# How Linde makes money

CXProWealth Business Lens · Linde (LIN) · Q3 FY2026

Read from the 10-Q for the period 2026-07-01 to 2026-09-30, filed 2026-10-29 with the SEC (accession 0001628280-26-068079): https://www.sec.gov/Archives/edgar/data/1707925/000162828026068079/

Business Lens explains how a company earns, spends and keeps its money, from its own filings. It is insight and context, never a view on the shares, a target, or advice. Figures are raw units as filed; percentages are percentage points.

## Headline figures

- Revenue: $9.4B (+9.2% on the year)
- Operating income: $2.2B (operating margin 22.9%)
- Net income: $1.7B (net margin 18.0%)
- Gross margin: not reported (the company reports expenses by nature: no cost of revenue or gross profit line exists)
- Free cash flow: $1.8B (18.9% of revenue)
- Cash conversion (operating cash flow / net income): 1.87x
- Capital expenditure: 14.8% of revenue

## Where the money goes (Q3 FY2026)

- Americas → Sales: $3.6B
- Emea → Sales: $2.3B
- Apac → Sales: $2.0B
- Engineering → Sales: $582.0M
- Other → Sales: $944.0M
- Sales → Cost of sales, exclusive of depreciation and amortization: $5.0B
- Sales → Selling, general and administrative: $892.0M
- Sales → Depreciation and amortization: $965.0M
- Sales → Research and development: $37.0M
- Sales → Cost reduction program and other charges: $425.0M
- Sales → Operating Profit: $2.1B
- Other income (expense) - net → Operating Profit: $27.0M
- Operating Profit → Interest expense - net: $71.0M
- Operating Profit → Income Before Income Taxes and Equity Investments: $2.1B
- Net pension and OPEB cost (benefit), excluding service cost → Income Before Income Taxes and Equity Investments: $49.0M
- Income Before Income Taxes and Equity Investments → Income taxes: $449.0M
- Income Before Income Taxes and Equity Investments → Income Before Equity Investments: $1.7B
- Income Before Equity Investments → Net Income (Including Noncontrolling Interests): $1.7B
- Income from equity investments → Net Income (Including Noncontrolling Interests): $61.0M
- Net Income (Including Noncontrolling Interests) → Less: noncontrolling interests: $48.0M
- Net Income (Including Noncontrolling Interests) → Net income - Linde plc: $1.7B

## Where the revenue comes from

### Segments (Segment Information (Details))

| Member | Value | Share |
|---|---:|---:|
| Americas | $3.6B | 38.3% |
| Emea | $2.3B | 24.7% |
| Apac | $2.0B | 20.7% |
| Other | $944.0M | 10.0% |
| Engineering | $582.0M | 6.2% |

The members sum to total revenue.

### ConsolidationItems (Segment Information (Details))

| Member | Value | Share |
|---|---:|---:|
| Operating Segments | $9.4B | 100.0% |
| Intersegment Eliminations | $114.0M | 1.2% |

The members do not sum to total revenue.

### ContractWithCustomerSalesChannel (Revenue Recognition - Schedule of Revenue by Distribution Method (Details))

| Member | Value | Share |
|---|---:|---:|
| Packaged Gas | $3.1B | 33.5% |
| Merchant | $2.9B | 31.1% |
| On-Site | $2.2B | 22.9% |
| Other | $1.2B | 12.5% |

The members sum to total revenue.

## Income statement, as filed

| Line | Q3 FY2026 | Of revenue |
|---|---:|---:|
| Sales | $9.4B | 100% |
| Cost of sales, exclusive of depreciation and amortization | $5.0B | 52.8% |
| Selling, general and administrative | $892.0M | 9.5% |
| Depreciation and amortization | $965.0M | 10.3% |
| Research and development | $37.0M | 0.4% |
| Cost reduction program and other charges | $425.0M | 4.5% |
| Other income (expense) - net | $27.0M | 0.3% |
| **Operating Profit** | $2.2B | 22.9% |
| Interest expense - net | $71.0M | 0.8% |
| Net pension and OPEB cost (benefit), excluding service cost | -$49.0M | 0.5% |
| **Income Before Income Taxes and Equity Investments** | $2.1B | 22.6% |
| Income taxes | $449.0M | 4.8% |
| **Income Before Equity Investments** | $1.7B | 17.9% |
| Income from equity investments | $61.0M | 0.6% |
| **Net Income (Including Noncontrolling Interests)** | $1.7B | 18.5% |
| Less: noncontrolling interests | ($48.0M) | 0.5% |
| **Net income - Linde plc** | $1.7B | 18.0% |
| Basic earnings per share (in dollars per share) | $4 | 0.0% |
| Diluted earnings per share (in dollars per share) | $4 | 0.0% |
| Basic shares outstanding (in shares) | 460,606,000 |  |
| Diluted shares outstanding (in shares) | 462,512,000 |  |

## History

| Period | Revenue | Operating income | Net income | Operating cash flow | Capital expenditure | Free cash flow |
|---|---:|---:|---:|---:|---:|---:|
| FY2016 | $10.5B | $2.2B | $1.5B | $2.8B | $1.5B | $1.3B |
| FY2017 | $11.4B | $2.4B | $1.2B | $3.0B | $1.3B | $1.7B |
| FY2018 | $14.8B | $5.2B | $4.4B | $3.7B | $1.9B | $1.8B |
| FY2019 | $28.2B | $2.9B | $2.3B | $6.1B | $3.7B | $2.4B |
| FY2020 | $27.2B | $3.3B | $2.5B | $7.4B | $3.4B | $4.0B |
| FY2021 | $30.8B | $5.0B | $3.8B | $9.7B | $3.1B | $6.6B |
| FY2022 | $33.4B | $5.4B | $4.1B | $8.9B | $3.2B | $5.7B |
| FY2023 | $32.9B | $8.0B | $6.2B | $9.3B | $3.8B | $5.5B |
| FY2024 | $33.0B | $8.6B | $6.6B | $9.4B | $4.5B | $4.9B |
| FY2025 | $34.0B | $8.9B | $6.9B | $10.4B | $5.3B | $5.1B |

Latest trend (the newest full year against the year before; a reading, not a forecast):

- Revenue: +3.0% (year before +0.5%): accelerating
- Operating income: +3.3% (year before +7.6%): slowing
- Net income: +5.1% (year before +5.9%): steady
- Free cash flow: +3.3% (year before -10.7%): accelerating

## Operating figures stated in the filing

- Sale of gas backlog (large projects under construction): $7.9B (as of 2026-09-30). "At September 30, 2026, Linde's sale of gas backlog of large projects under construction was approximately $7.9 billion." (Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations)
- Volume contribution to sales growth: 2.0% (as of 2026-09-30). "Volumes increased sales by 2% both in the quarter and nine months ended September 30, 2026 primarily driven by the electronics, chemicals and energy, and manufacturing end markets" (Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations)
- Price contribution to sales growth: 3.0% (as of 2026-09-30). "Higher price attainment increased sales by 3% both in the quarter and nine months ended September 30, 2026." (Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations)
- Employees: 64,512 employees (as of 2026-09-30). "The number of employees at September 30, 2026 was 64,512, a decrease of 977 employees from September 30, 2025 due to the ongoing impact of cost reduction programs, partially offset by acquisitions." (Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations)
- Employees: 65,489 employees (as of 2025-09-30). "Number of employees 64,512 65,489 (1) % 64,512 65,489 (1) %" (Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations)
- Americas price contribution to sales growth: 6.0% (as of 2026-09-30). "Pricing increased sales by 6% in the quarter, primarily from ongoing price actions in addition to recovery of costs incurred in the current and prior periods." (Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations)
- Americas volume contribution to sales growth: 3.0% (as of 2026-09-30). "Volumes increased sales by 3% both in the quarter and year-to-date periods primarily driven by the electronics, chemicals and energy, and metals and mining end markets." (Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations)
- EMEA price contribution to sales growth: 2.0% (as of 2026-09-30). "Higher price attainment increased sales by 2% both in the quarter and the year-to-date periods." (Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations)
- EMEA volume contribution to sales growth: 1.0% (as of 2026-09-30). "Volumes increased sales by 1% in the quarter and decreased sales by 1% year-to-date." (Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations)
- APAC volume contribution to sales growth: 5.0% (as of 2026-09-30). "Volumes increased sales by 5% both in the quarter and year-to-date periods, primarily driven by electronics and chemicals and energy end markets and project start-ups." (Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations)
- APAC price contribution to sales growth: 3.0% (as of 2026-09-30). "Higher p ricing increased sales by 3% in the quarter and 2% year-to-date." (Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations)
- Americas countries of operation: 20 countries (as of 2026-09-30). "The Americas segment includes Linde's industrial gases operations in approximately 20 countries including the United States, Canada, Mexico and Brazil." (Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations)
- EMEA countries of operation: 50 countries (as of 2026-09-30). "The EMEA segment includes Linde's industrial gases operations in approximately 50 European, Middle Eastern and African countries including Germany, the United Kingdom, France, the Republic of South Africa and Sweden." (Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations)
- APAC countries and regions of operation: 15 countries (as of 2026-09-30). "The APAC segment includes Linde's industrial gases operations in approximately 15 Asian and South Pacific countries and regions including China, Australia, India, and South Korea." (Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations)

## Operating income by segment

- Americas: $1.3B (58.7% of operating income)
- Emea: $817.0M (38.0% of operating income)
- Apac: $534.0M (24.8% of operating income)
- Engineering: $107.0M (5.0% of operating income)
- Other: $42.0M (2.0% of operating income)

## Investor view

**A $425 million cost program charge cut Linde's operating profit in a quarter when price and volume both lifted sales**

### How it makes money

Linde sells industrial gases through three delivery methods, and the filing reports each. Packaged gas, in cylinders, brought $3,147 million of the quarter's $9,404 million in sales, 33.5%. Merchant, bulk gas delivered to customer tanks, brought $2,922 million, 31.1%. On-site, plants built at a large customer's facility, brought $2,157 million, 22.9%. The remaining $1,178 million, 12.5%, is other sales. _(from the filing)_
Most profit comes from the regional gas businesses. Americas earned $1,263 million of segment operating profit on $3,601 million of sales, a 35.1% margin. EMEA earned $817 million on $2,327 million, also 35.1%, and APAC $534 million on $1,950 million, 27.4%. Engineering earned $107 million on $582 million, 18.4%. Other, which holds corporate costs and smaller businesses including U.S. homecare and global helium wholesale, earned $42 million on $944 million. _(from the filing)_
The company reports its costs by nature, so there is no gross margin line. Cost of sales excluding depreciation took 52.8% of sales, depreciation and amortization 10.3%, SG&A 9.5% and research and development 0.4%. Depreciation of $965 million is larger than SG&A of $892 million: the product is made in plants the company owns, and the cost of those plants is the second-largest line. _(from the filing)_
Operating cash flow was $3,169 million, 1.87 times net income of $1,692 million, largely because depreciation is a non-cash cost. Capital spending of $1,392 million, 14.8% of sales, left free cash flow of $1,777 million, 18.9% of sales, against $1,672 million in the same quarter a year earlier. _(from the filing)_

### What shifted

Sales rose 9.2% to $9,404 million from $8,615 million. The filing breaks the growth down: higher price attainment added 3% and volumes 2%, the volumes "primarily driven by the electronics, chemicals and energy, and manufacturing end markets". Currency, acquisitions, cost pass-through and engineering sales made up the rest. _(from the filing)_
The Americas led on price. Pricing added 6% to segment sales, "primarily from ongoing price actions in addition to recovery of costs incurred in the current and prior periods", and volumes 3%, for growth of 10.7%. APAC grew fastest, 12.0%, with volumes up 5% from electronics, chemicals and energy, and project start-ups. EMEA grew 6.8%, with price adding 2% and volume 1%. _(from the filing)_
Operating profit fell 9.2% to $2,150 million from $2,367 million, and the operating margin to 22.9% from 27.5%. The cost reduction program and other charges of $425 million equal 4.5% of sales, almost the whole 4.6-point fall in margin. The filing says the program recognized this quarter includes global severance and non-cash charges "primarily related to the U.S. homecare business". _(from the filing)_
Under the charge, costs moved in both directions. Cost of sales grew 13.3%, faster than sales, and rose to 52.8% of sales from 50.8%, which the filing puts down to "higher costs and cost pass-through". SG&A fell 0.6% to $892 million and depreciation rose 0.4%, so both shrank as a share of sales. Employees fell to 64,512 from 65,489, which the filing ties to "the ongoing impact of cost reduction programs". _(from the filing)_
Below operating profit, the effective tax rate rose to 21.1% from 18.0% ($449 million on $2,128 million of pretax income, against $424 million on $2,360 million), which the filing attributes to "a tax rate change in EMEA in 2025". Net income fell 12.3% to $1,692 million. Diluted shares fell to 462.5 million from 471.5 million, so diluted EPS fell to $3.66 from $4.09. _(from the filing)_

### Risks in the filing

The quarterly report says there have been "no material changes" to the risk factors in the latest annual report, so the full list sits there. The risk this report names directly is currency: results of non-U.S. operations are translated into dollars, and the filing warns that "such currency movements may materially impact Linde’s results of operations in any given period". _(from the filing)_
Cost inflation is named as the main offset to profit, in the consolidated results and in each of the three gas regions. The company says it covers it with higher pricing and productivity initiatives, and in the Americas with "recovery of costs incurred in the current and prior periods". _(from the filing)_
The U.S. homecare business is a named weak spot. This quarter the company moved it out of the Americas segment into Other, took non-cash charges "primarily related to the U.S. homecare business", and says Other's operating profit fell "primarily due to declines in the U.S. homecare business". _(from the filing)_
The company relies on debt markets alongside its cash flow. It says it "does not anticipate any limitations" on access to them and "remains committed to its strong ratings from Moody’s and Standard & Poor’s". Net interest expense rose 10.9% to $71 million from $64 million. _(from the filing)_
Two of these already show in the numbers: cost inflation, in cost of sales growing faster than sales, and homecare, in Other's thin margin and in the charge. Currency is the quiet one this quarter: it added to sales rather than taking away, which is the side of the risk that is easy to overlook. _(analysis)_

## Founder view: mechanisms

### Contracts that pass energy costs through

Linde builds plants at a large customer's site and sells the output under long contracts that bill energy cost changes back to the customer. The filing describes cost pass-through as "the contractual billing of energy cost variances primarily to on-site customers". Revenue moves with power prices; profit mostly does not. The supplier earns on owning and running the asset, not on guessing the price of energy. _(analysis)_

### Pricing power on a dense delivery network

Packaged and merchant gas travel by truck and cylinder from local plants. Gas is cheap to make and costly to move, so the supplier with the nearest plant and the densest route has the lowest cost to serve, and a customer's gas bill is small next to the cost of running out. That gives the incumbent room to raise prices steadily without losing the account. _(analysis)_

### A backlog of plants built against contracts

Linde spends ahead of revenue, building large plants against signed supply contracts. The filing calls the result a "sale of gas backlog": the estimated capital cost of large plants under construction. Growth arrives in steps as each plant starts up, and the money is committed long before the revenue appears. _(analysis)_

### Productivity that outruns growth

Linde runs repeated cost reduction programs and productivity initiatives, and the filing names productivity next to pricing as a driver of segment profit in every gas region. Overhead and headcount are held flat or cut while sales grow, so each extra dollar of price reaches operating profit with less taken out along the way. _(analysis)_

## Member research

Signed-in members read, on the page: what Linde's numbers depend on from here, and the playbook behind each mechanism (what needs scale, what transfers, how to test it, the metric that would show it).

## Sources

- Linde 10-Q for the period to 2026-09-30: https://www.sec.gov/Archives/edgar/data/1707925/000162828026068079/ (2026-10-29)

Methodology business-lens-1.0 · schema 1.2.0 · run business-lens-2026-11-02 · as of 2026-11-02