Air Products has reported fiscal 2018 full-year results which display GAAP net income from continuing operations of $1.5bn and GAAP diluted EPS from continuing operations of $6.59, both up 28%.
For the year ended 30th September 2018, on a non-GAAP basis, record adjusted diluted EPS from continuing operations of $7.45 was up 18%, the fourth consecutive year of double-digit annual growth.
Full-year sales of $8.9bn increased 9% on 6% higher volumes, 1% higher pricing and 2% favourable currency. Volumes were higher across all three regions, partially offset by lower activity from the Jazan project; excluding Jazan, volumes for the year were up 10%. The higher pricing was driven by the China and Europe merchant businesses.
Adjusted EBITDA of $3.1bn for the year increased 11%, led by strong volume growth, positive pricing, currency and equity affiliate income, partially offset by higher costs. Record adjusted EBITDA margin of 34.9% for the year increased 70 basis points.
Air Products reported GAAP net income from continuing operations of $453m and GAAP diluted EPS from continuing operations of $2.05 for its fiscal fourth quarter ended 30th September, 2018.
For the quarter, on a non-GAAP basis, adjusted net income from continuing operations of $442m and record diluted adjusted EPS from continuing operations of $2.00 both increased 14% over the prior year.
Fourth quarter sales of $2.3bn increased 4% from the prior year on 3% higher volumes, 1% higher pricing and 1% favourable energy pass-through, partially offset by 1% unfavourable currency. Volumes were higher in the Americas and Asia, partially offset by lower activity from the Jazan project; excluding Jazan, volumes were up 6%. Pricing increased 1%, driven primarily by the China merchant business.
For the quarter, adjusted EBITDA of $822m increased 7% over the prior year, driven by the higher volumes and higher equity affiliate income, partially offset by higher costs. Adjusted EBITDA margin of 35.8% increased 90 basis points over the prior year.
Commenting on the results, Seifi Ghasemi, Chairman, President and CEO, said, “The talented and focused team at Air Products has again delivered the strongest safety and financial performance in the industry, all while successfully executing some of the largest and most complex industrial gas projects in the world. Our significant cash generation and strong balance sheet enabled us to invest in new projects while returning nearly $900M to our shareholders this year via dividends. From this position of strength, we continue to execute on our gasification strategy and win profitable projects, enabling us to commit significant capital to grow Air Products.”
Results by segment
Americas sales of $987m increased 4% over prior year, with 4% higher volumes and 1% higher pricing, partially offset by 1% unfavourable currency. Hydrogen (H2) demand remained strong, and merchant gases volumes were positive. Adjusted EBITDA of $398m decreased 1% from the prior year, as the improved volumes and pricing as well as higher equity affiliate income were offset by increased costs.
EMEA sales of $555m increased 8% over prior year, driven primarily by 7% favourable energy pass-through, mainly due to a significant increase in natural gas prices in India. Positive volumes contributed 2% and pricing added 1%, partially offset by unfavourable currency of 2%. Adjusted EBITDA of $174m decreased 5% from the prior year. Adjusted EBITDA margin of 31.4% decreased 410 basis points; excluding the impact of higher energy pass-through, adjusted EBITDA margin was down 180 basis points, primarily due to higher power costs.
Asia sales of $633m increased 15% over prior year, driven by strong volumes and higher pricing. Volumes increased 14%, with new projects, primarily Lu’An, driving about 10% of the increase. Pricing increased 3%, mainly due to China merchant pricing. Adjusted EBITDA of $271m increased 21% and adjusted EBITDA margin of 42.8% was up 210 basis points over prior year on the strong volumes and higher pricing.
Ghasemi said, “With our safety, productivity and operating performance as the foundation, I remain very confident in our ability to deliver on our commitments. We continue to deploy capital into value-creating projects in our industrial gas business; in fact, we have already committed over $7bn. While we cannot predict or control political or economic developments, we do have control over the operational performance and growth of Air Products. Our fiscal 2019 guidance demonstrates our commitment to delivering at least 10% annual EPS growth over the long term. Our strategic Five-Point Plan is the roadmap for driving safety, inclusion, profitability and sustainability as we grow.”
Air Products expects full-year fiscal 2019 adjusted EPS of $8.05 to $8.30 per share, up 10% at midpoint over prior year. For the fiscal 2019 first quarter, Air Products expects adjusted EPS of $1.85 to 1.90 per share, up 5% at midpoint over the fiscal 2018 first quarter.
The capital expenditure forecast for fiscal year 2019 is expected to be in the range of $2.3 to $2.5bn.