Linde eyes more cost cuts to safeguard profitability
FRANKFURT (Reuters) - Germany's Linde (LING.DE), the world's No.2 industrial gases producer, is gearing up for tough times by extending its cost-cutting program until 2016.
The company, which also reported quarterly earnings above consensus on Monday, said it aimed to cut gross costs by between 750 million euros ($969.9 million) and 900 million euros in 2013 to 2016.
"This will help to reinforce our high level of profitability even in a challenging environment," Chief Executive Wolfgang Reitzle said in a statement, while affirming that Linde aims to improve its revenues and operating profit this year.
Linde also confirmed its medium-term profit target, saying it expected to post 4 billion euros of annual operating profit in 2013.
The Munich-based company's move comes on the heels of other major German companies, such as Siemens (SIEGn.DE), Puma (PUMG.DE) and Air Berlin (AB1.DE) announcing fresh savings programs after an economic recovery failed to materialize this year.
The bulk of Linde's customers are in the steel-making, oil refining and semiconductors industries but its gases are also used to help asthma patients breathe more easily and lift the balloons in the Macy's Thanksgiving Day Parade in New York City.
Linde reported its third-quarter net profit rose to 313 million euros from 290 million a year earlier, beating consensus of 293 million euros in a Reuters poll.
Revenues were up about 13 percent at 3.89 billion euros, broadly in line with estimates.
Germany's economy and its companies were resilient through most of the crisis but are now starting to show signs of wear. Europe's biggest economy is now seen growing by only 1 percent next year.
"Given the current economic situation, the Linde report can be seen as a piece of good news," one trader said.
Linde has benefited from its international business, which makes it less dependent on its German home market, but signs have been increasing that growth abroad, especially in Asia, is also waning.
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