On Thursday, Linde (NASDAQ: LIN), the world’s biggest industrial gases firm, reported second-quarter earnings slightly ahead of expectations, helped by cost cuts and price hikes, but struck a cautious tone about prospects amid flagging industrial activity.
Following the strong quarter, the U.S.-German group expected annual adjusted earnings per share of $15.40-$15.60, a little more optimistic than previous guidance of $15.30-$15.60.
But Chief Financial Officer Matt White told a conference call the group did not expect any further improvement.
“To some extent, in many countries in the world, we’ve been in an industrial recession,” he said of the last 18 months.
Linde (NASDAQ: LIN) is seen as a bellwether for industrial production as it supplies gases for a range of customers in sectors including chemicals, manufacturing, steel-making, and food and beverage.
This diversity can help the company cope with weakness in some end markets, as others can compensate. It has regularly beaten earnings estimates or raised guidance in recent years.
Quarterly sales in the Americas, Linde’s biggest region by revenue, rose 3%. However, they fell by the same percentage in Europe, the Middle East, and Africa (EMEA), its second-largest region by the same measure.
However, manufacturing activity in the United States has recently deteriorated.
“We are now seeing industrial activity being more sluggish. It is reflecting the softer demand growth that is there in the marketplace,” CEO Sanjiv Lamba said of the U.S. market.
A gauge of U.S. manufacturing in July dropped to an eight-month low amid a slump in new orders.
Linde’s quarterly adjusted earnings rose 8% to $3.85 per share, just ahead of analysts’ mean estimate of $3.78 in an LSEG poll.
(Source: ReutersReuters)
