林德 (LIN) 2026财年第三季度业绩电话会：每股收益创历史新高，4.25亿美元重组及第四季度业绩指引lg...

核心要点

• 林德（Linde）公布了2026财年第三季度创纪录的季度业绩，销售额达94亿美元，营业利润为28亿美元，每股收益（EPS）为4.59美元。
• 销售额同比增长9%。内生销售额增长5%，其中包括3%的定价拉动和2%的销量增长。
• 营业利润率为29.4%，同比下降30个基点，但在剔除合同规定的能源成本转嫁因素后与上年持平。
• 公司计入了4.25亿美元的重组费用。其中约有一半与裁员遣散费相关，其余部分主要用于业务组合及资产处置，且大部分发生在Lincare部门。
• 在亚太地区和美国有机增长的推动下，电子业务销售额增长了15%。林德目前在建的电子类项目规模约为20亿美元。
• 管理层预计第四季度每股收益为4.40美元至4.50美元，相当于同比增长5%至7%，并维持全年每股收益17.82美元至17.92美元的业绩指引。

核心财务数据

汇率因素为季度销售额贡献了1个百分点，同时成本转嫁、并购和工程业务各贡献了1个百分点。基础资本支出同比持平，剔除汇率影响后有所下降。

业务与运营表现

电子行业是林德增长最快的终端市场，销售额增长了15%。增长主要由亚太地区和美国引领，且该数据不包括公司持股50%的台湾合资企业（管理层表示该合资企业也在以类似的速度扩张）。目前在美国、韩国和中国有约20亿美元的电子项目在建，预计将在未来两到三年内分阶段投产。

化学品与能源业务增长了12%，反映出美国和中国的销量走强，以及为弥补此前通胀而采取的定价举措。管理层提到，加工较重、含硫量较高的原油的复杂炼油厂对氢气的需求有所增加。

在定价提升以及美国、中国和印度销量增长的支撑下，制造业销售额增长了7%。在建筑和数据中心活动的推动下，美国瓶装气体的增长率保持在10%出头。金属与矿业增长3%，美洲地区的增长被欧洲、中东和非洲地区（EMEA）以及亚太地区的轻微收缩所部分抵消。

食品与饮料业务增长3%。医疗保健业务增长2%，但管理层表示，若剔除Lincare，增长率处于中单字数水平。林德预计，在收缩业务组合并专注于提高其余业务的质量和盈利能力期间，Lincare的销售额增长将落后于市场。

区域市场表现依然不均。在欧洲，报告的销量增长舍入后为1%，但管理层指出，剔除设备销售后，内生销量实际持平。公司认为当前稳定性高于12至18个月前，但短期内尚缺乏推动工业增长的催化剂。

在中国，电子产品仍是主要增长动力，而钢铁产量下降了2.5%，化学品持平。管理层表示，第三季度出口强劲，但国内需求依然疲软。

全球定价上涨了3%。在美洲地区，报告的定价涨幅约为6%，其中包括约两个百分点的通胀弥补。管理层将美洲地区的基础定价年化运行率定性为约4%。亚太地区的定价部分受益于氦气价格上涨，而随着能源成本增加，欧洲、中东和非洲地区的定价呈现加速上涨迹象。

管理层业绩指引

林德预计第四季度每股收益为4.40美元至4.50美元，相当于同比增长5%至7%。管理层假设同比无汇率影响，但预计汇率将带来约1%的环比阻力。

第四季度指引区间的瓶颈中点意味着每股收益将环比下降约3%。管理层将其中约一个百分点归因于汇率，一个百分点归因于第三季度偏高的权益收益回归正常化，其余部分归因于季节性因素和较为谨慎的经济假设。

全年每股收益指引为17.82美元至17.92美元。公司继续假设宏观经济不会出现改善，且未将Lincare在第四季度出现实质性利润复苏纳入考量。

重组计划预计将于2026财年第四季度开始产生降本效益，并预计在2027年下半年实现全部年化收益。管理层预计现金回收期接近其常规一至两年区间的上限。这些节省的资金预计将是在林德常规生产力计划基础上的额外增量。

林德预计，尽管今年剩余时间将有约10亿美元的项目投产，但在取决于客户推进进度的前提下，年底的气体销售项目储备仍将维持在80亿美元左右。其工厂销售项目储备略低于30亿美元，管理层预计该数字将在2027年增长。

风险与关注领域

Lincare依然是盈利面临的重要阻力。管理层估计，该业务使今年迄今的每股收益增长减少了约1.5%至2%。林德已将Lincare调整至“全球其他”板块，加强了高管监督，并正在评估战略替代方案，不过管理层提醒称最终可能不会达成交易。

能源和分销成本的通胀有所加速，特别是在北美地区。现场供气合同通常能在当月收回能源成本，而大宗气体和瓶装气体的定价可能会滞后于成本三到六个月。

受高企且波动的能源成本以及监管复杂性的制约，欧洲工业活动依然受限。管理层预计欧洲大陆短期内不会出现实质性改善。

中国的增长仍依赖于电子产品和出口，而疲软的国内消费限制了对更广泛复苏的信心。管理层还指出，出口增长可能会在海外市场遇到阻力。

氦气供应继续面临与中东冲突相关的物流中断。管理层预计卡塔尔的产能将达到约75%的水平，但出口路线依然复杂，并受到集装箱供应有限的限制。林德已提高价格以回收采购和物流成本，但这些成本也限制了利润率的提升。

分析师问答集锦

• Lincare战略：管理层表示，首要任务是在保持安全合规运营的同时改进业务。业绩改善可能会扩大未来的战略选择，但目前无法保证必然产生某种结果。
• 电子业务前景：管理层预计，在有机需求、电子特种气体以及正在执行的约20亿美元项目的支持下，电子业务将继续保持两位数增长。林德还表示其项目储备强劲，但强调了审慎的资本配置。
• 伍德赛德项目：空分装置与氮气供应已于第三季度投入运营。预计两套氢气自热重整（ATR）装置将分阶段启动，并于2027年上半年完工。管理层预计收益贡献将于2027年下半年开始，并可能在2028年达到满负荷运转。
• 通胀回收：林德表示，成本收回机制已整合至大宗气体和瓶装气体合同中，但可能会滞后一到两个季度。近期美洲地区的成本收回尽管对营业利润做出了积极贡献，但仍稀释了该板块的平均利润率。
• Lincare现金流生成能力：管理层表示，Lincare的自由现金流继续保持正数。由于折旧与资本支出在很大程度上相互抵消（受营运资金季节性影响），息税前利润（EBIT）可作为自由现金流的大致替代指标。

业绩电话会议完整文字记录

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完整财报电话会议逐字稿

管理层陈述

Operator

Okay, and thank you for standing by. Welcome to the Linde Third Quarter 2026 Earnings Call and Webcast. At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded. After the speaker's presentation, there will be a question-and-answer session. [Operator Instructions]

I will now turn the conference over to Mr. Juan Pelaez, Head of Investor Relations. Please go ahead, sir.

Juan Pelaez

Good morning, everyone, and thanks for attending our 20,263rd quarter earnings call and webcast. I'm Juan Pelaez, Head of Investor Relations, and I'm joined this morning by Sanjiv Lamba, Chief Executive Officer; and Matt White, Chief Financial Officer.

Today's presentation materials are available on our website at the linde.com in the Investors section. Please read the forward-looking statement disclosure on Page 2 of the slides and note that it applies to all statements made during the teleconference. The reconciliations of the adjusted numbers are in the appendix of this presentation.

Sanjiv will provide some opening remarks and then Matt will give an update on Linde's third quarter financial performance and outlook, after which, we will wrap up with Q&A.

Let me now turn the call over to Sanjiv.

Sanjiv Lamba

Thanks, Juan, and good morning, everyone. Three months ago, we delivered financial results that were not up to the expectation of our owners. That message was received loud and clear by the Linde organization. And so we have and will continue to take actions that increase shareholder value.

During the third quarter, we recorded a $425 million restructuring charge to better align our cost base and portfolio with market conditions. Roughly half relates to severance, particularly in lower-growth regions. The balance relates primarily to portfolio and asset actions, mostly in the U.S. home care business or [ Linde Care ].

Effective this quarter, I've realigned this business to report directly to Matt, which, among other reasons, has prompted us to modify the segment reporting by moving it into the global Other segment. This will provide investors with greater insight into the underlying performance of our regional [ gases ] businesses while we continue to restructure [ Lincare ] and evaluate strategic alternatives.

Turning to the quarter, while performance has improved, there is still more work to be done. Sales of $9.4 billion, operating profit of $2.8 billion and EPS of $4.59 were all quarterly records. However, operating margin, excluding cost pass-through was essentially flat, reflecting continued headwinds from non-gas segments. Aside from the restructuring actions, we also have a series of price and productivity initiatives underway to stay ahead of the inflationary momentum building across the regions.

While the overall financial performance is heading in the right direction, sales trends remain varied by geography and end markets, which can be found on Slide 3. Starting with consumer-related markets. Electronics leads with 15% growth, primarily driven by the organic growth across APAC and the U.S. These figures exclude our 50% Taiwanese joint venture, which is growing at similar rates.

We also have approximately $2 billion of electronics projects under construction in the U.S., Korea and China, providing a strong foundation for continued double-digit growth.

Food and beverage grew 3%, led by the Americas and EMEA. Structural consumer trends, including greater consumption of carbonated beverages, higher-quality prepared ready-to-eat meals and food delivery services; all continue to drive demand for our gases, equipment and services.

Health care grew 2%. However, excluding [ Lincare ], the growth is mid-single digit, which is aligned with demographic trends. As we continue to trim the [ Lincare ] portfolio, I expect the sales trends to lag market average. But I fully expect to see improvements in both the quality and profitability of the remaining businesses.

Turning to Industrial markets. Chemicals and Energy grew 12%, reflecting stronger volumes in the U.S. and China as well as pricing actions to recover prior cost inflation especially in the Americas.

Customers along the U.S. Gulf Coast and in China are benefiting from the relative raw material advantages amid the Middle East conflict supporting stronger demand. This has been particularly evident among more complex refiners requiring more hydrogen to process heavier and higher sulfur crude.

Metals and Mining was up 3%, driven primarily by the Americas, with stronger construction and industrial activity in North America. This was partially offset by slight contractions in EMEA and APAC. Importantly, pricing improvements are broad-based across all major geographies as we continue to manage inflation.

The manufacturing end market grew 7%, reflecting broad-based price increases and stronger volumes in the U.S., China and India, including continued aerospace growth. U.S. packaged gas growth remains elevated at low teens from construction and data center activity. Rare gas sales for satellite propulsion have softened as customer payloads continue to await launch.

Merchant and on-site volumes remained strongest in the U.S., including higher activity in the U.S. Gulf Coast energy and chemicals, stronger metals production and increased space propellant. China and India growth rates remain healthy with our portfolio of Tier 1 customers.

In summary, volume growth remains concentrated in key geographies and specific end markets, while price increases are more broad-based and tracking with inflation. In addition, the $8 billion sale of gas project backlog will provide future growth and increase supply density across 4 geographies.

That being said, we still have opportunities for improvement. The third quarter restructuring program and the ongoing productivity initiatives will expedite our efforts to better align each local cost structure with market conditions.

Furthermore, we are accelerating pricing efforts to stay ahead of rising inflation. And at [ Linde ], which has weighed on the overall results, we're taking decisive actions to improve performance while evaluating strategic options.

Linde's operating model is built on a siphon accountability and continuous improvement. When performance falls short, we act. When conditions change, we adapt when attractive opportunities emerge, we invest with discipline. I remain confident that the Linde organization will continue to deliver industry-leading results that our owners expect from us.

I'll now turn the call over to Matt to walk through our financial results.

Matthew White

Thanks, Sanjiv. Please turn to Slide 4 for the consolidated results. Sales of $9.4 billion increased 9% over prior year. Currency impact of 1% continues to abate and is not expected to have a meaningful impact for the remainder of the year. Conversely, 1% of cost pass-through, which represents contractual billing of energy cost variances, has steadily increased from energy inflation.

Acquisitions and engineering each contributed 1% sales growth from tuck-in M&A and higher third-party plant sales, respectively. Excluding these items, underlying sales grew 5%. Volume of 2% is [Audio Gap] roughly split between project backlog contribution and organic growth. although most of the organic growth relates to equipment sales in APAC and EMEA.

As Sanjiv mentioned, organic growth is concentrated in a few key end markets and geographies, although prior year comps are becoming easier in certain regions, such as EMEA.

Prices increased 3% in the quarter. While the majority came from ongoing price actions, a portion relates to prior and current period inflation cost recovery in the Americas. An acceleration of energy and distribution cost pressures in North America warranted incremental recovery. While we don't anticipate these costs to sustain into the fourth quarter, the team is prepared for additional measures if necessary.

Operating profit grew 8% to $2.8 billion. Operating margin of 29.4% and fell 30 basis points from prior year, but was flat excluding cost pass-through, which is highlighted in the table to the right. Margin increases of the combined gas segments were offset by declines in engineering and global leather. As stated earlier, actions are well underway to address the underperformance.

EPS of $4.59 grew 9% over prior year or 8% excluding the impact of currency. Year-to-date, we're losing about 2% EPS growth from [ Lincare ]. So negating that headwind will support the return to double-digit EPS growth for the global organization.

Slide 5 provides a summary of capital management. Operating cash flow of $3.2 billion increased 8% over prior year, in line with EBITDA growth. As mentioned in prior calls, the second half OCF is higher due to seasonal cash timing of taxes, interest and incentives.

Base CapEx, which includes growth investments as well as maintenance and repair, is flat versus prior year or down when excluding currency impacts. The excess available operating cash flow affords Linde a steady capital allocation process, which can be seen in the pie chart.

We've deployed over $9 billion of capital year-to-date with roughly half invested into the business and the remainder distributed back to shareholders. We've maintained this approach through good times and bad. And the rising interest rate environment reinforces something we have known for a long time. Balance sheet and cash flow matter. Health and stability of both provides us significant optionality regardless of the future macro.

I'll wrap up with guidance on Slide 6. For the fourth quarter, we're guiding an EPS range of $4.40 to $4.50 or 5% to 7% growth. While no prior-year currency impact is assumed, we do expect a 1% headwind sequentially.

Consistent with prior guides, no economic improvement is assumed. This also applies to [ Lincare ]. Despite the recent actions, we are not yet embedding any meaningful change to Q4 profit. While I fully expect future improvement, we're taking a more cautious view for the near term.

A full year guide of $17.82 to $17.92 simply rolls the fourth quarter into the year-to-date actual. However, one change you may notice is that the full year FX benefit increased from a strong 1% last quarter to a weak 2% this quarter. That's more rounding than anything else. So time will tell where the final number lands.

Overall, the core gas business is healthy. but there are clear opportunities to improve, most notably around management actions in price and productivity against the backdrop of higher inflation. And while Lincare is a headwind to results today, we're taking significant actions to improve going forward, while simultaneously increasing transparency and executive oversight as we evaluate strategic options.

I'll now turn the call over to Q&A.

Operator

[Operator Instructions] Your first question comes from the line of David [ Balata ] from Deutsche Bank.

分析师问答

David Begleiter

Sanjiv and Matt, just on the backlog, you still expect to end the year on a sale of gas basis around the $8 billion level. [ sell ] a plan, how should that progress over the next few quarters? And what does that mean for engineering sales growth in 2027?

Sanjiv Lamba

David, the sale of backlog sits close to $8 billion today. My expectation remains. We will continue to start up for the rest of this quarter, a number of projects that might lead up to around $1 billion, as we previously mentioned. And depending on customer timings, we expect still to be able to get pretty close to that $8 billion number. So the target internally remains at 8 angle. Sometimes that's dependent on customers' final decision, but feel pretty confident we're going to be in that vicinity.

As far as sale of plant backlog is concerned, that's just under $3 billion at the moment. It has sitting within that, some space component today. We expect to see that to continue to grow as well. So I expect the trend line for sale of plant backlog will remain along the lines we have at this point in time, growing over the course of next year.

In February next year, we'll provide you with a more pronounced guidance on what we see for the business overall. And within that, we can address that question specifically.

Operator

Your next question comes from the line of [ Duffy Fisher ] from Goldman Sachs.

Unknown Analyst

Just a question on cost. If you look at your COGS line in Q3, year-over-year, you're up 13% and your acquisitions and volume are up 3. So if you just subtract that kind of a cheap metric would say that your per unit COGS is up about 10% per unit. Can you just walk through what that is? That seems like a fairly high number. Maybe I'm missing something around currency. But just if you kind of got to a per unit, how much is your COGS really up year-over-year?

Matthew White

Duffy, it's Matt. So yes, I think there's a couple of moving parts there. So for the quarter, you got to start with FX, right? So that's up 1%. You can take that out, that will apply across all the lines. Cost pass-through is another 1%, as you imagine. That's also in there, given some of the energy that just grosses up as you know, both sales and variable costs. .

In addition, as you saw, the energy market did quite strong, and a lot of that's on the back of [ HEICO ], our hydrogen business, which tends to have, as you know, a higher variable cost, just given the inputs for that business. That also is driving part of it.

To your point, the acquisitions will come in in that regard. And so a lot of that plays into that. But I would add that when we talked about some of this recovery we had to do, that partly plays into that as well.

And maybe I can kind of take this point to talk a little bit about the pricing recovery. So this is something we mentioned last quarter that we were seeing these costs and we needed to go out and recover. That is a normal part of the business. That's something we do all the time.

I would say it's a little more prominent this quarter for two primary reasons. The first is just we saw a more accelerated cost, both with distribution and power in the last few quarters. as you read about some of the power situations, the weather and what we saw, especially in North America that we needed to get out and recover.

I would say secondly, which is just more optics, is as we move [ Lincare ] out of the Americas segment, while this recovery has always happened, it's going to look a little more pronounced now because you're taking [ Lincare ] out the denominator of that calculation. So by default, you will see more elevated pricing and more prominent recovery in Americas, just given that function of the change.

So I would say all of those played into that. We do expect that to kind of come back down here into the fourth quarter. But that's the reason we also needed to go out and recover some of that.

Operator

Your next question comes from the line of John McNulty from BMO Capital Markets.

John McNulty

Regarding the charge that you took in terms of the severance side or the non-Lincare portion of the restructuring and efficiency work that you're doing, I guess, can you help us to think about how that will play out going into 2027 in terms of the savings and the improved efficiency versus your kind of normal cadence that you call out most of the time in terms of efficiency improvements that we kind of know as a steady state?

Matthew White

John, it's Matt. I can handle that. So I would start with the severance portion is very, very consistent with all of our prior actions we've taken. So as you may recall, the paybacks on a cash basis, undiscounted, tend to be in the 1- to 2-year range. And that range is really a function of where in the world, more of the severance occurred just based on contracts or sort of what the requiring severance would be.

So I would say, for this particular charge, it's closer to the higher 2 year end, but that will start taking effect here in the fourth quarter. But really, we'd expect to see the full benefits in the second half of next year on a full run rate basis. So that's pretty consistent with our other charges that we've had 1.5 to 2-year payback, and you start to see full benefits within 3 to 4 quarters of the action itself.

Operator

Your next question comes from the line of Vincent Andrews from Morgan Stanley..

Vincent Andrews

Matt, I wanted to ask you versus where we were at 2Q when you look into the fourth quarter, where natural gas and electricity costs have gone in Europe, how much of an incremental headwind is that to you? And how much of it do you think you'll be able to price for in the fourth quarter versus having to wait to recover in the first quarter?

Matthew White

Yes. So Vincent, I'll break it down between on-site and then the merchant and package. So on-site, it's recovered in the current month, and that cost faster. So that would essentially be cost pass-through. .

When you think about merchant and package, which this North American impact is more related to, it generally can be anywhere from a 3- to 6-month sort of lag on recovery is what we tended to see.

And I would say, in Europe, what we've seen in the past, and it really depends how it plays out this year is either it's a very cyclical up and down power, which means it's just a constant 3-, 4- or 5-month recovery lag that we continue to do until it stabilizes or you can have a continued power spike to the point it works into the entire inflation of the economy, which then it becomes essentially permanent price.

We'll see how this one plays out. I would say when we saw this inflation spike in 2021, 2022; it was more sustained and became price. If you remember from our results then. This particular one has vacillated a little more, but we'll see how it plays out as we get into the winter months going ahead.

Operator

Your next question comes from the line of Josh from UBS .

Joshua Spector

I wanted to ask kind of simply here just in terms of your EPS guidance versus what you just delivered, 9% growth versus 7% growth, what are the factors that drive the deceleration in the fourth quarter versus 3Q? And what should we be inferring from fourth quarter as we look forward into 2027? .

Matthew White

Josh, it's Matt. So for 2027, we'll give that in February. So we'll stick with Q4 right now. And I think the best way to probably talk about it is sequentially to hopefully address your question. So if you take the midpoint -- and obviously, time will tell where we deliver, but I'll just use the midpoint for simplicity's sake of the guidance range. It's about a 3% decline. 1% is FX as we mentioned. Obviously, we're seeing the dollar strengthen across most currencies right now. So that's part of that. And time will tell, it will be what it will be when it ends up.

Another percent, if you noticed, we had a little bit of elevated equity income this quarter and third quarter, and a lot of that was a customer true-up on a contract we were paid for that was resolved. And so that caused a bit of a spike in the equity income this quarter. That will go back to run rates Q4. So that's roughly a percent.

And the last percent we'll see -- I mean we do have a little bit of seasonality in Q4. As I mentioned, we're taking a pretty guarded view on the impact of some of the actions we're taking with both the non-gas business as well as our view on the economy right now. We're not going to take any view on continued sustained growth. But our goal is to do better than this range, and our goal is to work to get above it. But that's where we are right now. and we'll have to see.

Obviously, we -- for most intensive purposes, we left the full year guide somewhat intact, and that was part of the thought process as well as laying out this Q4 guide to just leave that intact at this point because we didn't see a reason to to take any bullish signals yet until we can kind of see how the rest of the economy plays out.

Operator

Your next question comes from the line of James Hooper from Bernstein.

James Hooper

On everyone. Can I get an update, please, on the [ Woodside ] project and when the component parts might start up and how the customer facing it on the strategic review might affect your business? .

Sanjiv Lamba

Thanks, James. So the [ Woodside ] project continues to make progress. When we last spoke to you, we were about to start up the air separation unit and start the nitrogen supplies that is now underway already in Q3, and it will continue to progress for the rest of the year and into next year. We are also supplying the customer currently temporarily with hydrogen from our pipeline network, ensuring that they have an opportunity to continue to manufacture ammonia as they would want to.

Now the ATRs, which is our on-site supply for hydrogen will get started up. There are 2 trains for the ATR. So there is always a staggered start up. I expect that to be completed in the first half. And at the end of that a 6-month period, we would then be at a point where all the facilities would be ready. And the only component left to be completed then would be the carbon capture and [ secustration ] element, which is being worked on by ExxonMobil.

So our timeline that we have communicated in the last call, I think, hold for now, and the teams are working to see what we can do and maybe even slightly improve that. So you'd only see that impact start come through in the second half of next year.

A quick reminder on those of you who looked at large projects like this, there is a ramp profile that always exists with projects like this on the ammonia side as well. So once we start up, then we would start going into that ramp process, which would mean that we staggered capacity utilization of our plants until we get to that 100%, which I expect probably to be sometime in 2028.

The conversations around the strategic review that the customer is doing. I think will -- is something that they will have to complete. We are actively engaged with them.

The only point I'd make to you is we always, in projects like this, assess the quality of the asset into which we supply, and we recognize that we have a really high-quality asset that's being supplied over here, which originally was owned by [ OCI ], transferred to Woodside. And irrespect of who the ultimate owner is, we believe this ammonia complex will have a very attractive and opportunity for them to continue to make some money from the complex. So feel good about our positioning with that asset as well.

Operator

Your next question comes from the line of Matthew DeYoe from Bank of America.

Matthew DeYoe

I wanted to ask a little bit on volumes, both kind of structurally and then maybe in the quarter. Starting with Europe, Sanjiv, I have a feeling what your answer will be [indiscernible] but are you getting any more optimistic that the Europeans are taking a bit more defensive view on industry there now with like steel antidumping and the auto import cap. towards the quarter, it looks like volumes maybe got a little bit better in Europe in 3Q, but I don't know if that's just noise and comps on kind of like what's still pretty much a tough market.

And if I could tack on Europe, saw a bit better performance than I would have expected on volumes. I feel like last time we caught up, there was some expectation of a deceleration in China, but maybe that doesn't feel as visible here in the print. So I want to give you an opportunity to kind of sound off on that stuff.

Sanjiv Lamba

Thanks, Matt. You kind of almost predicted what my answer was going to be. So I'm not going to disappoint you sadly Europe, unfortunately continues to be in that range that we talked about the last time we spoke. There is, at this point in time, no catalyst.

Now I'm sure you've seen the positive volume on Europe rounded up to 1, but the reality is that unfortunately comes -- well, I shouldn't say unfortunately, but that comes largely on the back of sale of equipment, which has embellished that number, if you will, strip that out and the underlying number is flat.

Now look, the comps have gotten better, to your point, and that helps. But a flat number today for Europe actually is looking better than the minus 2, minus 3 that we've seen, if you go back 12, 18 months ago.

So there seems to be a degree of stability, but there is absolutely no catalyst, and I have absolutely no reason for any confidence that the European market will pick up and give us any growth in the near term. There is zero capital. And I do not see the pragmatism that is needed across that whole European Union and the European community to take decisions that could get back industrial activity to a level where actually we start seeing some positive movement.

So sadly, that disappointment will remain for some time until such decisions are taken. And I read the press as much as you do. And as I said before, nothing there suggests that, that trends likely to change anytime soon.

On China, you were right. In the last call, I said my expectation was a moderation in the second half. That played out for steel, as an example. So steel production was down 2.5%. There is a curtailment -- production curtailment order from the government that's playing into steel. So steel is down. Chemicals flat.

The star of the show really has been electronics in China. And really, electronics industrial production has grown about 17% in the quarter, if I'm not wrong, and essentially driving a lot of the growth within that space. Beyond that, manufacturing also has been -- other than the green shoots that we previously referred to on EV and batteries. Everything else has been rather down.

Now the other point I want to make on China is the expectation was that exports would moderate, but it has been a fantastic export market in Q3. So that obviously has helped the economy a little bit.

Domestic demand continues to not manifest itself at all. That remains my concern, to be honest. Sustained improvements in China require the domestic consumption to pick up alongside some level of export growth. We are just not seeing the domestic consumption pick up.

I'll give you one number that surprised me. Domestic EV consumption or purchasing is down about 11%, 12% despite the fact that you're still seeing significant exports outside. At some stage, that export machine will face resistance at the other end, mostly Europe. And I think we'll see that moderate as well.

So you know what, I'm not seeing any structural changes in China that are giving me confidence that we will see a significant rebound other than whatever forecast you might have on exports outside China into the rest of the world.

Operator

Your next question comes from the line of Eric Boyes from Evercore ISI,

Eric Boyes

Does the Lincare restructuring savings take away from the usual productivity gain that's typically embedded in your normal earnings algorithm for 2027. Or will that typical productivity benefit come on top of Lincare for next year?

Matthew White

Eric, it's Matt. It will be on top, right? The way we always view it is the productivity is an ongoing embedded in the culture. That is an expectation, and that is every day. These restructurings are more episodic onetime and they're more top-down approaches that are incremental. So it's consistent with how we do the gas view as well that it will be incremental. .

Operator

Your next question comes from the line of Jeff Zekauskas from JPMorgan.

Jeffrey Zekauskas

Thanks very much. It looked like helium prices moved up in Asia sequentially. Did they move up in the other geographic jurisdictions?

And then for Matt, at least by my calculation, the decrease in [ Lincare ] EBIT in the first half was $66 million. And I know you said that it would -- the [ Lincare ] would lower EPS growth by 2%, which would be about $200 million pretax. So are you rounding up? Is the number a little less than that?

Sanjiv Lamba

Jeff, on Helium, I'll let Matt answer the [ Lincare ] question. On helium generally, we have seen prices up. You might recall, we had said in the last round as well that one of the things -- one of the actions we've taken as we've signed up some new contracts as well as we continue to serve all our contracted customers is that we have built in the pricing, some recoveries on the dislocation costs associated with the Middle East conflict and the sourcing and logistics challenges that we have. .

So we are seeing that rounded up in pricing. But of course, that is also rounded up in the cost structure. Therefore, the margin improvements don't quite show through on the helium and affect us more broadly. But clearly, we are seeing that pricing move up. And it is across the world, across all the markets in each of the segments we have.

Matt, do you want to take the...

Matthew White

Yes, sure. Jeff, yes. So the -- obviously, you'll have the first half, you won't have the back half in Q3 and Q4 from that perspective, spike down. But it is about 1.5% to 2% on the year-to-date and especially when we kind of look out on holding flat what the Q4 would be. And part of that also is a function of how last year the performance was when you think about the baseline.

So it is in that range, and that's the effect it's having. So whether do you say it's 1.5, 1.6, rounding how you want to look at that, but I would say it's a very strong 1 to a week or 2 is what we've seen on when we project out of the year just based on the numbers.

Operator

Your next question comes from the line of Kevin McCarthy from Vertical Research Partners.

Kevin McCarthy

I was wondering if you could compare and contrast your price experience in the Americas versus your other major regions? I'm looking at plus 6% in the Americas and maybe half that in Asia and 1/3 of that in Europe. So maybe you can discuss why that's the case and whether we should continue to expect Americas to outpace ROW moving forward? .

Sanjiv Lamba

And I'll let Matt cover that just to tell -- get into the details of the Americas pricing, which has some recovery elements which are beyond the quarter.

Matthew White

Yes. Sure, Kevin. So I think a couple of things. First, if you look at the 6%, I would say probably close to 2 associated with some of this recovery we talked about. So underlying run rate, you're in the 4 range. Globally, even excluding the recovery, we're still 3 because the 3 we have is a very strong 3, I'll say, in terms of the global rollout. .

So the run rate there has probably been more in the 4 range, and that's kind of the year-to-date, if you look at it, too, through that period, excluding the 2. And part of it is just you've seen both inflation and costs but also general inflation. You have to remember, you have South America as well in that set of numbers. where you tend to see a little higher inflation.

You definitely have seen some power and distribution inflation in North America with the U.S. specifically. I think when you go over to EMEA, we are starting to see that pick up more. As I said earlier, it vacillated a bit. I think what we saw in EMEA, we would see some energy rise and then fall and rise and fall. So we would cover that through some surcharging, but it wasn't necessarily translating to significant incremental permanent pricing. But it feels like that may start to accelerate. Time will tell, but that's what we're starting to see in EMEA.

And when you move to APAC right now, probably half of that pricing is helium, which relates more, Sanjiv kind of alluded to, seeing the helium price increases. The other half, we are seeing some good traction in South Pacific and places like India. But obviously, China, it's still not a high inflation region, as you can imagine. So that's continuing to put a little bit of a drag on the base business, just given some of the conditions there.

So I would say right now, even when you exclude this recovery we had Americas continues to see the highest rate of inflation just given the activity in North America and the traditional inflation you tend to see in South America.

Sanjiv Lamba

Kevin, I'll only add that as we see this inflationary momentum continue to build, our pricing actions across the world, America is a great example as to how just Matt described it, but across the wall, continue to be focus of attention for the management team at Linde.

So including China, which is a lower inpatient economy, I think for the first time after a number of quarters, we've seen positive inflation in China. Also export PPI is up. Both indicators that the market is tuning into higher inflationary levels, and therefore, our pricing effort over there will continue to provide some further impact as well.

Operator

Your next question comes from the line of Patrick Cunningham from Citi.

Patrick Cunningham

I was hoping you could elaborate a little bit more on any other reasons for logic of moving Lincare to the other segment, whether you're considering selling that business? And just any sort of update on the mitigation actions you plan to take? When can we expect a meaningful change in profit levels there?

Matthew White

Patrick, it's Matt. I'll start with the move is driven by accounting, right, which is -- it's called [ COD ] on the chief operating decision maker and a combination of a series of accounting events and I think it culminated with the trigger and the change of the executive leadership oversight and how we evaluate that business through management and the Board, prompted that change to the other segment. So I think that was an accounting thing, which will set to the side.

But that being said, we absolutely and we said we will continue to evaluate strategic options, but we can't assure there will be a strategic option to be had. And so we have to improve this business. We have to run it better, while running it safely and compliantly. And so that is the focus and that is the goal.

Hopefully, the health care sector improves. So right now, it's not doing as well, I'll say as a sector, but if it improves in the coming years, and that market falls a bit, maybe there can be more opportunities for strategic options. But our goal is to improve it. It is to basically make it a better business. And then hopefully, that will not only get rid of some of the headwinds we're seeing, but it will also open up other options with that business.

And again, if you may recall, this is not too dissimilar if you go years back with the [ GIST ] business that traditionally was part of the EMEA segment we had a very similar construct. We changed the oversight of it. We changed how we managed and review that internally. It moved to the other segment. That business ended up a sale. We'll see what happens in this case.

Operator

Your next question comes from the line of [ Abigail birds ] from Wells Fargo.

Abigail Eberts

Just another one on [ Woodside ]. Just wondering if there's anything else you can give us to help us size that revenue drag given those project updates? .

Matthew White

So a, it's Matt. I think as far as a revenue drag, the way I would probably characterize it is we are supplying them from our existing network. And as Sanjay mentioned, without having the full assets up and running, those are molecules that we would have been able to route into our network system for other customers. .

As you can imagine, today in the U.S. Gulf Coast, hydrogen is a pretty valuable molecule because it helps desulfurize heavy crudes. -- and it helps refiners make more middle distillates and products in high demand like ultra-low sulfur diesel and other products like that. So we would definitely have been able to resell those molecules, and it's the same with some of the atmospherics as well.

So I think it is something that we fully expect to be incremental when it starts up and that we will get that benefit. But right now, we are pulling those molecules from our existing supply network to support them until these assets are up and running.

Operator

Your next question comes from the line of [ Alex Yefremov ] from Barclays.

Unknown Analyst

In electronics, you've been growing mid- to high teens this year versus what I think [ MSI ] growth at 8% to 10%. And is this a sustainable level of a growth for the next few quarters? And separately, how do you feel about prospects of new additions to backlog in electronics?

Sanjiv Lamba

Thanks, Alex. That's a great question on electronics and some of you, and I know Alexa, you were there were at our event in Phoenix and actually physically saw the conversations we have about electronics growth.

So the growth that we saw in the quarter is really largely driven around organic growth in electronics, and I feel pretty good about the trend that we see at least for the next few quarters. looking out in terms of how that end market is going to perform for us. So feel good about that. We feel that this is something that we will sustain.

The reason the confidence in the midterm also exists is because sitting within our backlog, as I mentioned briefly earlier on, we have about $2 billion of backlog projects under execution, which will have staggered start-ups over the course of the next 2, 3 years, and that will then feed into the double-digit growth that I expect from the electronics end market going forward.

The other point I'd make around electronics also is that there is, in addition to the atmospherics, which is where most of our conversation has been and which is where the Phoenix assets as an example, we had shown you, we're feeding into.

We also have continuing growth around the electronic special gases. These tend to be the cylinder gases high-value small volumes, but nonetheless, quite important. I think we continue to see growth over there as well. So between those two elements, I fully expect to see electronics growth in the double-digit rate going forward.

Talking about prospects, so the point I'd make on prospects is twofold. Let me start off by just the conversations, again, that we have in Phoenix to illustrate that we have a robust pipeline of projects, including with TSMC here in the U.S. with some of the other players in the U.S., but also as we think about the top 10 electronics players, we have existing relationships with each of them across the world, whether it's Taiwan, South Korea, the U.S. and of course, there is a growing market I referenced earlier on in China that provides prospects as well.

I expect Linde to win more than its fair share across that whole range particularly when it comes to these larger atmospheric projects like the ones we showed you in Phoenix. So I feel good about that whole prospect. I will say, though, that we are, as you know, very disciplined around capital allocation. And one of the things that we are playing into that has been our focus on lodging.

Obviously, we will do memory with some of our key customers that we have been working with for decades, but we tend to be a bit more selective around some of the memory projects and just recognizing the short cycle that memory tends to have might look different at the moment, but historically has been on a shorter cycle and which tends to be a little bit of variance to the long-term contracts that we prefer when we go out and do this level of business on project development.

Operator

Your next question comes from the line of [ Salvator Tiano ] from KeyBanc Capital Markets.

Unknown Analyst

Just want to go back to the pricing, especially in the Americas, the 2% component you mentioned. So essentially, firstly, can you help us a little bit understand how much was the, I guess, excess margin from the price increase that was going to offset cost from prior quarter. So essentially, what was a little bit perhaps a little bit more one-off in the quarter?

And secondly, it looks like some of the scale markets in the U.S. and the Americas have been doing pretty well in terms of profitability. So how -- going back to Kevin's question, what do you think would have been your price power for -- to recover these costs? Should conditions for these end markets have been more similar to the past few years where chemical, say, earnings were poorer? Would you be able to recover them to that extent? And how should we think about future recoveries if earnings for chemicals and energy assets do not set current levels?

Matthew White

Yes, Sal, it's Matt. So I think we'll just start with the basics. I think the recovery of cost is an integral part of our contracts. It's something we've always done -- we mentioned last quarter, we needed to get out and get more recovery, especially in North America. So that aspect of it is very consistent, and this primarily relates to merchant and package just to make sure because on-site, it's primarily cost pass-through, as you know. That is very much in the month, and it's very programmatic as part of the contract billing itself.

Within the merchant and package, there are aspects of each contract to go and recover it. And we've always had this lag. And the lag can be 1, it could be 2 quarters, I would say this particular period, we saw an acceleration of costs that came a little faster. And of the margin itself, you got to spread it over probably 5, 6 months, if not more. So it's really hard to give a margin in any particular period because people want to break it down to quarters.

But I will say on year-to-date, while it is still net in terms of the positive impact on [ OP ], it will clearly be dilutive, right? Because you're basically going out there and trying to get back a lot of these excess inefficiencies and you're going to do it in a way that's going to be dilutive to the average American margins.

So I would just say it's been spread over a couple of quarters. For the most part within the quarter itself, it would have still been net dilutive to the 35% margins that we printed just given the recovery portion. And it's something we will continue to do. And again, the fact that we've taken an annualized equivalent of [ Lincare ] sales of almost $2.3 billion annualized out of that segment. kind of makes this a little more magnified simply because you have a smaller denominator to divide buying, right? So I think that will be something going forward. And that's, again, part of the clarity and transparency, I think that will be a little easier with the way the segments are aligned today. But we will absolutely act again.

And then some of this does turn into permanent pricing over time as it becomes an integral part of inflation. -- within the economy itself. Time will tell if that happens. But right now, I feel very good about the 4% run rate on the underlying organic. And if inflation persists, then I expect in Americas, we will rise above that.

Operator

Your next question comes from the line of Laurence Alexander from Jefferies.

Laurence Alexander

Two quick ones or hopefully quick. One is what's the rough free cash flow that [indiscernible] is contributing? And secondly, on the comments around kind of the European industrial policy. What's the feedback you're getting from customers? How long this combination of males and cost pressures can continue before end markets need to shift to a more rapid industrialization strategy?

I know Europe has a lot of stakeholders to coordinate before decisions get made. But is it a couple of years? Is it a decade? I mean do you have any sense or people talking yet about where the real breaking point might be?

Sanjiv Lamba

So Laurence, I'll cover that, and then I'll ask Matt to cover the free cash flows on Lincare, You have probably on numerous calls, had, for lack of a better word, event on the lack of consistent policy framework that allows industries in Europe to move forward and be competitive. And that is obviously compounded in the current climate with energy costs being both volatile as well as extremely high. When -- in parts of Europe, you have energy selling at EUR 150 per megawatt. That's for electricity. .

And when you have natural gas a couple of weeks ago, selling at EUR 30 per MMBtu, you know you have a structural cost disadvantage that the government needs to kind of understand how it can either offset, which some countries are trying or find a way to ease the ability to not have to comply with thousands of regulations that make the business a little bit more competitive to try and offset some of this inherent disadvantage that's there. There isn't Europe per se.

So if you see Scandinavia, we continue to see good industrial activity in Scandinavia. The Nordics have got the advantage of lower cost of power. It is hydroelectric power for most part, priced well, competing well, and we still see the prospect of growth and projects in the Nordics as a good example, where it's offset by a significant disadvantage that sits in Continental Europe for most part.

Eastern Europe suffering because they are the back end of the supply chain that feeds into Continental Europe. Customers much of my frustration that I'm reflecting over here is coming from conversations that I have with my peer CEOs of various companies. And I think I'll give you the example of chemicals where that has become quite visible.

Now the Middle East conflict has helped in path to try and shore up some of the chemical industry across Europe. But clearly, level of restructuring in that industry, which includes a number of shutdowns of facilities and specific sites, as you're aware, is all playing into this narrative.

I don't think anyone has a time line learns. You can take a guess. Any guests that you and I take will be wrong. It will take longer, whatever we might estimate. So I guess my frustration here just reflects that lack of activity that is allowing broader industries to both survive and do well. And I think that is certainly, I would not hold my breath for the medium term.

Matt, do you want to cover this free cash flow?

Matthew White

Yes, I'll start with -- Laurence. It's positive, and it's been positive throughout the whole time. kind of rough and simple way to think about it is the depreciation add back and the CapEx mostly offset. So your operating profit EBIT essentially falls to the cash flow, free cash flow line. And so from that perspective, it's just a function of how you manage working capital.

There is a seasonal element to working capital in this business based on how the deductibles and plan -- health care plan systems roll over. So that will create some noise within the quarters. But aside from that, the EBIT tends to be a rough proxy and then you just -- the better you can manage collections, the better you can manage that number.

Operator

We will now take our final question from Tony Jones from Rothschild & Co.

Tony Jones

Just a quick one on Helium. Do you expect any change to the Qatar supply situation in '27? Related to it, do you still think pricing will be positive for Linde next year? And what does that do to margin, if anything?

Sanjiv Lamba

Thanks, Tony. You've found a way to put in three questions in there, but I'm happy to respond to all of them. Helium has done -- look, as I said before, we've done a really good job. The team has done a really good job around managing the helium through this crisis period.

And in doing that, not only have we served our existing customers extremely well, but we have added customers with long-term contract commitments that they've made to come onboard, just recognizing the resilience of Linde's helium sourcing and supply chain that allows us to go out and ensure that we are able to solve their needs even at times like this.

That has been worked from a pricing perspective, so to address that issue. But our pricing actions have been very focused on ensuring that the dislocation costs that come with this increased supply chain and sourcing challenges are adequately factored into the pricing and recovered appropriately. We have not tried to use this opportunity to to excessive pricing. We've been very mindful that these are long-term contracts, and I certainly want to make sure I tie in these molecules because longer term, helium will be long. And we have gone through that cycle and we know exactly where that's going to end up. So it has been important to get that done.

Coming to Qatar specifically, our view is that Qatar is likely to get to about 75% of the production levels. The challenge is not on the production side, as you know, Tony, the challenge is the ability to get anything out unless you do a very convoluted supply chain using land routes, and then get to ports, which are far off, which obviously adds to both the complexity of having enough tanks that allow that helium to be carried across that very significant terrain that it needs to cross and then obviously getting ships that would then be able to take it to the rest of the world.

All of that adds both cost complexity, but most importantly, there aren't enough tanks in the system to be able to allow that rerouting to be effective longer term for a sustained period of time. So I do expect -- and again, is your guess today is as good as mine, to be honest. If you could give me a date by when the straight of homes issues would get resolved, I would tell you exactly what the healing would look like. but neither of us are in a position to do that today.

All I can say to you is having the ability to source globally from various sources. I mean, we moved about 340 containers in the last quarter. That is pretty significant, and we moved it from all over the world between our sources in the U.S. to our sources in North Africa to our sources in Europe and some sources in Asia. And I think that managing that whole supply chain has been really the strength of Linde's ability to meet customer requirements and has played into that resilience that we often talk about.

I'm looking forward to seeing normalization happen out of Qatar, and that will, of course, provide a fill-up to our efforts to place even more molecules into the marketplace, having now signed these long-term contracts.

Operator

I would now like to turn the call back to Juan Pelaez for any additional or closing remarks.

Juan Pelaez

Thank you, everyone, for participating. Have a great day. .

Operator

This concludes today's call. Thank you for attending. You may now disconnect.

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