March 8, 2018 / 8:14 AM / 10 months ago

Linde sees lower medical gas prices crimping earnings

Linde Group logo is seen at company building before the annual news conference in Munich, Germany March 9, 2017. REUTERS/Lukas Barth

MUNICH (Reuters) - German gases group Linde (LING.DE), which is preparing to merge with Praxair PX.N, said it expects 2018 operating profit to rise 5 percent at best as gains in industrial gases continue to be tempered by lower prices for medical gases.

Linde achieved increases in both revenue and operating profit last year after adjusting for currency effects, lifted by a stronger performance from its engineering division.

Operating profit rose 2.8 percent to 4.21 billion euros ($5.22 billion), in line with market expectations, while revenue from continuing operations edged up 1 percent to 17.1 billion euros.

Linde’s on-site business, which supplies gases to large steel or petrochemicals plants, would benefit from a solid project pipeline this year while the healthcare operations would be burdened by price reductions, the company said.

To offset weaker prices from its medical gases division, Linde would be on the lookout for acquisition opportunities in that area, Linde said.

Linde has not yet agreed with regulators on potential divestments needed to meet antitrust approval for its merger with Praxair, Chief Executive Aldo Belloni said, adding that the “hot phase” for such deliberations will be in summer.

Belloni said he expects the healthcare and engineering divisions to remain part of a merged company. Linde reiterated it saw a “pain threshold” of not giving away more than $3.7 billion euros in sales or $1.1 billion in EBITDA in divestments.

Linde is currently in talks to sell its Gist logistics division, although a sale could still fail, the company said.

Reporting by Alexander Huebner; Writing by Ludwig Burger; Editing by David Goodman and Elaine Hardcastle

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