The gases company had received several billion-dollar orders from Gazprom in recent years.
(Photo: lime tree)
Munich A few days ago, when Sanjiv Lamba appeared in front of the employees for the first time as CEO of Linde at a town hall event, the Ukraine war was the dominant topic. Of course, all sanctions will be adhered to, no matter how big an order and who the customer is, the manager said, according to participants.
In Russia, the gas group has one major customer in particular: Gazprom. Last fall, Linde received two major orders worth six billion dollars from the Russian energy group. “We are very happy with these projects,” said Lamba at the end of 2021 when presenting the nine-month figures to analysts, then as Chief Operating Officer. They have “excellent relations” with Gazprom. For the CEO, who has only held this position since March 1, it is the first major test.
The war in Ukraine changed everything. More and more companies are withdrawing from Russia, regardless of sanctions. BMW, for example, stopped production in and exports to Russia, and Siemens stopped new business.
For the time being, Linde is sticking to the orders worth billions – there are others from the past that have not yet been fully processed. Developments in Ukraine are being closely monitored, the group said.
Top jobs of the day
Find the best jobs now and
be notified by email.
Measures are being taken to ensure the safety of employees and to maintain the supply of medical oxygen. Assess the rapidly changing sanctions framework to fully comply with existing treaties.
>>> Read here all current developments in the war against Ukraine in the Newsblog
In industry circles it was said that it would be easier for consumer goods manufacturers, for example, to no longer sell products such as sporting goods or mobile phones in Russia. This is different with long-term contracts. Politicians must decide which transactions are still desirable in the future and which are not. Otherwise there could be a risk of claims for damages.
Although Siemens is discontinuing new business in Russia, long-term service contracts, for example for trains, will continue to be fulfilled. At least as far as this is possible within the framework of the sanctions.
Linde had received the order for a gas processing plant and an LNG liquid gas plant in a large industrial complex near Ust-Luga. In addition, based on previous orders, the Group is involved in a plant as part of the “Power of Siberia” pipeline project with several orders; the pipeline is intended to connect natural gas fields in eastern Siberia with northeastern China. The plant was to be built in five construction phases by 2024.
LNG projects could compensate for losses
Whether all of these projects will be completed remains to be seen. Elsewhere, Linde could benefit from the geopolitical turmoil. In order to reduce dependence on Russian gas, Europe intends to focus more on liquid gas in the future. A new LNG terminal is planned in Brunsbüttel. A Belgian group of investors is planning a terminal in Wilhelmshaven. The LNG specialist and plant manufacturer Linde could possibly use this to compensate for some of the potential failures in Russia.
Business continues to be good in the rest of the world. Last year, sales rose 13 percent to $30.8 billion. Operating profit even improved by 50 percent to five billion dollars. “The best times are still ahead for Linde,” said ex-CEO Steve Angel, who moved to the top of the board of directors on March 1.
There he replaced Wolfgang Reitzle, who had headed the Dax group as CEO from 2003 to 2014. After the obligatory cooling off period, he returned in 2016 as chairman of the supervisory board and, against all odds, pushed ahead with the merger with Praxair.
>>> More background: Dax companies buy back their own shares for almost 18 billion euros
For Linde, the personnel shift meant a change of times. So far, according to insiders, the transitions have gone smoothly. New CEO Lamba appeared in front of the employees in Pullach in a hybrid format, around 4000 employees were connected digitally. As COO, he had already been able to warm up for a year as the person responsible for the operative business.
Under Lamba’s leadership, Linde will continue to pursue its share buyback strategy. A few weeks ago, the group announced a new program. By July 2024 at the latest, Linde shares are to be bought back for up to ten billion dollars. It took Linde a good year for the previous $5 billion share buyback that was recently completed.
The course has benefited from the continuous growth in profits and share buybacks in recent years. Linde is currently the most valuable Dax group ahead of SAP. In the course of the Ukraine crisis, the price fell from its high of over 300 euros to around 250 euros most recently.
More: The sanctions hit Russia’s economy with full force.