Issue with LTO (-flto) in assembly and C combined

Please see following code snippet:
--------------------------------------
$ cat x.c
void _exit(int code)
{
 while(1);
}

int add(int a, int b)
{
  return a+b;
}

void main()
{
 __asm volatile ("mov r0, #1");
 __asm volatile ("mov r1, #2");
 __asm volatile ("b add");
}
-------------------------------------

If compiled using following options it gives error,

$ arm-none-eabi-gcc -mcpu=cortex-m3 -mthumb -flto x.c
`add' referenced in section `.text' of /tmp/cclOkQHk.ltrans0.ltrans.o: defined in discarded section `.text' of /tmp/cccxizqr.o (symbol from plugin)
collect2: error: ld returned 1 exit status

$ arm-none-eabi-gcc -v
gcc version 4.8.4 20140725 (release) [ARM/embedded-4_8-branch revision 213147]

Based on above I have few questions:

1. Is this code snippet correct (at-least it works without -flto)?
2. Any workarounds to overcome this problem?

Thanks.