What drove Linde's gross profit growth in Q1 2024 despite lower revenue?

Linde's gross profit grew by $3.88 billion in Q1 2024, despite a slight decrease in total revenue to $8.1 billion, primarily due to several key factors:

|code|Ticker|Name|Date|Gross Profit|Total Revenue|market_code|
|---|---|---|---|---|---|---|
|LIN|LIN.O|Linde|2023 Q2|3.888E9|8.204E9|185|
|LIN|LIN.O|Linde|2023 Q3|3.841E9|8.155E9|185|
|LIN|LIN.O|Linde|2023 Q4|3.871E9|8.302E9|185|
|LIN|LIN.O|Linde|2024 Q1|3.884E9|8.1E9|185|

1. **Operating Profit Margin Improvement**: The adjusted operating profit margin for Linde improved significantly, increasing by 390 basis points to 27.6% compared to the previous year. This indicates that Linde was able to maintain profitability despite the revenue decline. The operating profit margin stood at 24.4%, reflecting efficient cost management and operational effectiveness.
2. **Increased Pricing and Volumes**: Strong quarterly earnings were driven by higher pricing and volumes, particularly in the Americas segment. This segment saw a nearly 14% year-over-year increase in operating profit to $1.08 billion, surpassing the Zacks Consensus Estimate. Similarly, the EMEA segment experienced a 21% year-over-year profit increase to $615 million, exceeding expectations. The APAC segment also contributed to the growth with a 9% year-over-year profit increase to $452 million.
3. **Backlog and Project Execution**: Linde's high-quality backlog at the end of the fourth quarter stood at $8.5 billion, including a sale-of-gas backlog of $4.9 billion. This backlog indicates a strong pipeline of projects and contracts, which supports future revenue and profit growth. The company's capital expenditure for the December quarter was reported at $1.2 billion, suggesting ongoing investments in growth opportunities.

In summary, Linde's gross profit growth in Q1 2024 can be attributed to improved operating profit margins, increased pricing and volumes in key segments, and a strong backlog of projects, which collectively supported the company's financial performance despite lower revenue.