Air Products & Chemicals Retains Optimism Despite Drastic Drop in Income

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Researched by Industrial Info Resources (Sugar Land, Texas)--On January 21, Air Products & Chemicals Incorporated (NYSE:APD) (Allentown, Pennsylvania), a global supplier of high quality industrial gases and atmospheric products, released its earnings report for the first quarter of the 2009 fiscal year, which ended December 31, 2008. The company's year-over-year quarterly net income dropped an astounding 74%, falling from $263.7 million in 1Q08 to $68.6 million this year. Operating incomes in the company's four business segments fell substantially.

In a conference call regarding the earnings, Chief Financial Officer Paul Huck discussed the battering that the company is taking in the current economic slowdown. "As we indicated back on December 16," he said, "declining conditions in the business around the world are creating one of the weakest business environments that we have seen across our end markets in some time. This quarter, volumes declined each month, as many customers are running at significantly lower operating rates or in some cases, have temporarily idled their facilities completely."

Operating income in the company's four business segments were as follows:

• Merchant Gases - operating income of $171 million, down 15% from 1Q08
• Tonnage Gases - operating income of $109, down 2%
• Electronics and Performance Materials - operating income of $25, down 63%
• Equipment and Energy - operating income of $7 million, down 25% from last year

While price increases were put into place, these were not enough to completely offset declines in sales volume and unfavorable foreign currency exchange within each segment. Air Products expects the current quarter to be worse. "We expect that the economy will continue to deteriorate in quarter two and expect the second quarter to be the worst quarter of 2009," said Huck. "January volumes have started slow, as many of our customers have extended their holiday shutdowns into this month."

Industrial Info, as part of its http://www.industrialinfo.com/prodserv/prodserv.jsp?pagerequest=dbproducts North American Industrial Database, is currently monitoring $645 million of Air Products' planned and active projects in the U.S. and Canada. The company is currently planning construction for two new hydrogen plants in Louisiana. Construction for these new plants could begin this summer and will ultimately depend on the demand requirements from their end users. For more information on this and other projects planned in the North American Chemical Processing Industry this year, see related article from January 6, 2009 - North American Chemical Industry Prepares to Start New Year with $2.4 Billion in Total Spending.

Such projects demonstrate Air Products' faith in the future of the company and help support Huck's optimistic statements about the future. "As we look beyond 2009," said Huck, "we still see a solid set of fundamentals for driving industrial gas demand in the future. As the world seeks alternative forms of energy, better efficiency in using its existing energy resources and improvements in the environment, industrial gases will play a large role in the solutions people use."

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