Linde expects higher profits thanks to popular industrial gases and savings


    The industrial gases group Linde, which has been merged from the old Linde AG and the US competitor Praxair, looks to the future with more optimism from quarter to quarter, despite the economic slowdown.</p><div>
    <p>The Dax-listed annual profit target for the third year in succession has already increased. The stock also climbs record after record. What&#39;s next for Linde - the key points for the company, what the experts say and how it works for the stock:</p><h2>This is going on at Linde</h2><p>After years of effort, the Munich lime tree closed<span class="chartIcon"> </span> with Praxair to the world&#39;s largest gas company together and overtook the French competitor Air Liquide<span class="chartIcon"> </span>, which had meanwhile advanced to first place with the acquisition of Airgas in 2016, overtake again. However, both corporations had to separate due to cartel restrictions of billions of parts of the business. The new Linde employs 80,000 people worldwide, including around 7,000 in Germany.

The new company is still called Linde, but former Praxair boss Steve Angel, who continues to work from Danbury in the US state of Connecticut, leads the gas corporation in the American style. The new Linde typically pays a dividend to its shareholders every quarter and accounts in US dollars. In addition, a second share buyback has been in progress since May. The group plans to acquire shares worth up to $ 6 billion over the next two years.

The boss of the new Linde receives support from longtime Linde CEO and later Linde's Supervisory Board Chairman Wolfgang Reitzle, who is now Chairman of the Board of the new world market leader. He had knocked the merger against the fierce resistance of the employees on the Linde supervisory board. Now there is again criticism from the unions. For the company wants to clear significantly more jobs than previously known and leave its Munich headquarters, according to the employee representatives.

The Dax Group plans to cut 850 more jobs in Germany had criticized the trade unions IG Metall and IG BCE at the end of August. In addition, the remaining 215 employees in the old Linde headquarters in Munich are to relocate to the suburb of Pullach. Linde confirmed the planned move at the turn of the year, while the company did not comment on the job cuts.

In the meantime, it is operationally operational for the new group. The merger is bearing fruit. For example, after gains in the third quarter, Linde did not raise the bar for its annual profit until mid-November. Earnings per share (EPS) adjusted for special effects are expected to increase by 17 to 18 percent in 2019 compared to $ 6.19 in 2018. Synergies from the merger of Linde and Praxair are expected to contribute to the increase in profits – not just in 2019. Thus, in the years 2019 to 2022 costs in the amount of about 1.1 billion US dollars are to be saved.

That's what the analysts say

Of the 14 experts listed on dpa-AFX, eight recommend the shares for sale. Three analysts are in favor of holding the papers. With as many experts, the advice is to sell the stock.

According to analyst Knud Hinkel of the analyst firm Pareto Securities, the third quarter of the gas manufacturer was excellent thanks to the US business and plant engineering. The growth is in line with that of the competition, which shows a continued good development of the industry.

Analyst Laurence Alexander of the analysis house Jefferies highlighted the again increased profit target. The cost savings would more than offset the effects of an unfavorable economic environment and negative currency effects. Should sales stabilize, the fourth quarter will exceed expectations. According to Alexander, in 2020, details on how to optimize the portfolio should become the focus of attention.

According to analyst Tim Jones of the Deutsche Bank, the merging of the businesses of the formerly single companies is going well. As expected, Linde has not raised the target for the cost synergies amounting to 900 million US dollars, but is likely to develop above plan here.

According to analyst Peter Spengler of DZ Bank, the global economic environment remains difficult due to the trade dispute between the US and China, the energy transition, the weak auto sector and Brexit. Spengler expects the planned share buybacks and cost synergies rising operating margins and double-digit earnings growth until 2021. Earnings per share should come in 2019 at the upper end of the again raised range.

That's what the stock does

The merger of Praxair and Linde has been expected for the investors so far. Since the end of October 2018, the stock of the merged company Linde Plc traded on the DAX and since then has gained almost 30 percent in value – the paper in the Dax-top field in the period. On Tuesday (19 November), the paper had again reached a record high of 191.30 euros.

So far, Linde Plc's paper has been seamlessly linked to the profits of the shares in Linde AG. These had increased by almost 40 percent since the summer of 2016, when the two companies first talked about a merger.

Linde plc is listed on the stock exchange in New York and Frankfurt. In the Dax, the group with a market capitalization of around 100 billion euros currently the number two after the software group SAP (150 billion euros) and ahead of Siemens (97 billion) and Allianz (91 billion euros). Competitor Air Liquide brings it to 57 billion euros.

Mid-August 2016 – so before the first reports of a merger with Praxair Linde just came to just over 25 billion euros and was still in the lower Dax half.

Also interesting: Guest contribution by Marc Friedrich and Matthias Weik – savers beware! Germans threaten negative interest rates of minus 4 percent and more

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