Peter Clark

Peter Clark of AllianceBernstein inquired about the potential benefits from recent competitor capacity shutdowns in the European soda ash market and asked if HPPO license income is included in the H2 guidance.

Answer

CEO Philippe Kehren stated that the European shutdowns demonstrate a necessary market restructuring and that he expects a similar, albeit slower, process to occur in China. He also confirmed that potential licensing income is one of the 'business opportunities' the company is actively working on for H2 and is factored into the outlook.

Peter Clark of Bernstein inquired about the market impact of recent competitor capacity shutdowns in European soda ash and whether potential HPPO license income is included in the H2 guidance.

Answer

CEO Philippe Kehren commented that the shutdowns reflect a normal market restructuring and that he expects a similar, albeit slower, process to occur in China. He also confirmed that licensing income, such as from HPPO, is a component of the business opportunities being pursued for the second half of the year.

Peter Clark asked about the status of the Green River soda ash expansion and its impact on CapEx, and also inquired about the margin drag from the mix shift in soda ash due to softness in the higher-margin European container glass market.

Answer

CEO Philippe Kehren confirmed the Green River project is nearing completion and its costs are included in the full-year CapEx guidance of EUR 300-350 million. He described the margin impact from the soft container glass market as 'moderate,' noting it was largely offset by strength in other segments like lithium carbonate and solar panels.

Peter Clark of Bernstein asked about the drivers of the peroxide recovery in Europe, particularly the role of the HPPO plant, the margin impact of seaborne Soda Ash volumes, and the outlook for the Coatis business.

Answer

CEO Philippe Kehren attributed the peroxide recovery to restocking effects and strength in both the HPPO and merchant segments. He clarified that while helpful, the seaborne Soda Ash market was not booming and only helped offset softness elsewhere. He also expressed optimism for the Coatis business, noting it is recovering from a trough in Q4.

Peter Clark of Bernstein inquired about the electronics project pipeline, referencing prior comments about new signatures, and asked if the high EMEA margin was driven by any exceptional factors.

Answer

Sanjiv Lamba, CEO, confirmed the recent project win in Korea is the first of several expected electronics announcements and that the overall project backlog remains robust. He clarified that the strong EMEA margin is not due to exceptional items but is a result of fundamental execution of the business model, which has driven margin expansion from 19% in 2019 to over 35% today.

Peter Clark from Bernstein asked if the significant 4% currency headwind in the 2025 guidance was disproportionately driven by highly profitable markets like Mexico and Brazil, and also questioned the tariff risk in those regions.

Answer

CFO Matt White confirmed that currencies in Brazil and Mexico were major factors, along with a broader strengthening of the U.S. dollar in Q4. Regarding tariffs, he stated the impact is indirect, affecting customer production levels. He noted Linde's network density positions it well to capture any production shifts, and the guidance already prudently assumes zero industrial production growth.

Peter Clark asked about the progress towards the $8-10 billion clean energy investment target, highlighting the new Dow project and seeking an update on other potential large-scale projects.

Answer

CEO Sanjiv Lamba expressed high confidence in achieving the $8-10 billion target, noting they are about halfway there with the OCI and Dow Phase 1 projects. He observed a 'reality check' in the broader hydrogen market, with cancellations of speculative green hydrogen projects. He emphasized that Linde's focus remains on economically viable, low-carbon (blue) hydrogen projects where the technology is mature and cost-competitive.

Peter Clark of Société Générale asked about the Americas margin outlook for the second half, given the Industrial Merchant business mix was shifting towards hardgoods, and also inquired about the situation in Mexico.

Answer

Mike Graff, Executive VP, expressed confidence in the Americas outlook, stating that hardgoods growth is a positive leading indicator for future activity. He highlighted strong forward-looking trends in manufacturing, metal fabrication, and construction, supported by major investments in EVs, semiconductors, and LNG, which should sustain momentum. The specific question on Mexico was not addressed in the response.

Peter Clark asked about the U.S. Industrial Merchant business, noting its growth seemed light compared to a competitor and questioning if this was due to business mix. He also sought clarification on the Normandy Cryocap project, asking if the 90% carbon capture rate applied to the process stream or the fuel stream.

Answer

Executive VP Michael J. Graff attributed the perceived lighter growth to customer-side constraints like supply chain and labor issues, as well as an internal production shift to medical oxygen. Executive VP Francois Jackow clarified that the Cryocap technology is designed to capture over 90% of the plant's *total* CO2 emissions, encompassing more than 630,000 tons annually, not just a single stream.

Peter Clark of Societe Generale pushed for more confidence on the full-year margin outlook given positive efficiency and pricing commentary. He also sought clarity on the U.S. Industrial Merchant (IM) performance, questioning the modest 1% storm impact and the outlook for Q2 versus 2019 levels.

Answer

CFO & Executive VP Fabienne Lecorvaisier reiterated strong confidence in 2021 margin improvement, especially in H1, but offered no new guidance. She explained the IM storm impact was limited due to its geographic diversity compared to the concentrated Large Industries business. Michael J. Graff, Executive VP, clarified that while bulk volumes have recovered, packaged gas and hardgoods (still down ~12%) are lagging due to weakness in non-residential construction.

Peter Clark questioned the certainty of the YCI methanol project starting in 2021 after previous delays. He also asked for details on which business areas were experiencing project postponements.

Answer

Executive VP Michael J. Graff confirmed that Air Liquide's facilities for the YCI project are ready, but the customer's own COVID-related delays have pushed the start-up into 2021. CFO & Executive VP Fabienne Lecorvaisier added that most project postponements are within the Large Industries segment, specifically related to oil and gas projects.