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Linde : De L’Eau Dans Le Gaz?

01 December 2015 by lberuti

Under the stewardship of its previous CEO, LINGR ( Linde AG ) sold non-core assets and refocused on industrial and medical gases, as well as building industrial plants. It looks as if these 3 sectors could experience headwind at the same time. With the oil-price slump, petrochemical customers are reluctant to order new plants. Industrial gas demand is weaker than previously expected. And the medical gas business in the US is the subject of government-mandated price cuts. These were the reasons put forward by LINGR’s management yesterday when they reduced their earnings target for the third time in a year. They expect operating profit to be between €4.2bln and €4.5bln in 2017, which is €300mln less than their previous forecast. On the back on that, return on capital employed should remain essentially flat until 2017. Investors were not impressed, and they sent the stock 14% lower. Even the 5 year risk premium which was once extremely stable, gapped 7bps to 33bps.