Linde Reports Record Backlog but Margin Pressures Weigh on Q2 Results
The industrial gas giant grew sales and EPS at near double-digit rates while backlog hit $8.1 billion, though U.S. home care business dragged on profitability.
Record Backlog Amid Margin Concerns
Linde plc reported record sales and earnings per share for the second quarter of 2026, with both growing at "near double-digit percent" rates, according to CEO Sanjiv Lamba during the company's earnings call on July 31 (earnings call, 2026-07-31). The industrial gas supplier also announced its backlog increased by $1 billion to a record $8.1 billion after securing a new electronics project in the U.S.
However, operating margins excluding cost pass-through declined approximately 30 basis points year-over-year, primarily due to challenges in the Americas segment. "We are not satisfied with our margin performance for this quarter," Lamba acknowledged (earnings call, 2026-07-31).
U.S. Home Care Business Under Review
The margin pressure stemmed largely from Linde's U.S. home care business, which continued to face headwinds from "higher cost inflation and policy changes" despite ongoing portfolio pruning efforts (earnings call, 2026-07-31). The impact was significant enough that Americas margins would have increased 20 basis points excluding the home care operations.
Lamba said the company is "actively evaluating the strategic fit of this U.S. home care business within Linde, both in part and as a whole," while working to improve its performance (earnings call, 2026-07-31). He expressed confidence in sequential improvement heading into the third quarter.
Electronics Driving Growth
Electronics emerged as the fastest-growing end market, with 18% year-over-year growth in the second quarter driven by project start-ups and demand tied to AI hardware. The $1 billion backlog addition supports "expansion of advanced node fabs in West and U.S.," building on Linde's existing Arizona plant network (earnings call, 2026-07-31).
Additionally, Linde's Taiwan joint venture secured approximately $800 million in new projects to supply semiconductor and advanced packaging facilities, though these were not included in the consolidated backlog.
Financial Performance and Outlook
Sales reached $9.3 billion in the quarter, up 9% year-over-year and 6% sequentially. CFO Matt White reported that underlying sales rose 4%, split evenly between volume and price increases. Operating profit translated to EPS of $4.50, representing 10% growth over the prior year (earnings call, 2026-07-31).
For the third quarter, Linde issued guidance of $4.45 to $4.55 per share, representing 6% to 8% growth. The company raised its full-year EPS range to $17.70 to $17.90, up from the previous bottom end, though management left the top unchanged citing a desire for "a few more quarters" of data before incorporating recent volume recovery trends into projections (earnings call, 2026-07-31).
Capital Deployment and Project Pipeline
Linde deployed $6 billion of capital year-to-date, split evenly between business investments and shareholder returns. The company expects to start up more than 20 projects representing approximately $1.3 billion in investments during the remainder of 2026. Despite these start-ups reducing the backlog, Lamba said he expects "our sale of gas backlog to finish the year with an 8 handle" due to continued project wins (earnings call, 2026-07-31).
Manufacturing-related markets showed improvement, particularly in U.S. aerospace and data center construction, with aerospace accounting for more than one-third of manufacturing growth during the quarter.
This article was generated by MarginX from the earnings call on 2026-07-31. It is not investment advice.