US Praxair sees opportunity for growth coming out of Q1

23 April 2014 22:07  [Source: ICIS news]

HOUSTON (ICIS)--March was a good month for Praxair, and the company expects to improve on the month's performance in Q2, the CEO of the US-based merchant gas producer said on Wednesday.

The company released its Q1 2014 earnings earlier in the day, showing a rise in net income of 8% year over year to $448m.

While the company saw growth in both volume and pricing, the severe winter in North America and some economic conditions dampened demand in the region, said CEO Matt White, who made his comments during a conference call about the earnings.

The biggest impact of winter weather was around the Great Lakes, which has been dealing with ice. Customers in the area have had to reduce production volumes when having trouble receiving ore shipments.

Some parts of the North American economy have been challenging, impacting demand from customers in the government, defense, construction and heavy manufacturing industries, White said. Oilfield activity in North America was soft as well.

Canada's northern Alberta oil fields had record quarter last year, setting the bar very high year over year, and the area did have weather challenges in Q1. In Mexico, challenges were due to Petroleos Mexicanos (Pemex) programmes. Both regions are expected to improve in Q2, White said.

"They are cyclical natures of the business," White said.

Praxair has been watching the Canadian manufacturing sector closely, due to its difficulties in competing with the US and Mexico. The historic manufacturing base included companies taking advantage of a weak currency, which is less the case now, White said.

In South America, Praxair has seen growth in the food and beverage and health care industries.

In Europe, southern Europe has stabilised economically, and Praxair was able to increase margins there due to several factors, including lower energy prices, the CEO said. The company is expanding in Russia and has seen no impact in its business operations from tensions with Ukraine, he said.

In Asia, Q1 sales were slower than Q4 in part due to the Lunar New Year holiday, but still increased year over year. Growth in Q2 could be slower in China, but Praxair is hopeful about future opportunities in the steel industry in India, White said.

By: Jessie Waldheim

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