Performance of Linde shares

Despite the positive stock market environment, Linde shares came under considerable pressure, especially in the second half of 2015. They closed the year at EUR 133.90 on 30 December 2015, down by 13.2 percent on the closing price for 2014 of EUR 154.20. This also pushed Linde stock market value down to EUR 24.857 bn. Compared with market capitalisation of EUR 28.625 bn at the end of 2014, this equates to a drop of EUR 3.768 bn.

Linde shares initially made a very strong start to the new stock market year, touching on a year high of EUR 193.85 on 18 March. This also represented an all-time high for Linde. The second quarter brought a volatile period in which Linde shares were no longer able to keep up with the German leading index. The downward trend was exacerbated by the Chinese crisis, sending Linde shares spiralling down to EUR 147.15 on 24 August 2015. Due to the uncertainty on the global markets, this negative trend continued, with Linde’s shares continuing to lose value until 24 September 2015.

Positive newsflow signalled the start of a brief period of recovery, albeit a merely temporary one. On 30 November 2015, Linde was forced to adjust its targets for the return on capital employed (ROCE) and the Group operating profit for 2017. The main reasons behind these adjustments relate to a considerable change in the overall environment compared with October 2014, when the original targets were set. First, the rates of growth in industrial production that are relevant to the industrial gases business continued to drop considerably across the globe. Second, state price cuts for services in the US Healthcare business are likely to be more pronounced than originally expected in 2016 and 2017. In addition, the Engineering Division will make less of a contribution to Group operating profit than originally expected. This is primarily due to a lower order intake due to a general reluctance to invest among customers, also due to what are likely to be low oil prices in the medium term. By 14 December 2015, Linde shares had fallen to the year low of EUR 128.05.

This setback in Linde’s share price does not, however, raise any doubt as to its fundamentally solid and stable business model. This business model is characterised by long-term contractual structures, a broad-based customer portfolio and a stable cash flow.

The restructuring programme, which was launched in 2014 and was largely concluded in 2015, as well as the well-known HPO (High Performance Organisation) concept designed to achieve sustainable productivity gains, are creating a positive perception of Linde’s focus on profits on the capital market.

The capital market is increasingly evaluating responsible behaviour in the corporate sector with investments that take the principles of sustainable management into account (Socially Responsible Investment, SRI). Linde is represented in a number of SRI funds, indices and ranking systems. Among others, Linde forms part of the global Dow Jones Sustainability Index (DJSI World), the FTSE4Good Index Serie, the MSCI Global Sustainability Index, the Ethibel Sustainability Index (ESI) and the STOXX Global ESG Leaders Index.

The leading international rating agencies Moody’s and Standard & Poor’s award Linde a high credit rating. In December 2015, both agencies confirmed Linde’s good credit rating of A+ and A2 respectively, with a stable outlook. These ratings recognise the Group’s conservative financial policy and its robust business model as well as its good liquidity situation.

During the financial year, Linde was able to benefit repeatedly from these ratings and from the good conditions in the international capital markets for corporate bonds. In the fourth quarter of 2015, for example, Linde placed three bonds worth a total of EUR 230 m. The first bond, which has a term of five years and a fixed coupon of 0.634 percent, has a volume of EUR 50 m. The second private placement, which has a term of 12 years and a fixed coupon of 1.652 percent, has a volume of EUR 80 m. The EUR 100 m bond has a term of fifteen years and a fixed coupon of 1.9. The proceeds of the issue were used to redeem a EUR 600 m bond which fell due in December 2015.

In 2015, the EUR 2.5 bn credit facility agreed in July 2013 was successfully extended by one year to 2020. The credit facility originally ran for five years, with two options to extend the facility, in each case by one year (subject to the agreement of the lenders).

With the syndicated credit facility supplementing its liquid funds, Linde had a solid general liquidity reserve at the end of 2015.

Linde share: price performance 2011–2015 compared with indices
Linde Share Performance in 2011–2015 compared with indices (Line chart)
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Linde performance in comparison with the most important indices1

 

 

 

 

 

 

 

2015
in percent

 

Weighting Linde shares in percent

1

As at 31.12.2015.

Linde (including dividend)

 

−11.6

 

Linde (excluding dividend)

 

−13.2

 

DAX

 

9.6

 

2.64

Prime Chemical

 

3.7

 

10.84

DJ EURO STOXX

 

8.0

 

0.64

DJ EURO STOXX Chemical

 

1.9

 

7.96

FTSEurofirst 300

 

5.0

 

0.37

FTSE E300 Chemical

 

3.1

 

7.53

MSCI Europe

 

2.2

 

0.33