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PRESS RELEASE: First six months of 2009: The Linde Group strengthens operating margin in difficult market environment

* Programme for sustainable improvements in productivity takes
    effect
  * Operating margin increases to 20.2 percent despite restructuring
    costs
  * Improved operating cash flow: 841 million euro (2008: 816 million
    euro)
  * Group sales down 12.5 percent to 5.476 billion euro
  * Group operating profit* down 12.2 percent to 1.104 billion euro
    (down 6.9 percent after adjusting for restructuring costs)
  * Outlook for 2009: Further recovery in business trends expected
    compared with the first half of the year; however, 2008 record
    level no longer attainable 

Munich, 3 August 2009 - The technology group The Linde Group has in
the first six months of the 2009 financial year in an ongoing
difficult market environment and despite volume reductions caused by
global economic conditions stabilised its profitability. At Group
level, the operating margin was 20.2 percent in the first six months
of the year, compared with 20.1 percent in the comparable prior-year
period. Adjusted for one-off restructuring costs of 67 million euro,
the operating margin was 21.4 percent. "The measures we have taken to
achieve sustainable improvements in productivity are having an
effect," said Professor Dr Wolfgang Reitzle, Chief Executive Officer
of Linde AG.  "At the same time, in our gases business we are
beginning to see occasional signs of a slight recovery in demand.
However, future global economic developments are beset with
uncertainty and the crisis is not yet over. Against this background,
we will be unable to achieve in the 2009 financial year the same
level of sales and earnings achieved in 2008, a record year. However,
provided that the economic recovery stabilises, we expect a better
business development in the second half year of 2009 than in the
first six month." 

In the course of the global economic crisis, Group sales fell by 12.5
percent in the first half of 2009 to 5.476 billion euro, compared
with the record figure achieved in the first half of 2008 of 6.256
billion euro. Group operating profit* for the six months to 30 June
2009 was 1.104 billion euro, 12.2 percent below the prior year figure
of 1.258 billion euro. Taking into account restructuring costs
arising from the accelerated implementation of the High Performance
Organisation (HPO) programme, the fall in Group operating profit for
Linde was only 6.9 percent. With HPO, the integrated programme for
process optimisation and increased productivity, the Group is seeking
to achieve cost savings of between 650 million euro and 800 million
euro in the financial years from 2009 to 2012 and to continue to
improve its competitiveness irrespective of the economic situation. 

Earnings before taxes on income (EBT) were 365 million euro, a
decline of 179 million euro (-32.9 percent) compared to the first
half of 2008 (544 million euro). After deducting restructuring costs
of 67 million euro and the gains on disposal of businesses of 59
million euro achieved in the first half of 2008 this decline was only
53 million euro (-10.9 percent). 

Earnings after tax at 30 June 2009 were 274 million euro (2008: 402
million euro). After taking minority interests into account, earnings
attributable to Linde AG shareholders were 248 million euro (2008:
375 million euro), giving earnings per share (EPS) of 1.47 euro
(2008: 2.24 euro). Account should be taken here too, when comparing
the figures for the first six months of 2009 and 2008, of the one-off
restructuring costs charged in 2009 and the gains on the disposal of
businesses recognised in 2008. On an adjusted basis, i.e. after
adjusting for the effect of the purchase price allocation in the
course of the BOC acquisition and the profits on disposal achieved in
the prior year, earnings per share in the first half of 2009 stood at
2.06 euro (2008: 2.72 euro). The restructuring costs recognised in
the first half of 2009 have not been adjusted for in this
calculation. Cash flow from operating activities in the first six
months of the year was 841 million euro, a figure which was higher
than that for the first six months of 2008 of 816 million euro,
despite the fall in earnings. This increase was mainly due to
improvements in working capital management. 

Gases Division
In the Gases Division, Linde was able to achieve slight increases in
sales and earnings in the second quarter compared to the first
quarter of 2009. However, if the figures for the first six months of
2009 are compared with those for the first six months of 2008, there
was an overall decline. Sales in the Gases Division for the six
months to 30 June 2009 were 4.350 billion euro, which was 7.6 percent
lower than the figure for the comparable prior-year period of 4.709
billion euro, despite an increase of 1.7 percent over the first
quarter of 2009. On a comparable basis, i.e. after adjusting for
exchange rate effects and also taking into account changes in the
price of natural gas and changes in Group structure, the fall in
sales was 6.7 percent. 

The operating profit of the Gases Division increased by over 8
percent in the second quarter compared to the first three months of
the year. However, when the figures are compared for the first six
months of 2009 and 2008, operating profit for 2009 at 1.138 billion
euro was 4.7 percent below the prior-year figure of 1.194 billion
euro. The Gases Division succeeded in limiting the reduction in
earnings in a difficult market environment, improving its operating
margin from 25.4 percent in 2008 to 26.2 percent in 2009. 

The trends in the individual regions and product areas of the Gases
Division were as follows: 

In the Western Europe operating segment, business continued to be
adversely affected by the substantial loss in value of the British
pound, as in the first quarter. Against this background, sales in the
first half of 2009 were 1.849 billion euro, 11.2 percent below the
figure for the prior-year period of 2.083 billion euro. On a
comparable basis, the decline in sales would have been a mere 6.0
percent. Operating profit was also adversely affected by exchange
rate movements, falling 12.0 percent from 575 million euro in the
first half of 2008 to 506 million euro in the first half of 2009. The
operating margin in Western Europe remained high and virtually stable
in the first six months of the year at 27.4 percent (2008: 27.6
percent). This relative stability was partly due to the positive
impact of the cost optimisation measures under the HPO programme. 

In Western Europe as a whole, there was no real market recovery in
the second quarter. In most regions, including our three major sales
markets, the UK, Germany and Scandinavia, volumes in the tonnage
(on-site), liquefied gases and cylinder gas product areas declined
significantly in comparison with the prior-year period. 

In the Americas operating segment, we achieved sales in the first six
months of 2009 of 993 million euro, 8.2 percent below the figure for
the first six months of 2008 of 1.082 billion euro. On a comparable
basis, the decline in sales was 8.4 percent. Linde was, however, able
to achieve a slight increase in operating profit of 1.9 percent to
210 million euro, compared to the figure for the first half of 2008
of 206 million euro. The operating margin rose as a result from 19.0
percent to 21.1 percent. This increase was partly as a result of
movements in natural gas prices, but was mainly due to the variety of
measures we have taken to improve our efficiency. 

In the Asia & Eastern Europe operating segment, sales in the first
six months of 2009 were 877 million euro, 7.2 percent below the
figure for the prior-year period of 945 million euro. On a comparable
basis, the fall in sales was 7.4 percent. Operating profit of 266
million euro was almost as high as the figure for the first half of
2008 of 269 million euro. There was a significant increase in the
operating margin as a result, from 28.5 percent to 30.3 percent. The
accelerated implementation of our HPO programme again contributed to
this positive trend. Additional contributions to earnings also arose
from our joint venture activities in China. In comparison with the
first quarter of 2009, we saw the clearest signs of an economic
recovery in the Asia & Eastern Europe operating segment. This trend
was demonstrated, for example, by higher capacity utilisation of our
tonnage plants and by the awarding of new projects. We also continued
to reinforce our leading market position in this region as a result
of the start-up of new plants. 

In the South Pacific & Africa operating segment, we were able to
continue to increase sales in the first six months of the current
year - by 5.4 percent to 666 million euro (2008: 632 million euro).
We were able to more than offset adverse movements in the exchange
rates of the Australian dollar and South African rand as a result of
the consolidation for the first time of the Australian LPG business,
Elgas. On a comparable basis, sales in the first half of 2009 fell by
4.6 percent. Operating profit rose by 8.3 percent to 156 million euro
(2008: 144 million euro). This is equivalent to an improvement in the
operating margin from 22.8 percent to 23.4 percent. 

Business trends in the individual product areas of the Gases Division
were affected by the continuing challenging global economic
environment. On a comparable basis, sales in the first six months of
the year in the bulk business fell by 9.1 percent to 1.074 billion
euro (2008: 1.181 billion euro). Sales in the on-site (tonnage)
business, where we supply industrial gases from plants situated on
the user's site, sales in the first half of 2009 of 989 million euro
were 5.4 percent below the figure for the prior-year period of 1.046

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