The Gases Division continued its growth trend in the first half of 2008, achieving a 10.1 percent increase in sales to EUR 4.709 bn after adjusting for exchange rate effects. If changes in the price of natural gas and changes to Group structure are also taken into account, the rate of sales growth was 8.5 percent. On the basis of reported figures, sales increased by 3.4 percent (2007: EUR 4.553 bn).

Sales arising from The Linde Group’s participation in joint ventures increased by 4.9 percent to EUR 302 m after adjusting for exchange rate effects. Sales from joint ventures are not included in Group sales, in accordance with Linde’s accounting rules.

The operating profit of the Gases Division again rose at a faster rate than sales, increasing by 12.7 percent after adjusting for exchange rate effects to EUR 1.194 bn. The reported increase in operating profit was 6.1 percent (2007: EUR 1.125 bn). We were able to more than compensate for cost increases as a result of continual improvements in efficiency, price increases and cost synergies arising from the acquisition of BOC. The operating margin improved once again. At 25.4 percent, it was 70 basis points higher than the prior year figure.

The following business trends were to be seen in the various regions and product segments:

On a comparable basis, i.e. without taking account of exchange rate effects, changes in the price of natural gas and changes in Group structure, the Western Europe operating segment achieved a 6.4 percent increase in sales in the first half of 2008 to EUR 2.083 bn. On the basis of reported figures, the increase was 5.5 percent (2007: EUR 1.975 bn).

Operating profit in the same period rose 6.3 percent to EUR 575 m (2007: EUR 541 m). At 27.6 percent, the operating margin reached the high figure of the comparable prior year period.

This positive trend was boosted principally by high demand in Germany. In the UK, business performance was also particularly good. In both our core markets, this was due to high growth rates in the cylinder gas, specialty gas and Healthcare product areas and increased efficiency as a result of ongoing process improvement measures.

In the Americas operating segment, we achieved a 9.2 percent increase in sales in the first six months of 2008 on a comparable basis to EUR 1.082 bn. On the basis of reported figures, sales in this segment were below the prior year figure of EUR 1.275 bn. In comparing these figures, two factors in particular should be taken into account. The first of these was a significant translation effect as a result of the fall in value of the US dollar. The second was the fact that the prior year sales included businesses in the cylinder, bulk and Healthcare (INO) product areas which were sold in the first half of 2007.

Against this background, the operating profit in the Americas region in the first half of 2008 of EUR 206 m was also lower than the figure for the prior year period of EUR 240 m. The operating margin, however, remained virtually unchanged at 19.0 percent. The positive impact of portfolio optimisation, price increases and ongoing efficiency improvements was indeed nearly fully offset by the dilution of the margin as a result of the contractual pass-through of natural gas price increases to customers.

We were able to implement price increases especially in the bulk product area and in the whole of South America. In the tonnage product area, moreover, we achieved respective volume growth as a result of the ramp-up of several hydrogen plants. We also saw very positive trends in the first half of 2008 in the specialty gases business.

In the Asia & Eastern Europe operating segment, on a comparable basis, the Gases Division achieved a 10.4 percent increase in sales in the six months to June to EUR 945 m. On the basis of reported figures, the rate of growth was 32.7 percent, from EUR 712 m in the first half of 2007. This significant increase is due in part to the inclusion in the consolidation of the former joint ventures in Malaysia, Hong Kong and Taiwan.

In Asia & Eastern Europe, there was a 35.9 percent increase in operating profit to EUR 269 m (2007: EUR 198 m), which increased once again at a faster rate than sales. As a result, the operating margin, which was already at a high level, increased by a further 70 basis points to 28.5 percent.

Growth in Asia was due to strong demand throughout the region. In Southern and Eastern Asia, we saw high growth rates in India, Singapore and Korea in particular. Positive business trends in China continued to be the result of new production start-ups, brisk business activity in the industrial parks, and dynamic growth in the joint ventures.

Market conditions have also remained favourable in the Eastern Europe region, clearly demonstrated by high volume growth and positive price trends. Growth continues to be robust, not only in the newly-industrialised countries, but also in the more industrialised countries such as the Czech Republic, Poland and Hungary.

In Romania, we entered into a long-term supply agreement in the second quarter with the international steel group ArcelorMittal. The agreement is the result of long-term cooperation with a major customer and underpins our leading market position in Eastern Europe. We will take on the existing gases supply for the steelworks there, as well as building an additional air separation plant. The total investment will be more than EUR 100 m.

In the Middle East region, we have recently concluded contracts for two promising projects, which will significantly strengthen our position in this attractive growth market:

Through Elixier, our joint venture with the Abu Dhabi National Oil Corporation (ADNOC), we will construct two large air separation plants, an investment of around 800 million US dollars. From the end of 2010, the plants will supply nitrogen for an Enhanced Gas Recovery process. This large tonnage project moreover underpins the business synergies between our Engineering and Gases Divisions.

In May, we announced our acquisition of 51 percent of the shares in the Saudi Arabian industrial gases company SIGAS (Saudi Industrial Gas Co. Ltd). SIGAS is the second largest gases supplier in Saudi Arabia. It is expected that the company will be consolidated from the fourth quarter of 2008.

In the South Pacific & Africa operating segment, on a comparable basis, we achieved a 14.5 percent increase in sales in the reporting period to EUR 632 m. On the basis of reported figures, the increase over the prior year figure of EUR 606 m was 4.3 percent, which was due mainly to unfavourable exchange rate movements in the South African rand. This also had an effect on operating profit, which at EUR 144 m was in line with the previous year period (2007: EUR 146 m). The operating margin in the reporting period was 22.8 percent.

Steep price rises in the Liquefied Petroleum Gas (LPG) market have had a significant influence on the positive sales trends in South Africa and the South Pacific region. Growth in the Pacific was also due to the high level of demand for leasing and equipment business in the cylinder gas product area. Moreover, additional price increases in South Africa which have been announced have not yet had their full effect on sales and earnings in the reporting period.

The good prevailing business environment in the international gases market is evident in the sales trends of all four product areas. On a comparable basis, i.e. after adjusting for exchange rate effects, changes in the price of natural gas and changes in Group structure, we increased sales in the tonnage business in the six months to June by 6.5 percent to EUR 1.183 bn (2007: EUR 1.111 bn). On a comparable basis, there was a 6.4 percent increase in sales in the bulk business to EUR 1.149 bn (2007: EUR 1.080 bn). In the cylinder gas business, we achieved an 11.1 percent increase in sales on the same basis to EUR 1.890 bn (2007: EUR 1.701 bn), while sales in the product area Healthcare rose 8.2 percent to EUR 487 m (2007: EUR 450 m).