As one of Connecticut’s biggest business leaders faces a Russian giant before an international tribunal as it rebounds from its costly exit from Russia – executives said on Thursday the economy also appears poised for a quick recovery should a recession hit.
Linde is headquartered in Danbury under CEO and Fairfield-based Sanjiv Lamba, with its formal headquarters outside London. The company is the world’s largest producer of industrial gases such as nitrogen and competes with Air Liquide and Air Products, among others. The company anticipates a boom in carbon reduction systems it will install in US power plants, with some of that work being spurred by the Inflation Reduction Act, which allocates billions of dollars for environmental programs.
Like every other Connecticut company, Linde’s production volume represents a weather balloon for the global economy. In February, Lamba spoke on CNBC’s “Mad Money with Jim Cramer” and said “we have a small contribution to make” to almost everyone Manufacturing activities ranging from energy refining and semiconductors to frozen pizza and draft beer.
With a recession on the horizon, it has yet to be reflected in investor appetite for Linde stock, which is up 15 percent this year, including a modest climb to over $365 a share on Thursday and Friday, after the company reported its first quarter results.
Linde hired 800 people in the first three months of 2023 to bring the total to over 65,800 worldwide.
“I’m not going to try to speculate on whether or not there will be a recession, but I’m telling you that everything we’re seeing at this point would suggest that if there’s a small downturn, it will be just that — a small downturn,” Lamba said on a conference call with investment analysts on Thursday. “We’ll wait and see what the economy is really doing.”
Driven by US gas production, volumes in the larger Americas region increased 1 percent year-on-year. In Europe and the Middle East, volumes fell 3 percent as the company halted operations in Russia to comply with international sanctions following the invasion of Ukraine and high energy prices impacted consumption and production.
Linde took a $787 million charge on profits last year after it said it “deconsolidated” its Russian operations before finding buyers for those operations, and charges totaling $103 million , reflecting deals in other countries that were associated with the Russian works.
At the end of December, a Russian court issued an injunction against Linde, prohibiting the company from selling shares in its subsidiaries or joint ventures in Russia. Gazprom’s RusChemAlliance joint venture sought an injunction in infringement proceedings after Linde halted construction of a gas processing plant near the Estonian border. Gazprom is Russia’s largest company
Linde has filed an arbitration claim with a Hong Kong arbitration court to recover all damages suffered by Linde as a result of the Russian court’s injunction.
The impact on Russia pushed Linde’s profit slightly to $3.4 billion in 2022, but profit rose 15 percent to nearly $1.5 billion in the first quarter.
“When you get a contract suspended due to sanctions like we had, you’ve done a lot of work, but you have to go through a process to establish when and how you can settle this with the customer,” Matt White said , Linde’s chief financial officer, on Thursday. “That’s probably going to take some time — in my mind, it could be a year or more.”
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