Linde Revises ROCE Target for 2014 Downward

German gases and engineering group Linde has joined other German companies in backing away from ambitious earnings forecasts made earlier for 2014.

CEO Wolfgang Büchele said the group will no longer be able to achieve its target of a 10% return on capital employed (ROCE), due to impairment losses resulting from changed conditions in some regions.

Adjusted for exchange rate effects, Büchele said Linde now expects to achieve a similar level of operating profit as in 2013, after adjusting for exchange rate effects.

Looking at medium-term targets, the CEO said Linde will continue to implement its strategy, which is geared toward profitability and sustainability. "However," he said, "we have to take account of the fact that economic growth has been much weaker than we all expected. In addition, future prospects for global economic trends have recently dulled."

From today's standpoint, Linde's management assumes that it will not be able to achieve the earnings target originally set for 2016 until 2017. Depending on economic trends, Büchele forecasts for 2017 operating profit of €4.5-4.7 billion and a reported ROCE of 11-12% in 2017, based on current exchange rates.

Adjusted for the negative exchange rate impact, the German gases and engineering group increased sales revenue by 4.8% in the first nine months of 2014. Operating profit, at €2.89 billion, was 3% below the comparative figure for January-September 2013 of just under €3 billion. Adjusted for exchange rates, operating profit rose 0.4%. The operating margin deteriorated to 23% from 24%.