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Linde's (LIN) Q4 Earnings Beat Estimates on Higher Prices

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Linde plc (LIN - Free Report) reported adjusted earnings from continuing operations of $1.89 per share in fourth-quarter 2019, beating the Zacks Consensus Estimate of $1.84. Moreover, the bottom line improved from the year-ago figure of $1.51 per share.

The company’s revenues of $7,080 million improved from the year-ago level of $5,801 million and beat the Zacks Consensus Estimate of $6,947 million.

The strong quarterly earnings of the leading producer and distributer of industrial gases were supported by improved prices across Americas, Asia Pacific, Europe, Middle East & Africa.

Linde plc Price, Consensus and EPS Surprise

 

Linde plc Price, Consensus and EPS Surprise

Linde plc price-consensus-eps-surprise-chart | Linde plc Quote

Segmental Results

 

The company operates through four business segments — Americas, APAC (the Asia Pacific), EMEA (Europe, Middle East & Africa) and Engineering.

Pro forma sales from the Americas unit in the December-end quarter of 2019 were $2,737 million, up from $2,684 million in the year-ago comparable period. Moreover, the segment contributed $676 million to pro forma operating profit, mirroring an improvement from $609 million in fourth-quarter 2018. Higher prices and volume primarily contributed to the outperformance.

From the APAC unit, the company generated sales of $1,403 million, down from the year-ago quarter’s $1,447 million. The sales decline resulted from lower volume, following weaker economic conditions in the South Pacific. However, the segment contributed $299 million to operating profit in fourth-quarter 2019, up from $246 million in the prior-year period owing to higher prices.

Sales from the EMEA unit declined to $1,654 million from $1,704 million in the December-end quarter of 2018. However, the company generated operating profit of $353 million from the segment, higher than $296 million in the prior-year quarter. The results were aided by an uptick in prices, partially offset by lower volume owing to a slowdown in manufacturing activities.

The company’s pro forma sales from the Engineering business were $770 million, up from $716 million in the prior-year quarter. The segment’s profit also increased to $93 million from $77 million in fourth-quarter 2018, thanks to increased productivity and timely project executions.

Balance Sheet

As of Dec 31, 2019, Linde had cash and cash equivalents of $2,700 million. Long-term debt totaled $10,693 million. Its debt-to-capitalization ratio is 21.3%.

Guidance

The company expects adjusted earnings per share (EPS) of $8-$8.25 for 2020, suggesting a year-over-year improvement of 9-12%.

Zacks Rank & Stocks to Consider

Linde currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the basic materials space are Kinross Gold Corporation (KGC - Free Report) , Franco-Nevada Corporation (FNV - Free Report) and Pretium Resources, Inc. (PVG - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Kinross Gold is likely to see earnings growth of 32.3% in 2020.

Franco-Nevada is likely to see earnings growth of 28% in 2020.

Pretium Resources is likely to see earnings growth of 75% in 2020.

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