Linde targets hydrogen investments as raises 2020 growth outlook

Linde is considering targeted investments in hydrogen, the U.S.-German company announced as it raised its full-year earnings forecast after increased industrial gas volumes and higher pricing led to a better-than-expected third quarter.

Hydrogen use is expected to rise as companies such as auto and truckmakers hunt for cleaner fuels amid efforts to reduce greenhouse gas emissions.

Production of hydrogen, which accounts for 7% of sales at the world’s largest industrial gases group, could represent a $380 billion opportunity globally by 2040, analysts at Berenberg said in a note last month.

Chief Executive Steve Angel said during a results call that Linde planned to invest in hydrogen in places where it already has a clear presence, including countries and regions which have rich natural gas resources, such as the United States, Russia, northern Africa, Canada, and Australia.

The company raised its full-year guidance as it expressed confidence it its resilience in the face of “significant uncertainty” cased by the COVID-19 pandemic.

“Regardless of the underlying economy, I have confidence in our business model and high-performance culture to continue growing earnings and cash flow for years to come,” Angel said.

Linde expects adjusted earnings per share to grow by 10% in 2020, compared to a previous 4% to 6% target. This is close to its initial guidance of 10-13% growth, which Linde cut in May at the height of the coronavirus crisis.

The group reported third-quarter adjusted EPS of $2.15, above the $1.97 expected on average by analysts in a Refinitiv poll, and above Linde’s guidance of $1.90 to $1.95.

Linde’s growth sectors were healthcare and electronics, with sales up 5% and 4%, respectively, due to higher medical oxygen volumes, mainly in Latin America, and a rise in memory and hardware demand, primarily from China and South Korea.

France-based Air Liquide, Linde's biggest competitor, said last month its third-quarter sales fell 8.7%.

Shares in Linde closed up 5.7%, outperforming Germany's DAX and topping the European chemicals sector index.

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