Linde's Q4 2024: Contradictions in IP Trends, Economic Impact, and Electronics Growth

These are the key contradictions discussed in Linde's latest 2024 Q4 earnings call, specifically including: IP Trends and Leverage, Impact of Economic Conditions on Project Development, IP Leverage on EPS, and Electronics Market Growth Expectations:



Financial Performance and Growth:
- Linde reported sales of $8.3 billion for Q4, flat to the prior year and down 1% sequentially.
- The growth was driven by a 2% increase in price over 2023, 1% sequentially, and a 2% growth in underlying sales excluding FX and cost pass-through.
- Contributions from project backlog in the Americas and APAC offset lower base volumes in EMEA.

Margins and Management Actions:
- Operating profit grew 9% to $2.5 billion, resulting in a 29.9% margin.
- This was primarily due to management actions around price, cost, and productivity, leading to a 13% EPS growth excluding FX, or 11% including FX.

Capital Investment and Backlog:
- Linde's capacital expenditure increased by 9%, entirely driven by contractual projects, as base CapEx decreased due to currency, productivity, and lower base volumes.
- The company completed more than $10 billion in backlog wins, including a $2+ billion deal in Canada, demonstrating strong pipeline activity.

Currency and Economic Factors:
- Linde's guidance for full-year EPS ranges from $16.15 to $16.55, representing 4% to 7% growth, or 8% to 11% excluding a 4% currency headwind.
- The currency headwind is due to a 4% FX translation impact from a significant strengthening of the U.S. dollar towards the end of 2024.

Geographic and Market Trends:
- In EMEA, Linde expects volumes to remain soft, particularly in metals and mining, while the Americas are projected to grow at a low single-digit rate.
- Asia Pacific is largely flat, with China stable but no expected recovery, and India being a growth story.