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| Statement |
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| First, a very resilient base business |
| Clearly, the business is showing a huge amount of stability and I appreciate that the dividend has been growing at a healthy cliff year-over-year for the last couple of years |
| Obviously, the pricing has helped the non-capital intensity of our growth has helped |
| So therefore, the higher CapEx, we feel quite good about |
| And when you think about where ROC has been and as Sanjiv mentioned in the prepared remarks, we believe that maintaining an industry-leading and healthy ROC and operating margin while growing EPS, while growing OCF is the best combination for shareholder value creation and ultimately, relative TSR outperformance |
| We feel good about our execution that we are undertaking |
| So one of the things they’ve done tremendously well and I give the team credit, we are having been really one of the profit growth stories over the last three to four years despite having negative volume trends in that same period |
| They did have a solid Q4 |
| So, I’d say to you that, again strong performance across food |
| It’s a good start towards our long-term goals and I am pleased to see acknowledgement of this progress in or external recognition |
| We also positioned the business with high-quality future growth |
| By all measures 2023 was another successful year |
| I feel pretty confident about pushing forward on that 10 plus percent EPS growth despite all the challenges around, et cetera that people talk about, because we know that we have the levers in place to make sure that we get done |
| On the dividend, we commit to growing it every year and to your point we have very healthy ratios that enable us to continue to grow that |
| We kind of lead with strong network density all of that provides us in many ways a unique position to be able to kind of win more than our fair share of the opportunity that we see |
| So well positioned |
| From my perspective, the best way to deliver superior TSR is to have industry-leading results and EPS growth, operating cash flow growth, operating profit margins and return on capital |
| ROC and operating margin demonstrate the quality and health of the business |
| If we do our job well every year, we grow the dividend with a healthy cliff |
| Return on capital finished over 25% against the backdrop of healthy operating cash flow |
| Nice quarter and outlook |
| On the buyback side, this is because we have such excess cash in the organization and we see a very attractive opportunity to continue buying our stock back |
| EPS at $3.59 was 14% above last year as pricing net of cost inflation, backlog contribution and a lower share count more than offset lower base volumes |
| Clearly, it’s been a strong performer tightened productivity in the phase of weaker onsite volumes |
| Year after year, we’ve proven how we positively correlate to superior TSR and positive outcomes, two important ways to gauge shareholder value creation |
| Because of this, I remain confident in our ability to continue to creating long-term shareholder value regardless of the economy |
| Now having said that, EMEA has as I mentioned earlier on been a very strong profit growth story for us, we manage that whole process right through the negative volume trend |
| And they will have a strong contribution to mix to the EPS growth that we look at |
| And despite the economic and geopolitical challenges, Linde once again delivered on its commitments with industry-leading results |
| We talk about pricing as being management action that something that we do every day and that process and discipline that follows I think is what makes the pricing mechanism so strong and robust for us |
| Statement |
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| Because the one thing about this industry is if you invest poorly in a project, it can create problems for you for two decades |
| Overall, economic conditions have been stagnant as the estimated industrial production growth for our weighted countries was close to 0% for the fourth quarter |
| So, you would recall we spoken about China in weakness and slow recovery over there, I think all of last year in fact |
| As far as industrials go, as we’ve said, we’ve seen a lack of momentum |
| Almost all processed food companies are showing down volume |
| Versus prior year, the sales declined 3% from contractual cost pass through due to lower energy prices in EMEA and Americas, which has no effect on profit |
| I also like to point a one-time unfavorable impact embedded in this quarter’s results related to the Argentinean peso which devalued over 50% |
| The 1% sequential decline was primarily driven by seasonal factors and the devaluation of the Argentinean peso |
| As far as electronics is concerned, electronics saw a little bit of a recovery in Q4 |
| So, margins were down sequentially, but sales were roughly flat and when you talk about the variant, you talk about the lower onsite volumes which I think about lower margin relative to the mix and pricing was up |
| It is of course weighed down by the fact that construction is a little bit slower |
| Manufacturing generally has been a bit lackluster, but there are some bright spots within that |
| We’ve been seeing China being a little bit softer and we’ve kind of tracked that for at least 6 to 9 months for now |
| While the economic assumption is similar to the full year, the first quarter is traditionally our lightest due to seasonal factors |
| I expect to see small to mid-size green hydrogen projects, primarily to serve merchant type demand, that these will likely not meet our backlog definition |
| Steel, which is the other major market that we’ve been talking about has been shrinking for a while |
| Year-over-year volumes were flat as contribution from the project backlog was offset by softer base volumes, primarily in EMEA |
| And again, our view is you will see continued mild recovery probably through the first half of the year and then the second half we’ll have to just watch and see what happens |
| So we believe it’s appropriate to remain cautious that’s early in the year |
| Look, there was a view that if volumes in EMEA would crash two years ago when we saw the energy crisis that didn’t happen |
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