Figures are still down in comparison to last year’s Q4 results, but CEO of Air Products, John McGlade is confident about the position the company is now in.
Air Products reported income from continuing operations of $246m, or diluted earnings per share (EPS) of $1.14, for its fiscal 2009 fourth quarter, compared to $273m and $1.26 respectively for the fourth quarter of fiscal 2008.
Fourth quarter revenues of $2,129m declined 22% versus the previous year. Lower energy and raw material cost pass-throughs, and unfavorable currency, impacted sales by 12% and 3% respectively.
Underlying sales declined 7% on lower volumes in the Merchant Gases and Electronic and Performance Materials segments, and lower pricing in Electronics and Performance Materials.
Sequentially, sales were up 8%, 7% on an underlying basis. Operating income of $328m declined 12% on lower volumes and unfavorable currency, partially offset by cost reduction actions. Sequentially, operating income increased 7%, primarily on improved volumes.
For fiscal 2009, sales of $8,256m declined 21% on lower volumes, lower energy and raw material cost pass-throughs and unfavorable currency. Underlying sales declined 8%. Operating income of $1,185m was down 22%, and diluted EPS of $4.06 declined 20% from the previous year.
John McGlade, Chairman, President and Chief Executive Officer of Air Products, said, “The beginning of our fiscal 2009 coincided with the start of the global financial crisis, driving the recession that resulted in unprecedented declines in demand for our products worldwide.”
“While this affected our fiscal year results, we were able to offset some of the decline with aggressive cost controls. Sequentially, we are seeing volume improvement in all our businesses, and our actions to move to a sustainable, low-cost structure have positioned us to capitalize on growth as our markets recover.”
In the Merchant Gases segment, sales of $932m declined 15% from the previous year on weaker volumes across manufacturing end-markets globally and unfavorable currency, partially offset by favorable pricing.
Sequentially, sales increased 6% on 3% higher volumes from improved demand in most geographies. Operating income of $166m declined 16% from the previous year on lower volumes and unfavorable currency, partially offset by favorable pricing.
In the Tonnage Gases segment, sales of $640m were down 32% from the previous year on lower energy and raw material cost pass-throughs.
Sales and volumes were up 13% sequentially on stronger demand from chemical, refinery and steel customers.
Operating income of $105m decreased 22% from the previous year on lower operating efficiencies, and unfavorable currency.
In the Electronics and Performance Materials segment, sales of $434m declined 22%, primarily on lower volumes and Electronics pricing. Operating income of $49m increased 17% from the previous year as favorable cost performance offset volume declines and lower Electronics pricing.
While year-on-year Electronics sales were down 27%, sales increased 3% sequentially, due to improved customer operating rates.
Performance Materials volumes improved 9% sequentially, reflecting seasonal improvement and stronger Asia sales, but declined 10% from the previous year on weaker demand from coatings, autos, housing and other end markets.
In the Equipment and Energy segment, sales of $123m declined 3% from the previous year. Operating income of $6m decreased from the previous year on lower sales and higher Energy development costs.
Looking forward, McGlade said, “We have implemented the difficult but necessary actions to take advantage of our strong global market positions.”
“Additionally, we see significant future opportunities in the evolving energy, environment, and emerging market sectors. We also continue to drive to a low-cost structure to enable us to grow faster than our competition.”
“While the pace of the recovery is unknown, our people remain committed to achieving our margin, return and growth goals.”
The company has announced initial guidance for fiscal year 2010 EPS in the range of $4.65 to $4.90 per share, representing year-over-year earnings growth on a continuing operations basis of 15 to 21%. For the first quarter of fiscal 2010 ending December 31, 2009, EPS is expected to be between $1.07 and $1.15 per share.
The company also announced that it expects capital spending in fiscal 2010 to be between $1.3 and $1.5bn, approximately equal to fiscal 2009.