Air Products has reported net income of $181 million or diluted earnings per share (EPS) of $.80 for its first fiscal quarter ended 31 December 2005. Net income increased eight percent and diluted EPS was up 11 per cent compared with the prior year.
First quarter earnings comparisons are affected by the adoption of Statement of Financial Accounting Standards No. 123R and expensing of stock options as of 1 October 2005. On a comparable basis (including stock compensation expenses), net income increased 13 percent and diluted EPS increased 16 percent.
Discussion of fiscal Q1 results on a comparable basis:
Revenues of $2,099 million were up five per cent over the prior year on higher natural gas and raw material cost contractual pass-throughs to customers, volume growth in gases, and improved pricing in chemicals. Operating income of $252 million was up 11 per cent from the prior year, primarily on strong gases volumes and higher equipment activity.
Unfavourable currency impacted sales growth by two percent in the quarter, and hurricanes Katrina and Rita in the prior quarter also reduced revenues by an additional three percent. The hurricanes reduced operating income in the quarter by $20 million ($14 million in gases and $6 million in Chemicals), or $.06 per share.
John P. Jones, chairman and chief executive officer, said: 'We had a strong first quarter with continued growth in sales, earnings and most importantly, return on capital. We delivered these results despite significant challenges from the hurricanes and large spikes in raw material and energy costs. Our people executed well against the objectives we set for the quarter. A major driver in these results is our continued success in delivering productivity to the bottom line. We also saw continued volume growth in our gases business and high activity in our equipment business, driven by liquefied natural gas (LNG) heat exchangers.'
Gases segment sales of $1,562 million were up eight percent over the prior year on higher volumes in the company's Asian base gases business, stronger pricing in North America base gases, as well as higher natural gas cost contractual pass-throughs to customers. Operating income of $229 million increased eight percent from the prior year on strong volumes across most businesses and a gain on a European land sale, partially offset by the unfavourable impact of the hurricanes.