Linde, Air Liquide Gas Sales Stoked By Emerging Market Growth

European industrial gas companies Air Liquide SA (AI.FR) and Linde AG (LIN.XE) reported rising second-quarter net profit Monday that beat analysts' expectations due in part to strong demand in Asia-Pacific economies such as China.

German industrial gases and engineering company Linde said net profit soared 87% compared to the same period a year before, while French industrial gases group Air Liquide's net profit rose 13%.

Both companies said cost optimization measures contributed to second-quarter performance, and emerging economies showed stronger growth compared to mature economies in the U.S. and western Europe.

Linde's second quarter revenue rose 16% to EUR3.21 billion, while Air Liquide's second quarter revenue increased 7% to EUR3.36 billion.

Both Linde and Air Liquide reiterated their guidance for 2010.

Air Liquide said its objective is "continuous growth" in net profit, "in line with our long-term performance." Although the company didn't explicitly quantify what it meant by long-term performance, on Feb. 15 it provided a chart showing continuous growth in net profit since 1989 and with a 20-year compound annual growth rate of 8%.

"We are strongly rebalancing towards emerging" markets, Air Liquide Chief Executive Benoit Potier told reporters at a breakfast meeting.

Linde Chief Executive Wolfgang Reitzle said the company is "well on the way to achieving a faster rate of growth in group operating profit than in group sales."

In 2010, Linde aims to exceed the operating profit of its record year 2008, Reitzle added.

For its engineering division, Linde expects the improved investment climate in international plant development to continue for the rest of the year. In the gases division, Linde said its project pipeline should make a "particularly significant contribution" to sales and earnings targets in 2010.

Linde and Air Liquide are rivals in the industrial gas market, and compete internationally with U.S.-based Air Products & Chemicals Inc. (APD).

Linde shares traded up +3.6% at EUR93.15 at 1049 GMT while Air Liquide shares were up 1.2% at EUR87.40.

Year-to-date, Linde shares have fallen around 3% and Air Liquide shares have fallen around 5%.

Air Liquide stock has had a strong growth rate and is "already very expensive, whereas Linde has some catching-up to do," said Peter Spengler of DZ Bank. It's likely that investors will now lean toward Linde stock, he added, noting that Linde is also better positioned in growth markets such as China.

- By Harriet Torry, Dow Jones Newswires: +49 69 29725 511: harriet.torry@dowjones.com and Adam Mitchell, Dow Jones Newswires, +33 1 40171756; adam.mitchell@dowjones.com

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