Linde

Linde just posted record sales of 9.3 billion dollars, up 9 percent, and record earnings of 4 dollars and 15 cents per share, up 11 percent. It turns nearly 30 cents of every sales dollar into operating profit, one of the best margins of any large industrial company on earth, and earned 23.5 percent return on capital. It also handed back 1.6 billion dollars to shareholders in the quarter through dividends and buybacks.

Computer chip factories are becoming Linde's growth engine. It signed another long term electronics supply deal in the United States last quarter, pushing its contracted gas backlog to a record 8.1 billion dollars, with total project backlog at 11 billion dollars. Asia Pacific sales jumped 13 percent on chip and energy demand. That work is already sold, so the revenue arrives as each plant switches on.

Rising costs are nibbling at Linde's famously fat margins. Operating margin slipped 60 basis points versus last year as inflation ate up the gains from higher prices and cost cutting. Every region saw margins dip. Linde is still extremely profitable, but it now has to raise prices just to stand still.

Linde sells to factories and metal producers, so a manufacturing slump hits it directly. Europe, the Middle East and Africa managed only 1 percent underlying sales growth last quarter, with volumes actually falling on weak factory demand. Overall volumes rose just 2 percent company wide. This is a steady compounder, not a rocket ship.