Praxair profits rise thanks to Asia expansion
Praxair, Inc. reported second-quarter net income and diluted earnings per share of $445m and $1.49, 4% and 5% above the prior-year quarter, respectively. Sales in the second quarter were $3,014m, 7% above the prior-year quarter.
Strong volumes in Asia and South America were partially mitigated by lower volumes in Europe, while North American volumes were comparable to the prior year. Acquisitions contributed 3% growth in the quarter. Operating profit in the second quarter was $665m, up 5% compared to the prior-year quarter.
The increase was driven by higher overall volumes, higher pricing and acquisitions, partially offset by negative currency translation effects. Operating profit as a percentage of sales was 22.1%. Second-quarter cash flow from operations was $577m and capital expenditures were $522m, primarily for new production plants under long-term contracts with customers. The company invested $171m in acquisitions of Dominion Technology Gases, Volgograd Oxygen Factory and several packaged gas distributors in the United States.
The company paid dividends of $177m and repurchased $152m of stock, net of issuances. The debt-to-capital ratio was 57.9% and debt-to-EBITDA was 2.1x. The after-tax return on capital and return on equity for the quarter were 13.0% and 28.4%, respectively.
Commenting on the financial results and business outlook, Chairman, President and Chief Executive Officer Steve Angel said, “Our on-site business continued to be very strong with improving volumes to the energy, chemicals and metals industries across the Americas and Asia. Merchant deliveries continued to grow modestly with stable demand from healthcare and food and beverage.”
“However, packaged gas demand weakened slightly due to poor overall business confidence and lower private and public spending on construction and capital projects. In the near term, we expect these trends to continue with the strongest growth in chemicals, energy and emerging markets. Fortunately, we are well positioned geographically and have a strong backlog of large on-site projects being readied for start-up.”
For the third quarter of 2013, Praxair expects diluted earnings per share in the range of $1.48 to $1.53. For the full year of 2013, the company expects adjusted diluted earnings per share to be in the range of $5.90 to $6.00. These estimates are based on current foreign exchange rates for our international businesses, which on a weighted basis are 3% weaker than January when we initially gave earnings guidance for 2013.
They also exclude an expected pension settlement charge in the third quarter of about $9m. Praxair expects full-year sales in the area of $12bn. Full-year capital expenditures are expected to be in the range of $1.8 to $2.0bn, and the adjusted effective tax rate is forecasted to remain at about 28%.