Linde plc (NASDAQ:LIN)

The common-size income statement reveals significant shifts in profitability and cost structure over the five-year period. Sales remained consistently at 100% throughout, allowing for a focused analysis of expense and profit margins. A notable trend is the improvement in gross margin, coupled with changes in operating expenses and interest-related items, ultimately impacting net income.

Gross Profitability

Gross margin experienced a positive trend, increasing from 43.03% in 2021 to 48.83% in 2025. This indicates improved efficiency in managing the cost of sales, exclusive of depreciation and amortization, which decreased as a percentage of sales from -56.97% to -51.17% over the same period. The most substantial improvement occurred between 2022 and 2023.

Operating Expenses

Selling, general, and administrative expenses decreased slightly as a percentage of sales, moving from -10.36% in 2021 to -10.10% in 2025. However, this decrease was not consistent year-over-year. Depreciation and amortization also showed a declining trend, from -15.05% to -11.07%, likely due to asset management and accounting practices. Research and development remained relatively stable, fluctuating around -0.45% of sales. Cost reduction programs and other charges were most impactful in 2022, at -3.08%, but diminished significantly in subsequent years.

Operating Profit

Operating profit demonstrated a substantial increase, rising from 16.19% of sales in 2021 to 26.25% in 2025. This improvement is attributable to the combined effect of the expanding gross margin and relatively controlled operating expenses. The largest single-year increase in operating profit margin occurred between 2022 and 2023.

Interest and Financing

Interest expense increased as a percentage of sales from -0.38% in 2021 to -1.47% in 2024, before decreasing slightly to -1.37% in 2025. Interest income showed an offsetting increase, from 0.13% to 0.69% in 2024, then decreasing to 0.61% in 2025. Net pension and OPEB benefit exhibited relative stability, fluctuating between 0.50% and 0.71% of sales.

Net Income and Taxes

Income before income taxes and equity investments followed the trend of operating profit, increasing from 16.56% to 26.18%. The income tax percentage also increased, from -4.10% to -5.85%, likely due to the higher pre-tax income. Net income, including noncontrolling interests, mirrored this pattern, growing from 12.85% to 20.77%. Net income attributable to Linde plc also increased, from 12.42% to 20.30%.

Other Items

Several other items exhibited fluctuations. Asset divestiture gains (losses), net, moved from a negative -0.10% to a positive 0.23% and then to 0.10%. Insurance recoveries appeared in 2022 and 2023, while purchase accounting impacts related to the Linde AG merger became more pronounced in 2024 and 2025. Other income (expenses), net, showed volatility, with a significant positive impact in 2024, followed by a negative impact in 2025.

Overall, the financial performance demonstrated a positive trajectory, characterized by improved gross margin, controlled operating expenses, and increased profitability. The fluctuations in other income and expense items warrant further investigation, but the core business appears to be strengthening over the analyzed period.