Praxair announced that it expects the combined impacts of hurricanes Katrina and Rita to reduce operating profit by $15 to $18 million, or about four cents of diluted earnings per share, in the third quarter ended 30 September 2005.
The third quarter effects include minor property damage, business interruption, insurance adjustments, start-up and shutdown costs, higher distribution costs and higher energy costs.
While none of the company’s facilities sustained significant property damage from either hurricane, eight facilities in Texas and Louisiana were affected and temporarily shut-in during the hurricanes. Six of the eight facilities resumed operations within ten days of closure and the other two are expected to become operational shortly.
However, demand for oxygen, nitrogen and hydrogen from Praxair’s pipeline systems on the Gulf Coast remains curtailed pending the start-up of customer facilities damaged by the hurricanes or constrained by the availability of electricity, and a shortage of labour in the region.
Consistent with prior disclosure and earnings guidance, Praxair also anticipates a third quarter tax charge of approximately $90 million, or about 27 cents per diluted share, related to its plan to recapitalise its foreign subsidiaries and repatriate about $1.1 billion of foreign earnings pursuant to the American Jobs Creation Act.
Excluding the hurricane and tax charges, Praxair’s third quarter earnings guidance remains unchanged at 61 to 64 cents of diluted earnings per share. Including these charges, diluted earnings per share for the third quarter are forecasted to be in the range of 30 to 33 cents.
Praxair will release its third quarter results on 26 October before the market opens.