Edited from: "To our shareholders", annual report 2008 and “Praxair fourth-quarter 2008 and full-year 2008”, press release.
Praxair states that the uncertain economic environment it faced at the end of 2008 and going into 2009 is anticipated to continue. On this basis, Praxair took actions to reduce its cost structure. “We are operating with a lean cost structure which will allow us to perform well in the near-term, while carefully positioning us for stronger returns in the economic recovery”, says chairman, president and chief executive officer, Steve Angel. 
However, Praxair expects growth from new plant start-ups and applications technologies to mitigate the effects of lower base-business volumes. It also expects overall pricing to remain stable.
“We are confident in our ability to maintain or improve operating margins – that is what differentiates our business from commodity businesses where both volumes and margins suffer in a downturn”, says Angel.
In 2009, it expects its capital expenditures to be in the range of $1.4bn to $1.5bn. Most of its spending is for new production plants, or expansion of existing plants, which are supported by 15-year to 20-year customer contracts with take-or-pay provisions and fixed pricing with cost pass-through provisions.
“We are currently constructing 42 major projects around the world which are scheduled to come on-stream and will generate revenues beginning in 2009 through 2011”, says Angel.
The largest of these are in North America where hydrogen for refining is its largest growth market. It also has a number of new projects in South America and Asia, supplying customers in widely diverse industries.
Praxair says that the new US administration has indicated that it will push a strong environmental agenda, which it believes should bode well for its applications that lower emissions, reduce energy consumption, treat water or play a role in renewable energy systems.
Looking ahead, Praxair expects that demand for energy supplies, infrastructure growth in emerging economies, and environmental regulation will continue to drive long-term growth for industrial gases.
“We serve a diverse array of end-markets, including food and beverage and healthcare which provide steady, non-cyclical growth”, says Angel.
Praxair will further concentrate its resources on four markets that it feels will generate above-average growth in the years ahead, these being: energy, healthcare, electronics, and Asia. Demand increases for its nitrogen and carbon dioxide used to pressurise reservoirs of oil and natural gas, and demand for Praxair's hydrogen are expected to grow along the US Gulf Coast at around 20%/year through to 2010.
Based on the current environment, Praxair expects sales for the full year of 2009 to be in the area of $9bn. This guidance assumes a negative currency impact of about 9% and a negative impact of about 3% from lower cost pass-through. The company expects diluted earnings per share to be in the range of $3.85 to $4.15.
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Financial highlights: Praxair, year ended 31 December
|
|
2008 |
2007 |
2006 |
2005 |
2004 |
|
Sales ($ m) |
10,796 |
9,402 |
8,324 |
7,656 |
6,594 |
|
Operating Profit ($ m) |
1,883 |
1,786 |
1,519 |
1,293 |
1,103 |
|
Net Profit ($ m) |
1,211 |
1,177 |
988 |
732 |
697 |
|
Total Assets ($ m) |
13,054 |
13,382 |
11,102 |
10,491 |
9,878 |
|
Diluted earnings per share ($) |
3.80 |
3.62 |
3.00 |
2.20 |
-- |
|
Number of Employees |
26,936 |
27,992 |
27,042 |
27,306 |
27,020 |
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Praxair
Company Structure
Praxair supplies atmospheric, process and specialty gases, high-performance coatings, and related services and technologies to a wide range of industries such as aerospace, food and beverages, healthcare, semiconductors, chemicals, refining, ore and gas production, primary metals and metal fabrication, as well as other areas of general industry. Praxair was founded in 1907 and became an independent publicly traded company in 1992.
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