Performance pleases despite economic headwinds
Fresh from the recent news of the divestiture of its Continental Europe Homecare Business, Air Products has reported a mixed set of fiscal 2012 first quarter results.
The company revealed net income of $292m, or diluted earnings per share (EPS) of $1.36, for its fiscal first quarter ended 31st December 2011, versus $296m and $1.35 for the first quarter of fiscal 2011.
First quarter revenues of $2.423m increased 1% versus the prior year on higher prices in Merchant Gases and Performance Materials. However, higher volumes from new plants in Tonnage Gases were offset by lower Equipment sales and lower volumes in Performance Materials and Merchant Gases.
Chairman, President and CEO John McGlade explained that the company had expected such a set of results and was pleased with its performances amidst the strong economic headwinds.
Quarterly highlights included the increase in underlying sales and the coup of the largest on-site ASU order ever in China.
“Coupled with our improved operating performance and new plant on-streams, this should lead to stronger sales and earnings growth in the last half of our year”
Sequentially, sales declined 7% due to seasonality in Electronics and Performance Materials and Merchant Gases, plus currency effects. Operating income of $385m was down 5% and margin of 15.9% was down 100 basis points from last year, driven by lower Equipment sales and weaker Merchant Gases volumes.
McGlade said in a statement, “As we expected, economic growth continued to slow this quarter, depressing volumes and limiting earnings growth. In spite of these economic headwinds, we did improve our operating performance, while lowering costs and winning significant new tonnage contracts.”
Looking ahead, he explained, “We expect second quarter economic activity to remain slow. We are forecasting Asia and North America growth to accelerate in the second half of our fiscal year. Coupled with our improved operating performance and new plant on-streams, this should lead to stronger sales and earnings growth in the last half of our year.”
“Our recent orders, strong project backlog and robust bidding activity position us well to achieve our 2015 goals for growth, margin and returns.”
First quarter highlights
A mixed first fiscal quarter saw Air Products’ Merchant Gases sales of $989m unchanged versus the prior year as lower volumes were offset by higher pricing in the US/Canada and European Liquid Bulk and Packaged Gases.
Tonnage Gases sales of $810m were up 6% on improved volumes from new plants, while operating income decreased 4% from the prior year due to higher maintenance costs from outages. Sequentially, sales were down 8% due to lower volumes and lower energy pass-through.
Electronics and Performance Materials sales of $535m increased 2% on higher volumes and pricing, though Electronics sales were actually up 4% and Performance Materials sales decreased 1% versus last year. Equipment and Energy sales of $89m and operating income of $7m were down 21% and 64% respectively versus the prior year, driven by lower ASU and LNG project activity.