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    LIN
    Earnings call· Mar 2026(Q1 FY26)

    LINDE Q1 FY26 earnings call LIN

    May 1, 2026 Source

    Executive summary

    Linde Q1 FY26 — Strong EPS Growth and Margin Expansion Amidst Geopolitical Volatility

    Linde delivered a solid Q1 FY26 with strong EPS growth and margin expansion, demonstrating resilience despite a challenging global economic backdrop and geopolitical volatility. The company continues to benefit from strategic investments in high-growth areas like electronics and commercial space, while actively managing regional volume shifts and supply chain constraints. Management remains confident in its capital allocation model and ability to navigate market uncertainties, with expectations for continued margin expansion throughout the year.

    Highlights

    5

    • EPS of $4.33 grew 10% year-over-year.

    • Operating margins reached 30%, improving 50 basis points sequentially.

    • Return on capital remained healthy at 23.8%.

    • Underlying sales increased 3% year-over-year, driven by 2% higher pricing and 1% higher volumes.

    • Signed 9 bolt-on acquisitions, primarily in the Americas, contributing 1% to sales growth.

    Concerns

    4

    • U.S. home care business was relatively flat due to a new policy in late 2025, impacting overall healthcare growth.

    • EMEA experienced negative volumes and weaker industrial activity, offsetting growth in Americas and APAC.

    • The helium business is facing acute global shortages due to recent events, though Linde is well-positioned.

    • The construction and subcontractor environment in the U.S. Gulf Coast remains challenging, causing delays in the Darrow project's hydrogen and TNS side until Q1 next year.

    Guidance & targets

    5
    CategoryTargetConfidence
    Q2 EPS
    $4.40 to $4.50
    high materiality
    Medium
    Full-year EPS
    $17.60 to $17.90
    high materiality
    Medium
    Full-year Operating Margins
    Upper end or above traditional 40-60 bps range
    medium materiality
    High
    Helium Business Contribution
    Potential upside
    low materiality
    Medium
    Sale of Gas Backlog
    Higher than $7.1 billion, potentially >$8 billion
    medium materiality
    High

    Segment performance

    6
    SegmentRevenueYoYQoQMargin
    Healthcare
    Growth impacted by a new U.S. healthcare policy affecting the home care business, otherwise performing as anticipated. Normally a resilient market, expected to grow low to mid-single digits.
    16% of global salesU.S. home care business flat
    		—1%——
    Food and Beverage
    Broad-based strength, especially in the U.S. beverage business, traditional bottling, and food freezing in North and South America. Expected to remain a steady contributor.
    9% of global salesMid- to high single-digit growth over last several years
    		—5%——
    Electronics
    Strongest growth driven by continued investments in advanced chips to support AI, heavily weighted toward the U.S., China, and Korea. Linde is well-positioned as scale and industrial gas intensity expand.
    Substantial electronic sales in Taiwan excluded (non-consolidated 50% joint venture)Investing >$1 billion in project backlog for ultra-high purity plants
    		—10%——
    Chemicals and Energy
    Americas driven by higher hydrogen and nitrogen activity in U.S. Gulf Coast refining and Latin American upstream energy. APAC increases primarily from Jurong Island integrated complex. EMEA experienced negative volumes from on-site customers shifting production.
    22% of global salesAmericas and APAC growth offset EMEA contractions
    		—3%——
    Metals and Mining
    Growth entirely from the Americas, with APAC and EMEA relatively flat. Supported by better industrial activity and protectionist policies in the U.S. and Latin America. Renewed competitiveness seen from gas-intensive integrated blast furnaces.
    		—3%——
    Manufacturing
    Aerospace activity in the U.S. (space vehicle production, testing, launch) saw strong double-digit growth. Excluding aerospace, the remaining market grew low single-digit percent. Strength in Americas, partially offset by continued weakness in EMEA, while APAC slightly improved.
    Half of increase from aerospace activity in United StatesU.S. packaged gases grew mid-single digitU.S. hard goods grew double-digit percent
    		—5%——

    Operational metrics

    12
    Operating Margin
    30%similar to prior year
    Q1 FY26

    Sequentially, margins improved 50 basis points, driven by management actions in pricing and cost productivity that more than compensated for seasonal volume declines.

    Return on Capital
    23.8%
    Q1 FY26 end

    Industry-leading return on capital, a reflection of capital discipline, consistent earnings growth and good backlog execution.

    Foreign Currency Tailwinds on Sales
    5%YoY
    Q1 FY26

    Foreign currency was a 5% tailwind driven primarily by the strengthening of the euro.

    Foreign Currency Tailwinds on EPS
    1%
    Q1 FY26

    EPS of $4.33 was 10% over prior year or 5% when excluding the effects of currency translation. Q2 and full-year guidance includes a 1% currency benefit.

    Net Acquisitions Contribution to Sales
    1%
    Q1 FY26

    Net acquisitions contributed 1% from attractive roll-ups we've been executing globally.

    Annual Dividend Growth
    7%
    Q1 FY26

    Raised the annual dividend by 7%, making it 33 consecutive years of dividend growth with an average growth rate of 13%.

    Share Repurchases
    $800 million
    Q1 FY26

    Repurchased $800 million of stock during the quarter.

    Investments into Business
    ~$1.5 billion
    Q1 FY26

    Reinvesting almost $1.5 billion into the business.

    Other Income
    $63 millionvs $26 million a year ago
    Q1 FY26

    In this particular quarter, we had a gain on a sale. It was a cash gain, it was a real gain. Full year expected to be in the lower end of the $100M-$200M range from prior years.

    U.S. Packaged Gases Growth
    mid-single digit
    Q1 FY26

    Within the U.S., packaged gases grew mid-single digit, aligning with recent favorable U.S. production statistics.

    U.S. Hard Goods Growth
    double-digit percent
    Q1 FY26

    Within the U.S., hard goods grew double-digit percent, driven by energy, construction, and general metal fabrication, aligning with recent favorable U.S. production statistics.

    Global Base Volume Growth
    positive
    Q1 FY26

    Global base volumes turned positive, though not enough to round to 1% when combined with project backlog contribution.

    Industry KPIs

    6
    MetricValueDetails
    Bolt on m a9deals
    Volume vs price split3%%
    Signed project backlog$7.1 billionUSD
    Energy cost pass throughSurcharges
    Helium supply demand pricing85% to 90%%
    Productivity cost savings program—

    Orderbook & backlog

    1
    Sale of Gas Backlog$7.1 billionQ1 FY26 end

    10 projects started up from backlog with approximately $300 million investment. 5 new projects signed adding $100 million to the backlog.

    Deals & partnerships

    1
    Multiple (unnamed)acquisition

    Signed 9 bolt-on acquisitions during the quarter, primarily in the Americas, which will continue adding to future EPS growth.

    Capital programs

    2
    Ultra-high purity plants (Electronics)investing>$1 billion

    Benefit: support the most advanced fabs in the world

    Currently investing more than $1 billion of the project backlog for ultra-high purity plants, which will support the most advanced fabs in the world.

    Darrow Project (Hydrogen and TNS)underway
    Start: mid-2026 (nitrogen)

    Benefit: make gray hydrogen and convert to blue; sequestration

    Nitrogen expected to start mid-2026. The ATR and TNS (for sequestration) have slipped a few months into Q1 2027 due to challenging construction and subcontractor environment in the U.S. Gulf Coast.

    Risks & headwinds

    5
    U.S. Home Care Policy Impactnext several quarters

    U.S. home care business relatively flat

    Mitigation: Rest of healthcare performing as anticipated, providing a resilient balance to cyclical markets.

    EMEA Economic Weakness and Production Shiftsongoing

    Negative volumes in EMEA; contractions in Chemicals and Energy; softer manufacturing activity

    Mitigation: Management actions to improve performance; potential for catalysts like restrictive import policies or IAA funding reaching the ground.

    Middle East Conflict and Geopolitical Volatilityongoing

    Direct and indirect impacts on industrial activity in EMEA; acute global helium shortages

    Mitigation: Linde's broad-based helium supply chain; focus on securing long-term helium agreements; business units adapting to production shifts around the world.

    Challenging Construction Environmentshort-term

    Darrow project's ATR and TNS slipped a few months into Q1 next year

    Mitigation: Team 100% focused on getting the project up as fast, safe, and reliably as possible.

    Volatile European Energy Pricesongoing

    Currently handled via surcharges

    Mitigation: Surcharges adjust with volatility; sustained increases would eventually become structural price.

    Q&A highlights

    8

    Why were margins flat in Europe and down in Asia, despite overall strong performance, and what are the drivers?

    Matt White explained that EMEA's weakness was due to lower volumes from a weaker industrial environment and Middle East conflict impacts, but actions are being taken. APAC's Q1 was seasonally weaker and impacted by lower-margin equipment sales connected to long-term contracts. He expects full-year margins to be at the top end or above the 40-60 bps range.

    “On a full year basis, we feel pretty confident we're not only going to raise margins for the full year 2026, but probably at the upper end or even above our traditional range that we tend to talk about of 40 to 60 basis points.”

    asked by Laurent Favre · answered by Matthew White

    2 min read5 chapters

    Detailed Narrative

    01

    End-Market Performance & Shifts

    Linde's end-market performance in Q1 FY26 showed a clear bifurcation, with consumer-related markets (approximately one-third of sales) and industrial-related markets (the remaining two-thirds) exhibiting varied growth. Healthcare grew 1% year-over-year, impacted by a flat U.S. home care business, while food and beverage saw 5% growth from broad-based strength. Electronics surged 10%, primarily driven by continued investments in advanced chips to support AI, with substantial growth in the U.S., China, and Korea.

    02

    Geographic Dynamics & Industrial Activity

    Industrial end markets demonstrated growth across the board, with Chemicals and Energy up 3% (Americas and APAC offsetting EMEA contractions) and Metals and Mining up 3% (entirely from the Americas). Manufacturing grew 5%, with half of this increase attributed to aerospace activity in the United States. The Americas region is experiencing robust industrial activity and benefits from protectionist policies, contrasting with EMEA, which faces continued weakness and production shifts to more competitive assets outside Continental Europe.

    03

    Helium Market & Strategy

    The helium market, which was in oversupply through 2025, is now experiencing acute global shortages due to recent geopolitical events. Linde, leveraging its broad-based supply chain, is well-positioned to meet existing customer commitments. The company prioritizes securing new multi-year contracts over spot sales and does not anticipate significant spot sales this year. Current guidance does not factor in improvements from the helium business, suggesting potential upside if market conditions improve.

    04

    Financial Performance & Margin Expansion

    Linde reported sales of $8.8 billion, an 8% increase year-over-year, with underlying sales growing 3% (2% pricing, 1% volume). Operating profit reached $2.6 billion, resulting in a 30% margin, a 50 basis point sequential improvement driven by management actions in pricing and cost productivity. EPS of $4.33 increased 10% year-over-year. Management expects these actions to continue supporting profit growth and margin expansion for 2026, aiming for the upper end or above their traditional 40-60 basis points range.

    05

    Capital Allocation & Project Backlog

    Operating cash flow stood at $2.2 billion, yielding $900 million in free cash flow after $1.3 billion in capital expenditures. Linde increased its annual dividend by 7%, marking 33 consecutive years of growth, and repurchased $800 million in stock while reinvesting approximately $1.5 billion into the business. The sale of gas backlog ended the quarter at $7.1 billion, with 10 projects started up ($300 million investment) and 5 new projects signed ($100 million added). The Darrow project's hydrogen and TNS side is now expected in Q1 next year due to U.S. Gulf Coast construction delays.

    AI-generated summary of the company’s earnings call. Not investment advice.