Air Products has reported GAAP (generally accepted accounting principles) net income from continuing operations of $416m and GAAP diluted earnings per share (EPS) from continuing operations of $1.89, up 37% and 36%, respectively from the prior year, for its fiscal second quarter ended 31st March, 2018.

For the quarter, on a non-GAAP basis, adjusted net income from continuing operations of $378m and diluted adjusted EPS from continuing operations of $1.71 both increased 20% over prior year.

The company’s Q2 sales of $2.2bn increased 9% from the prior year on 4% higher volumes and 5% favourable currency. Volumes were higher in all three industrial gas regions, partially offset by lower activity from the Jazan project in Saudi Arabia. Pricing increased 1%, driven primarily by the China merchant business.

For the quarter, adjusted EBITDA of $739m increased 13% over the prior year, driven by the higher volumes, positive pricing and favourable currency. Adjusted EBITDA margin of 34.3% increased 140 basis points over the prior year, primarily on the higher volumes.

Commenting on the results, Seifi Ghasemi, Chairman, President and CEO, said, “Our talented and committed Air Products team delivered another strong quarter, further improving safety performance and financial results. Adjusted EPS of $1.71 increased 20% over prior year, our 16th consecutive quarter of year-on-year adjusted EPS growth. We also continued to generate a significant amount of investable cash. Adjusted EBITDA margin of 34.3% shows our people are continuing to focus on delivering strong operating performance while successfully winning new growth opportunities,” he said.

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Americas sales of $913m increased 3% over prior year, driven by higher hydrogen (H2) and merchant gases volumes. Adjusted EBITDA of $362m increased 3% over the prior year, primarily driven by the higher volumes.

EMEA sales of $562m increased 36% over prior year, driven by 20% higher volumes, 15% favourable currency and 1% favourable pricing. The higher volumes were primarily from the new H2 plant in India; merchant volumes also contributed positively. Adjusted EBITDA of $179m increased 29% over the prior year on the higher volumes, pricing and currency. Adjusted EBITDA margin of 31.8% decreased 160 basis points from the prior year; excluding the India plant, which has comparatively high natural gas costs, adjusted EBITDA margin was up slightly compared to prior year.

Asia sales of $558m increased 28% over prior year, driven by 17% higher volumes from new plants and base business growth, 8% favourable currency, and 3% higher pricing. Adjusted EBITDA of $227m increased 30% on the strong volumes, favourable currency and higher pricing.

Ghasemi said, “Our team’s performance continues to have us operating from a position of great strength. Air Products people around the world are working hard, every day, to drive our safety, productivity and operational performance higher. In addition, our very strong balance sheet and cash flow position mean we have the capability to invest at least $13bn over the next five years in many growth opportunities we see, including acquisitions, asset buybacks and large projects. Our absolute focus on these two areas – delivering operational excellence and strategically deploying capital for growth – are our playbook for continuing to create value for our customers and shareholders.”

Increasing guidance for fiscal 2018, Air Products now expects full-year adjusted EPS of $7.25 to $7.40 per share, up 15% to 17% over prior year. For the fiscal 2018 third quarter, Air Products expects adjusted EPS of $1.80 to $1.85 per share, up nine to 12% over the fiscal 2017 third quarter.

Including the Lu’An project, the capital expenditure forecast for fiscal year 2018 is expected to be in the range of $1.8 to $2.0bn on a GAAP and non-GAAP basis.