Air Products' Q1 operating profits rise 17.2%

23 January 2008 12:50  [Source: ICIS news]

MUMBAI (ICIS news)--US-based Air Products posted a 17.2% year-on-year rise in operating profits for the first quarter to $372m on the back of higher volume growth, improved margins across most segments and a weaker dollar, it said on Wednesday.

The speciality gases and performance materials manufacturer’s sales for the period ended 31 December increased 9.1% to nearly $2.5bn, while its income from continuing operations surged 16.3% to $257m.

"We delivered double-digit earnings growth and significant margin improvement during the quarter," said Air Products’ president and CEO John McGlade.

Its net income, which rose 14.5% to $263.7m, included revenue from discontinued operations comprising the divestment of its interest in the polymers joint ventures to Wacker Chemie, and the sale of its high purity process chemicals (HPPC) business to KMG Chemicals, it said.

"This strong performance reflects the continued emphasis we have placed on delivering profitable growth through our global focus and relentless drive for productivity," McGlade added.

Operating income at Air Products’ merchant gases segment jumped 26.6% to $175.4m during the quarter on the back of higher volumes, improved pricing, a weaker dollar and productivity, it said.

Tonnage gases operating income increased 16.6% year on year to $111.1m on the back of higher revenues from higher volumes, increased natural gas costs, improved plant efficiencies and asset sales, it added.

Operating income at its electronics and performance materials segment surged 32.5% to $66m, driven by higher specialty materials and bulk gas volumes, while performance materials volume gains were driven by demand for surfactants and specialty additives used in environmentally friendly formulations, Air Products said.

Going forward, the company raised its earnings guidance for the 2008 fiscal year, expecting earnings growth of 15-19%.

"The company is forecasting a range of $4.85-$5.00 [for earnings per share] for the year [2008] and $1.17-$1.21 for the second quarter," Air Products said.

The company had earlier provided a 2008 earnings per share (EPS) guidance of $4.80-$5.00, which included $0.17/share of income for polymers and a $0.07 charge for pension settlements.

"Economic activity through the first quarter of this [fiscal] year is tracking in line with our expectations," McGlade said.

Looking forward, the company expects high bidding activity and solid demand from customers looking to improve energy efficiency, plant productivity, product quality and environmental performance, he added.

"Our focus on growth markets and geographies, productivity and streamlined operations, combined with a robust backlog of projects, should allow us to consistently deliver higher growth and higher returns in both the short- and long-term," McGlade said.

By: Divya Chowdhury
+65 6780 4359

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