Air Products Experiences 22% Rise in Earnings

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Researched by Industrial Info Resources (Sugar Land, Texas)--Industrial gases manufacturer Air Products & Chemicals Incorporated (NYSE:APD) (Allentown, Pennsylvania) recently reported earnings for the first quarter of the company's 2010 fiscal year. Although sales of $2.17 billion were down 1% year over year, this represented a 2% rise from the previous quarter. However, net income of $252 million, after adjusting for a 1Q09 cost-reduction expenditure of $174.2 million, was up 22% year over year.

Speaking of the lower quarterly sales figures, Chief Financial Officer Paul Huck said in a conference call, "This decline was the result of significantly lower natural gas prices, which reduced our contractual pass-through of energy-related costs, lowering sales by 7%."

Sales in each of the company's four business segments revealed a mixed bag that reflected the changed marketplace caused by the global economic downturn:

• Merchant Gases: sales of $934 million, up 1% from 1Q09
• Tonnage Gases: sales of $698, down 6% year over year
• Electronics and Performance Materials: sales of $433 million, up 7%
• Equipment & Energy: sales of $109 million, down 9% year over year

Behind these numbers exists some interesting figures regarding global sales and economic recovery. Despite the overall increase in sales in the Merchant Gases sector, sales in North America were down 11%, reflecting a 9% decrease in volume from last year. Asia, on the other hand, is showing a much more rapid recovery from the economic slowdown. Asian sales figures were up 13%, reflecting an 11% increase in sales volume from last year.

Although sales figures in the Tonnage Gases segment were down, sales volumes in the segment actually increased 11% year over year, suggesting growing strength in Air Products' end markets. "The higher volumes reflect the continuing improvement of steel and chemical end-markets, as well as new plant on-streams," said Nelson Squires, director of investor relations.

"Despite the slow nature of the recovery, we remain optimistic about our prospects for growth in the future. As we noted, 2010 should be a year of strong growth for us," said Huck. "As we look beyond 2010, we are excited by the opportunities we have to grow, driven by alternative fuels, the focus on improving energy efficiency and the continued need for manufacturers to lower emissions and improve environmental performance."

The company seems to be putting its money where its mouth is, with capital expenditure for 2010 estimated to be between $1.3 billion and $1.5 billion. Industrial Info is currently tracking more than $1.2 billion of active Air Products projects in North America and Europe. In the U.S., Air Products is currently in the process of constructing a hydrogen production plant in Baton Rouge, Louisiana. The estimated $250 million project is scheduled for completion in the first half of this year. The plant will produce 120 million square feet per day of hydrogen and steam for Exxon Mobil Corporation's (NYSE:XOM) (Irving, Texas) adjacent refinery. The company also plans to begin construction of another grassroot hydrogen plant in Detroit, Michigan, with a 50 million-square-foot-per-day capacity, which will be used at Marathon Oil's (NYSE:MRO) (Houston, Texas) nearby refinery. The $60 million project is scheduled for completion in early 2012. Information on these and other projects is available in Industrial Info's North American Industrial Database.

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Industrial Info Resources (IIR) is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy related markets. For more than 26 years, Industrial Info has provided plant and project opportunity databases, market forecasts, high resolution maps, and daily industry news.