand in Linde Engineering also showed a high rate of growth, increasing by 65 percent to 3.305 billion euro (2004: 2.003 billion euro).

Linde Engineering - Outlook
Linde anticipates that the positive trends in the international plant construction business will continue. The Middle East remains an important market for ethylene plants and rising demand for synthesis gas plants is expected in the United States and Russia, while the market for air separation plants in South America and Asia will continue to prosper. Moreover, the liquefaction of natural gas as an alternative to conventional distribution by pipeline is gaining in importance across the world. Against this background, Linde remains optimistic about the Engineering division and anticipates a continuing improvement in sales and earnings in the current year.

Material Handling
In 2005, there was a further rise in global demand for industrial trucks. Nevertheless, the rate of growth in the three major world markets, Europe, Asia and North America, slowed down in comparison with 2004. Within this environment, Linde continued its upward trend and increased sales by 7.6 percent to 3.628 billion euro (2004: 3.372 billion euro). Operating profit improved by 14.9 percent to 223 million euro (2004: 194 million euro), while return on capital employed rose from 12.3 percent to 13.1 percent.

The GO optimization program launched by Linde in 2005 contributed significantly to this positive development. GO stands for Growth and Operational Excellence and comprises a number of activities which aim not only at achieving ongoing improvements in cost structures, but also at opening up new growth areas. An example of this was the successful launch by Linde in the early summer of 2005 of OM Pimespo as a second brand in the fast-growing Chinese market.

Material Handling - Outlook
The market for industrial trucks will not change substantially in the current fiscal year. In the United States, growth rates may be a little slower than in the previous year, but will still be higher than in Western Europe. In Eastern Europe and China, on the other hand, the assumption is that there will be an above-average rise in demand. Against this background, Linde is again expecting an increase in sales in the Material Handling business segment in 2006 and, as a result of the GO program, a further improvement in operating profit.

* Prior year figures restated to take account of changes in accounting standards and adjusted for the disposal of Refrigeration and the fact that goodwill is no longer amortized.