By Andrey Sychev and Bartosz Dabrowski
(Reuters) -Linde, the world’s largest industrial gases company, on Thursday raised its full-year earnings guidance after reporting second-quarter profit above market expectations, as higher pricing offset weaker volumes.
Linde, which supplies gases such as oxygen, nitrogen and hydrogen to factories and hospitals, now expects its adjusted earnings per share to rise by 12% to 14%, up from the previously guided 9-13% growth.
The increase came even as revenues fell. The U.S.-German company said industrial contracts in Europe and the U.S., its biggest regions by sales, decreased due to higher energy prices and outages on the U.S. Gulf Coast.
But the company said it offset this via price increases and a resilient performance in its healthcare and food & beverage branch.
“We are managing inflation by contractually passing through energy costs,” Chief executive Sanjiv Lamba said during a conference call.
Linde’s order backlog also remains strong, standing at $7.8 billion at the end of the second quarter, helped by growing green energy investments.
The company has consistently beat analysts’ quarterly expectations in recent years, benefiting from pandemic-driven demand for consumer electronics and growing hydrogen investments aided by global initiatives to cut back on emissions, such as the U.S. Inflation Reduction Act.
Adjusted earnings per share rose to $3.57, beating the $3.48 per share expected by analysts. However, the group’s total sales were down 3% at $8.2 billion in the second quarter, below the Refinitiv Eikon forecast of $8.6 billion.
Analysts said Linde was starting to feel the impacts of a tough economy. Industrial gases firms feel the ramifications of economic downturns with a delay because complex gas production implies longer delivery terms.
“Late cyclicality of the industrial gas business has started to be felt and should accelerate over the coming quarters,” Markus Mayer, an analyst at Baader Helvea bank, wrote in a note, adding this confirmed the bank’s cautious view on the stock.
Linde’s shares opened negative and were largely muted by 14:40 GMT despite the earnings beat.
(Reporting by Andrey Sychev and Bartosz Dabrowski in Gdansk; Editing by Milla Nissi and Emma Rumney)
