LINDE PLC (LIN)·Q1 2025 Earnings Summary

Executive Summary

• Q1 2025 was resilient: sales were $8.11B (flat YoY), adjusted EPS $3.95 (+5% YoY, +8% ex-FX), and adjusted operating margin expanded 120 bps to 30.1% as pricing and productivity offset softer volumes and FX headwinds . Versus S&P Global consensus, EPS modestly beat while revenue modestly missed (see Estimates Context).*
• Guidance: FY25 adjusted EPS range narrowed to $16.20–$16.50 (midpoint unchanged; FX headwind improvement offset by more conservative base volume assumption). Q2 2025 EPS guided to $3.95–$4.05 (+3–5% YoY; +5–7% ex-FX). Capex unchanged at $5.0–$5.5B for the year .
• Operating cash flow rose 11% YoY to $2.16B; FCF was $0.89B; $1.81B returned to shareholders in the quarter (dividends + buybacks). Dividend declared at $1.50/share payable June 18, 2025 .
• Strategic drivers intact: record ~30% margins supported by pricing discipline and 4k+ productivity projects in Q1 (105 AI/digital use cases); sale-of-gas backlog ~ $7B within $10B total backlog continues to underpin multi-year growth (electronics and blue hydrogen focus) .

What Went Well and What Went Wrong

• What Went Well

  • Margin expansion: Adjusted operating margin reached 30.1% (+120 bps YoY), with all segments expanding margins on pricing and productivity actions .
  • Cash generation and capital returns: OCF +11% YoY to $2.16B; returned $1.81B to shareholders while funding $1.27B capex .
  • Strategic wins in secular growth: New agreement to expand supply to Samsung’s Pyeongtaek semiconductor complex, adding an eighth on-site ASU; startup expected mid-2026 . CEO: “I’m confident the Linde business model can continue to create shareholder value in any environment.”

• What Went Wrong

  • Volumes soft: Underlying volumes -1% YoY (manufacturing, metals & mining weakness); sequentially, underlying sales -1% as seasonal/APAC softness and certain packaged gas markets weighed .
  • Asia/Europe demand backdrop: APAC sales -3% YoY; EMEA sales -3% YoY as industrial end markets remained weak; China remains mixed with no recovery assumed in 2025 .
  • Revenue slightly below consensus: Q1 revenue of $8.11B trailed S&P Global consensus ($8.25B) despite EPS beat (see Estimates Context).*

Financial Results

Q1 2025 YoY deltas:

• Revenue: flat YoY
• Adjusted EPS: +5% YoY; +8% ex-FX
• Adjusted operating margin: +120 bps YoY
• OCF: +11% YoY

Segment breakdown

KPIs and balance of growth/cash returns

Non-GAAP note: Adjusted EPS and adjusted operating profit/margins exclude Linde AG purchase accounting impacts and other charges; reconciliations are provided in the press release attachments .

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• CEO (press release): “Linde employees delivered another resilient performance by expanding operating margins 120 basis points to 30.1%, growing EPS (excluding FX) by 8%, and maintaining industry leading return on capital of 25.7%.”
• CEO (call): “The dark blue defensive categories... together account for almost 2/3 of global gas sales” supporting resilience in volatile periods .
• CFO (call): “Operating profit of $2.4 billion… margin of 30.1% or 120 basis points higher than prior year… EPS… 8% when excluding the effects of currency translation.”
• CFO (guidance): “We’re holding the original guidance midpoint, but narrowing the range by $0.05 on each end… assuming recessionary conditions at the midpoint.”
• CEO (pricing): “We are an inflation play… pricing tracks globally weighted CPI” .
• CEO (productivity/AI): “In Q1, we’ve done more than 4,000 projects… 105 AI use cases… power optimizer and distribution telemetry models driving efficiencies” .

Q&A Highlights

• Backlog timing (Dow Alberta): Customer-driven delays contractually protected; invoicing begins after grace period; working with Dow on alternatives .
• EMEA margins: Gains driven by sustained pricing/productivity; expectation to grow further when volumes return .
• Clean energy scope: $8–10B over “next few years” still intact; focus on blue hydrogen supported by 45Q; green hydrogen pursued opportunistically where renewables lowest cost .
• Guidance construction: FX headwind improved ~2% but offset by a conservative volume contraction placeholder; if conditions improve, results can outpace guide .
• China outlook: Medium-term IP growth low-single-digit; 2025 no recovery assumed; stress in merchant/packaged; green shoots in EV/batteries and electronics localization .
• U.S. manufacturing: Q1 softer YoY (weather disruptions) but March improved; April still positive though sentiment turned more negative; mixed by end market .

Estimates Context

Notes:

• Q1 revenue was flat YoY and modestly below consensus; adjusted EPS modestly beat, aided by price/cost spread and productivity .
• Management kept FY25 midpoint intact, narrowing the range as FX benefits were offset by volume conservatism .
• Values retrieved from S&P Global.*

Key Takeaways for Investors

• Pricing and productivity remain the core EPS lever in a weak macro, yielding record-like 30% adjusted margins and an EPS beat despite slight revenue softness .
• FY25 midpoint intact with a narrower range reflects prudent assumptions; upside exists if volumes stabilize/improve and FX tailwinds persist .
• Backlog quality is high (sale-of-gas ~$7B) and diversified, with visible secular catalysts (semiconductor on-sites, blue hydrogen under 45Q), supporting multi-year EPS compounding .
• EMEA structural margin reset appears durable (>35% OP margin), creating operating leverage if/when volumes recover .
• China remains a drag near term; management’s digital/AI productivity and contract protections mitigate downside risk .
• Capital allocation steady (buybacks, dividend up 8% earlier in year; $1.50/share declared for Q2) alongside elevated project capex to build backlog assets .
• Near-term trading: watch for macro data (manufacturing, tariffs), FX trends, and electronics project announcements; medium-term thesis anchored by backlog conversion, pricing discipline, and AI-enabled productivity .

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*Values retrieved from S&P Global.