Air Products reported encouraging results for its fiscal third quarter ended 30th June 2011. In particular, the North American firm saw net income from continuing operations appreciate to $318m, reflecting a 15% increase versus the corresponding quarter last year.
Furthermore, the firm enjoyed diluted earnings per share (EPS) from continuing operations of $1.46, equating to a 14% rise on the prior year.
Third quarter revenues also increased 14% to $2,578m. Meanwhile, sales grew 7% on higher volumes, primarily in the Electronics and Performance Materials and Tonnage segments. Moreover, with operating income of $417m, this too reflected success with an 11% incline on the prior year.
John McGlade, Chairman, President and CEO, reflected on the results, “We continued to see strong volume growth across a number of our businesses. Growth in the Asia Merchant business and more broadly in the energy and electronics markets was strong, while both the US and Europe Merchant businesses were slower.”
He continued, “This quarter, as expected, we saw a significant number of planned customer maintenance outages in our Tonnage segment. We remain very disappointed by the continued higher operating and maintenance costs in our Merchant segment and are taking the necessary steps to improve performance.”
A segmented break-down
With 12% annual increase and sales of $1,027m, Merchant gases enjoyed higher volumes, particularly in Asia. Meanwhile, operating income appreciated at a more modest rate of 3% to $182m; thanks to favourable currency and increased volumes, mostly offset by higher operating costs and pricing pressure in Europe.
Undergoing a sizeable sales incline, Tonnage gases also enjoyed success, increasing 20% to $869m. At the same time, operating income declined 4% to $115m. In a public statement, the firm described that, “volume gains were more than offset by higher maintenance costs primarily from customer scheduled outages.”
Similarly, Electronics and Performance Materials sales improved 21%, with sales of $602m. Operating profit in the sector also rose by 75% to $109m. Notably, this period represented record sales, profits and margins for the segment.
Meanwhile, Equipment and Energy underwent a down-turn with sales declining 31% to $80m. Accorrding to Air Products, this decline was precipitated by lower ASU sales and last year’s gain due to an asset sale.
With a successful third quarter behind it, Air Products expects an equally strong fourth quarter. McGlade said, “We anticipate continued strong revenue growth in our Tonnage and Electronics and Performance Materials segments. With the Tonnage planned maintenance outages behind us and the actions we are taking to improve Merchant performance, we expect margins to improve significantly in the quarter.”
Specifically, Air Products expects fourth quarter EPS to be between $1.48 and $1.53 per share and the full fiscal year EPS to be between $5.70 and $5.75 per share.
The targets reflected the company’s recent adjustment of its financial targets for 2015. In line with the firm’s latest forecast, Air Products aims to deliver top line growth of 11% to 13% per year over the next four years.