Published
# Linde plc (LIN) — Business, Risks and Management's Discussion
Sources: the fiscal 2025 Annual Report on Form 10-K (accession 0001628280-26-011430, filed
February 25, 2026) and the Form 10-Q for the quarter and six months ended June 30, 2026
(accession 0001628280-26-051289, filed July 31, 2026), supplemented for post-period matters
by the Form 8-K furnishing the second-quarter 2026 earnings release (accession
0001654954-26-007052) and the Form 8-K reporting the July 28, 2026 annual general meeting
(accession 0001193125-26-325127).
---
## Business
*From the fiscal 2025 Form 10-K, accession 0001628280-26-011430.*
Linde plc is a public limited company formed under the laws of Ireland, with principal
executive offices in Woking, United Kingdom and Danbury, Connecticut, and administrative
offices in Tonawanda, New York and Pullach, Germany. It is the largest industrial gas
company worldwide. Sales were $33,986 million in 2025, $33,005 million in 2024 and $32,854
million in 2023. Approximately 64% of 2025 sales were generated outside the United States.
The company had 65,177 employees at December 31, 2025. Ordinary shares trade on Nasdaq
under the symbol LIN.
**What it sells.** Two product lines. The industrial gases business produces atmospheric
gases (oxygen, nitrogen, argon and rare gases such as krypton, neon and xenon) separated
from ambient air, and process gases (hydrogen, helium, carbon dioxide, carbon monoxide,
electronic gases, specialty gases and acetylene) produced by other methods. Most of Linde's
conventional hydrogen is made from natural gas or methane by steam methane reformation or
auto-thermal reforming; the company also produces low-carbon ("blue") hydrogen by capturing
and sequestering carbon emissions, renewable ("green") hydrogen by electrolysis, and
recovers hydrogen from existing chemical and petrochemical processes. The Engineering
business designs and builds turnkey plants — air separation, hydrogen, synthesis, olefin
and natural gas plants — for third-party customers and for Linde's own gases businesses.
End markets are healthcare, chemicals and energy, manufacturing, metals and mining, food
and beverage, and electronics; Linde is not dependent on a single customer or a few
customers.
**How the revenue is contracted.** Three distribution methods, each with a distinct
contract profile, and this is the core of the business model:
- **On-site / tonnage** — Linde builds a plant on or next to the customer's site and
supplies by pipeline. Contracts are generally total-requirements contracts with terms
typically of 10 to 20 years, containing minimum purchase requirements and price
escalation provisions. Many on-site cryogenic plants also produce liquid product for the
merchant market, so plants are typically not dedicated to one customer.
- **Merchant / bulk liquid** — delivered by tanker truck to customer-site storage containers
that Linde generally owns and leases to the customer. Usually three- to seven-year
requirements contracts. Merchant oxygen and nitrogen carry a small distribution radius;
argon, hydrogen and helium travel much farther.
- **Packaged / cylinder gases** — small volumes in cylinders, generally sold under one- to
three-year supply contracts and purchase orders.
In the second quarter of 2026 the consolidated mix by distribution method was packaged gas
34%, merchant 30%, on-site 24% and other (including Engineering) 12% of sales.
**Assets and geography.** Because industrial gases are generally uneconomical to transport
more than a few hundred miles, Linde runs a large, geographically dispersed production
base: approximately 350 facilities in the Americas (mainly cryogenic air separation,
hydrogen and carbon dioxide plants), approximately 275 in EMEA and approximately 230 in
APAC, plus non-cryogenic plants, packaged gas facilities and pipelines. Five major North
American pipeline complexes sit in northern Indiana, Houston, the Texas Gulf Coast, Detroit
and Louisiana. Engineering plant components are made in owned factories in Tacherting,
Germany; Hesingue, France; New York; and Dalian, China. Research and development is
conducted primarily in Pullach, Tonawanda, Burr Ridge (Illinois) and Shanghai.
**Segments.** Industrial gases are managed geographically, giving three reportable segments
— Americas, EMEA and APAC — alongside a fourth, Engineering, managed worldwide. "Other"
holds corporate costs and smaller businesses, principally Linde Advanced Material
Technologies (LAMT) and global helium wholesale. In 2025 the three geographic segments
produced 90% of sales and Engineering plus Other the remaining 10%. Segment operating
profit, the company's own measure, excludes purchase accounting impacts of the 2018 Linde
AG merger, cost reduction and other charges, and items not indicative of ongoing trends.
Fiscal 2025 segment sales and segment operating profit (millions of dollars):
| Segment | Sales | Segment operating profit |
|---|---|---|
| Americas | 15,208 | 4,747 |
| EMEA | 8,549 | 3,055 |
| APAC | 6,661 | 1,933 |
| Engineering | 2,250 | 408 |
| Other | 1,318 | (6) |
| **Total** | **33,986** | **10,137** |
**Cost structure and competition.** Energy — mostly electricity, natural gas and diesel for
distribution — is the single largest cost item in production and distribution. Linde
mitigates price movement contractually through pricing formulas, surcharges, cost
pass-through and tolling arrangements; large contracts typically carry escalation and
pass-through clauses. Hydrogen, helium, carbon dioxide, carbon monoxide and specialty gas
raw materials are largely purchased from outside sources. Competitors include L'Air
Liquide, Air Products and Chemicals, Messer Group and Mitsubishi Chemical (through Taiyo
Nippon Sanso), plus many small and mid-size regional producers and distributors; a
significant portion of the international market is served by customer-owned plants. Where
Linde has pipeline networks it derives a competitive advantage. The business is not
materially seasonal and is not materially dependent on any one patent or patent family.
---
## Risk factors
*Condensed from Item 1A of the fiscal 2025 Form 10-K, accession 0001628280-26-011430. The
Form 10-Q for the quarter ended June 30, 2026 states there have been no material changes to
these risk factors through that quarterly period.*
- **Cyclical end markets and weakening economies.** Linde serves customers across more than
80 countries, which generally steadies results through cycles, but chemicals and energy
and metals and mining are cyclical. Downturns can cut demand, impair customers' ability
to pay, cause contract terminations or project delays, reduce capacity utilization, and
force impairments of plant or of goodwill, customer relationships and intellectual
property.
- **Energy and raw material cost and supply.** Energy is the largest cost item; contractual
escalation and pass-through may not fully mitigate variability. Disruption in externally
purchased raw materials could impair Linde's ability to meet contractual supply
commitments.
- **International operations.** Currency devaluations, transportation interruptions,
political and economic instability, restrictions on transferring funds, trade conflicts,
duties and tariffs, import/export controls, labor unrest and possible nationalization or
expropriation of assets.
- **Currency translation.** A significant share of revenue is denominated in currencies
other than the reporting US dollar; hedging may not succeed.
- **Financing and ratings.** Credit-market disruption could raise the cost or difficulty of
financing; borrowing costs depend in significant part on debt ratings, themselves driven
by interest coverage and leverage.
- **Goodwill and intangible impairment.** At December 31, 2025 goodwill was approximately
$28 billion and other indefinite-lived intangibles approximately $2 billion, largely a
consequence of acquisition accounting for the 2018 merger of Linde's predecessor
companies. Negative industry trends, business disruption, changes in asset use,
divestitures or a sustained decline in market capitalization could force impairment.
- **Catastrophic events.** Physical exposure to natural disasters linked to climate change
(hurricanes, floods), epidemics and pandemics, and acts of war or terrorism, affecting
Linde's own operations and those of its customers and suppliers.
- **Operational risk.** Results depend on continuous plant operation and on completing new
construction on time, on budget and to performance specification; failure exposes Linde
to lost revenue, litigation and reputational damage. Production, storage, vehicle
transport and pipeline operations carry risk of fire, toxic release and explosion, with
potential loss of life, environmental damage and extensive property damage.
- **Talent and technology.** Competitive advantage rests substantially on skilled personnel;
separately, failure of research and development to keep pace with competitors could cost
the company customers.
- **Cybersecurity.** Systems have been, and are expected to continue to be, subject to
increasingly sophisticated attacks; to date such attempts have not had a significant
impact on operations or financial results. Cybersecurity is identified as a top
enterprise risk and falls under Audit Committee oversight, with a Global CIO reporting to
the CFO and a CISO reporting to the CIO.
- **Acquisition integration and joint ventures.** Integration may create unforeseen
operating difficulty; named risks include remediating controls at acquired companies,
diversion of management time, cultural and systems integration, failure to achieve
targeted synergies, and loss of key employees and business relationships.
- **Regulation.** Securities laws, tax laws and currency controls, trade and export
restrictions and economic sanctions, antitrust, safety, environmental protection
(including climate change and energy efficiency laws and related disclosure), data
protection including artificial intelligence, global anti-bribery laws including the FCPA,
and healthcare regulation. Environmental and climate rules may drive structural change in
key end markets by altering customer and competitor behavior.
- **Litigation and product liability.** Subsidiaries face lawsuits and government
investigations in the ordinary course; industrial gases are potentially hazardous
substances and medical gases must meet specifications or risk patient harm, and US class
action exposure is noted as historically more significant than elsewhere.
- **Irish incorporation and enforcement.** A US money judgment is not automatically
enforceable in Ireland; there is no US–Ireland reciprocal enforcement treaty, and an Irish
court may refuse a judgment obtained by fraud, contrary to Irish public policy, in breach
of natural justice, or irreconcilable with an earlier foreign judgment.
- **Tax law and residency.** Linde is Irish-incorporated but currently treated as UK tax
resident, so changes to UK rules bear directly on it; ceasing UK residence could trigger
exit charges, dual residence could cause duplicative taxation, and the IRS could
challenge the position that Linde is not a domestic US corporation.
**Principal legal and contingent matters** (from the commitments and contingencies notes of
both filings; balances as of June 30, 2026):
- **Russia / RusChemAlliance (RCA).** Performance of all Linde Engineering agreements in
Russia was lawfully suspended on May 27, 2022 in compliance with sanctions. RCA, owned 50%
by PJSC Gazprom, obtained a December 2022 St. Petersburg injunction blocking sale of Linde's
Russian shares and assets, then won St. Petersburg decisions on both its gas processing
plant ("GPP") and LNG claims. During the fourth quarter of 2024 RCA enforced the GPP
decision against Linde's shares in two Russian joint ventures, which were sold locally with
proceeds paid to RCA; enforcement against remaining local assets is ongoing. Linde has
secured contrary rulings outside Russia — Hong Kong International Arbitration Centre awards
on exclusive jurisdiction and a January 2024 Hong Kong court judgment granting permanent
anti-suit and anti-enforcement injunctions and ordering the St. Petersburg injunction lifted
— but RCA continues to pursue Russian proceedings. Guarantor banks, following their own
asset seizures in Russia, have asserted reimbursement claims against Linde GmbH in Germany
totaling approximately €0.8 billion. A Linde subsidiary has obtained a German damages
judgment against Gazprom PJSC of €204 million over the seizure of a Russian joint venture's
shares. Linde records a contingent liability of $1.1 billion representing advance payments
previously in contract liabilities for the terminated RCA projects, and does not expect a
material adverse earnings impact given $1.8 billion of combined liabilities recorded at
June 30, 2026 and the immaterial investment value of its remaining deconsolidated Russian
subsidiaries.
- **Amur GPP.** Gazprom filed an October 2024 claim in the Amur Region arbitration court
against Linde Engineering and unrelated Linde entities for damages and lost profits from
fires at the Amur gas processing plant in October 2021 and January 2022; Linde's own review
attributed the first fire to construction and assembly quality, the responsibility of
contractor Nipigas. Linde Engineering initiated arbitration against Gazprom before the
Stockholm Chamber of Commerce during 2025. Contingent liability of $0.7 billion for this
and other Amur GPP contract matters.
- **Linde AG squeeze-out appraisal.** Former Linde AG shareholders filed proceedings in
Munich seeking an increase above the €189.46 per share cash consideration paid in the April
2019 squeeze-out of minority holders, applicable to 14,763,113 shares. The court rejected
the claims in full in November 2023; plaintiffs have appealed. No reserve has been
established.
- **Brazil Refis program.** Federal tax disputes enrolled in Brazil's 2009 voluntary amnesty
program remain unresolved, with litigation over the application of cash deposits and net
operating loss carryforwards and over the size of available tax reductions.
---
## Management's discussion — fiscal 2025
*From Item 7 of the fiscal 2025 Form 10-K, accession 0001628280-26-011430.*
**Top line.** Sales of $33,986 million rose 3%. The whole of the increase came from price
and acquisitions: higher price attainment added 2%, primarily in the Americas and EMEA, and
acquisitions added 1%, largely in APAC and the Americas. Volumes were flat, with base
volume declines largely offset by new project start-ups. Currency translation and cost
pass-through — the contractual billing of energy cost variances, mainly to on-site
customers — were both flat.
**Margins and earnings.** Cost of sales excluding depreciation and amortization rose 1% and
fell as a share of sales to 51.2% from 51.9%, on higher pricing and productivity gains
against cost inflation. SG&A rose 3% to $3,433 million, holding at 10.1% of sales.
Reported operating profit of $8,923 million was 3% higher; adjusted operating profit of
$10,137 million was 4% higher. Cost reduction program and other charges were $273 million
net, comprising $308 million of global severance largely in Engineering less $35 million of
other benefits mostly from a divestiture. Other income (expense) swung to a $58 million
expense from $185 million of income, on a $164 million merger-related purchase accounting
charge in 2025 against 2024 benefits of $41 million from a supplier settlement in the
Americas and $45 million of insurance recoveries. The reported effective tax rate fell to
22.4% from 23.4%, chiefly on a German tax rate reduction worth $158 million, partly offset
by the non-recurrence of 2024 repatriation benefits; on an adjusted basis the rate rose
slightly to 23.7%. Net income attributable to Linde plc was $6,898 million and diluted EPS
$14.61, against $6,565 million and $13.62 in 2024; adjusted diluted EPS was $16.46, up 6%,
helped by a lower share count. EBITDA was $12,836 million and adjusted EBITDA $13,351
million. Enacted US legislation (H.R.1, the One Big Beautiful Bill Act, signed July 4, 2025)
made permanent 100% bonus depreciation and domestic research cost expensing, providing
current and future cash tax benefits, with no material effect on 2025 results.
**Segments.** *Americas* sales rose $766 million, or 5% — price 3 points, volume 1 point on
electronics, metals and mining and chemicals and energy including project start-ups,
pass-through 1 point, net acquisitions 1 point, currency minus 1 point on the Brazilian real
and Mexican peso — with operating profit up $197 million, or 4%. *EMEA* sales rose $197
million, or 2%, with currency adding 3 points (euro and sterling) and price 2 points against
a 3-point volume decline in metals and mining, manufacturing and chemicals and energy;
operating profit rose $275 million, or 10%. *APAC* sales were flat — acquisitions plus 2,
volume minus 1, currency minus 1 — and operating profit rose $15 million, or 1%.
*Engineering* sales fell $72 million, or 3%, on project timing despite a 3-point currency
tailwind, with operating profit down $2 million. *Other* sales rose 5% on LAMT volumes
partly offset by helium, but operating profit fell $68 million on helium and the
non-recurrence of a 2024 insurance recovery.
**Cash and capital.** Operating cash flow of $10,350 million was $927 million above 2024,
on higher net income adjusted for non-cash charges and lower net working capital, including
higher contract-liability inflows from Engineering customer advances. Capital expenditure
of $5,261 million was $764 million higher and went primarily into new plant and production
equipment for backlog growth, roughly 60% in the Americas and 21% in APAC. Acquisitions net
of cash acquired were $412 million (primarily EMEA and APAC, against $317 million in 2024
concentrated in Americas packaged gas); divestiture and asset-sale proceeds were $42 million
against $170 million. The sale-of-gas backlog of large projects under construction —
the total estimated capital cost of large plants being built — was approximately $7.3
billion at December 31, 2025. Dividends of $2,811 million reflected an 8% increase in the
per-share rate to $6.00 from $5.56. Net purchases of ordinary shares were $4,578 million;
under the $15 billion repurchase program authorized on October 23, 2023, $7.7 billion had
been repurchased and $7.3 billion remained authorized at year end. Net debt rose $5,160
million to $21,933 million, of which roughly $2,400 million was foreign currency translation;
total debt was $26,989 million, 81% fixed rate, at a global effective borrowing rate of
approximately 2.3%. Ratings at year end were A/A2 long-term and A-1/P-1 short-term, with a
$5 billion and a $1.5 billion revolving credit agreement, both unsecured, undrawn and
without financial covenants.
**Balance sheet judgments.** Goodwill was $27,927 million and other indefinite-lived
intangibles $1,826 million; the October 1, 2025 annual test indicated no impairment, with
enterprise value of approximately $220 billion against total capital of approximately $62
billion. Critical estimates flagged by management are long-term construction contract
revenue recognized on a cost-incurred input method (where estimating total cost at
completion is the key uncertainty), pension assumptions, asset impairment, income taxes and
contingencies. US pension plans closed the year with a $169 million surplus and non-US plans
a $615 million surplus; 2026 consolidated pension expense is expected to be a benefit of
approximately $136 million, with required contributions of $25 million to $35 million.
**Environmental positioning.** Production and distribution of industrial gases is energy
intensive and a significant source of greenhouse gas emissions, and hydrogen production and
other plants are already subject to carbon taxation or cap-and-trade in California, China,
Singapore and the European Union. Management believes it can mitigate those costs through
the terms of its product supply contracts, and frames decarbonization as a source of demand
as much as cost: continued growth in clean hydrogen sales, oxyfuel combustion technology for
metals, glass, refining and chemicals, oxygen for wastewater treatment, carbon dioxide for
desalination, and gases for second-generation biofuels under EU and US renewable fuel
standards. 2025 environmental protection costs were not significant, and future annual
spending is expected to be similar.
---
## Current period — quarter and six months ended June 30, 2026
*From the Form 10-Q, accession 0001628280-26-051289.*
**The quarter.** Sales of $9,289 million were 9% above the prior-year quarter, and this
time growth was broad rather than price-only: price added 2 points, volume 2 points
(electronics, manufacturing, and chemicals and energy), currency 2 points (Brazilian real,
Chinese yuan and euro), acquisitions 1 point, cost pass-through 1 point and Engineering 1
point. Reported operating profit was $2,554 million, or 27.5% of sales, up 8%; adjusted
operating profit was $2,744 million, a 29.5% margin, up 7%. The reported effective tax rate
was 24.0% against 24.4%. Reported diluted EPS was $4.15, up 11% from $3.73, on higher net
income and a lower share count; adjusted diluted EPS was $4.50. EBITDA was $3,553 million.
**Six months.** Sales of $18,070 million were also 9% higher, with currency contributing 3
points over the half. Reported operating profit rose $455 million, or 10%; on an adjusted
basis $380 million, or 8%. Cost of sales excluding depreciation and amortization rose to
52.3% of sales in the quarter and 51.9% for the half, from 50.7% and 51.0%, on higher costs
and cost pass-through partly offset by productivity; SG&A improved to 9.6% and 9.9% of sales
from 10.2% and 10.0%. There were no cost reduction program or other charges in either 2026
period, against $55 million of mostly severance charges in the first half of 2025. Other
income of $80 million year to date included a gain on a divestiture in the Americas.
Headcount was 64,649 at June 30, 2026, 193 lower than a year earlier, reflecting the
continuing cost reduction program partly offset by acquisitions.
**Segments.** Americas sales rose $271 million, or 7%, in the quarter (price 2, volume 2 on
electronics and manufacturing, currency 2, acquisitions 1), with operating profit up $63
million, or 5%. EMEA sales rose $141 million, or 7%, driven by 3 points of currency, 2 of
price, 2 of pass-through and 1 of acquisitions against a 1-point volume decline in
manufacturing; operating profit rose $43 million, or 6%. APAC was the standout: sales rose
$215 million, or 13%, with volume alone adding 6 points on new project start-ups and
equipment sales, plus 3 points of currency, 2 of price and 2 of pass-through, and operating
profit rose $41 million, or 8%. Engineering sales rose $74 million, or 13%, on project timing and
currency, with operating profit up $10 million, or 11% — though for the half Engineering
operating profit was $3 million lower. Other sales rose $93 million, or 30%, on LAMT
volume, price and pass-through, lifting Other operating profit by $31 million.
**Cash, capital and the backlog.** First-half operating cash flow was $4,511 million, 3%
higher, on higher net income. Capital expenditure of $2,780 million was $253 million above
the prior year, again for plant and production equipment supporting backlog growth, and the
sale-of-gas backlog of large projects under construction had grown to approximately $8.1
billion at June 30, 2026 from approximately $7.3 billion at the end of 2025 — the clearest
forward indicator in the filing. Acquisitions net of cash acquired were $385 million,
primarily businesses in the Americas and EMEA (against $270 million a year earlier in the
Americas and APAC); divestitures and asset sales brought in $123 million, including proceeds
from the sale of a business in the Americas. Net debt inflow was $1,645 million: Linde
issued €1.6 billion of euro-denominated notes and repaid $725 million of US dollar notes in
the half. Net purchases of ordinary shares fell to $1,656 million from $2,207 million;
during the second quarter the company bought 1,732 thousand shares at an average $504.02,
bringing cumulative repurchases under the 2023 program to $9.4 billion with $5.6 billion
still authorized. Dividends of $1,479 million reflected a 7% increase in the quarterly rate
to $1.60 per share from $1.50. Both revolving credit agreements — $5.0 billion and $1.5
billion — remained unsecured, undrawn and free of financial covenants. Contract liabilities
were $2,413 million and contract assets $523 million at June 30, 2026, mostly Engineering
and on-site customer prepayments.
**Funding structure.** Linde filed a Form S-3 registration statement on May 5, 2026 under
which Linde plc and its wholly owned subsidiary Linde Inc. may offer debt securities, with
cross-guarantees among Linde plc, Linde Inc. and Linde GmbH. The company's European debt
issuance programme was updated with a base prospectus filed with the Luxembourg Stock
Exchange on May 4, 2026 and enlarged to €25.0 billion, valid for one year from that date.
**Outlook disclosure.** The 10-Q itself carries no numeric financial guidance: the company
states that it provides operating results updates, material trends and financial guidance
through its quarterly earnings releases and investor teleconferences rather than in the
quarterly report. The numbers for this quarter accordingly appear in the second-quarter
earnings release furnished the same day, summarised under subsequent events below.
---
## Subsequent events
Neither the fiscal 2025 Form 10-K nor the Form 10-Q for the quarter ended June 30, 2026
contains a subsequent-events note; the 10-Q's notes run from summary of significant
accounting policies through revenue recognition with no such note, and no acquisition or
divestiture signed or completed after June 30, 2026 is disclosed in either filing.
In the window between the June 30, 2026 quarter end and the July 31, 2026 filing date, Linde
furnished its second-quarter earnings release (Form 8-K, accession 0001654954-26-007052),
raising full-year 2026 adjusted diluted earnings per share guidance to a range of $17.70 to
$17.90 and setting third-quarter guidance at $4.45 to $4.55.
The other corporate action in that window was the annual general meeting of shareholders,
held July 28, 2026 (Form 8-K, accession 0001193125-26-325127), at which holders of
396,007,872 shares — 85.65% of shares outstanding and entitled to vote — were present or
represented. All nine director nominees were re-elected, the lowest with 93.55% of votes
cast, and every board proposal carried; the shareholder proposal requesting a report on
Linde's renewable electricity procurement strategy was defeated, receiving 13.05% of votes
cast in favour.