Record earnings and cash flow are among many highlights of Praxair, Inc.’s full year 2013 results, declared today and reaffirming the company’s leadership position in the gases industry in the Americas region.
Takeaway from the results are fourth quarter sales of $3.0bn, 8% above the prior-year quarter, and full year sales of $11.9bn – up 6% from 2012.
Praxair also reported record full year operating cash flow of $2.9bn and fourth-quarter net income of $474m, while its high profile acquisition of the NuCO2 US beverage carbonation business is described as having ‘exceeded our expectations in all areas’.
Commenting on the results and business outlook, Chairman, President and CEO Steve Angel said, “In 2013, Praxair delivered record operating cash flow of $2.9bn that represented about 25% of sales. Sales and earnings grew 8%, excluding negative currency translation effects, in a global economy that has only shown modest recovery. Operating margin was a strong 22%.”
“We completed three world-scale steam methane reformers for hydrogen supply to refineries under long-term contracts and quickly integrated the NuCO2 U.S. beverage carbonation business which has exceeded our expectations in all areas, including growth and operating profit.”
He added, “In 2014, we expect the global economy to continue to grow at a modest pace, in-line with recent sequential trends. In Southern Europe volumes are stabilising and with our industry-leading position in North America we remain well positioned to continue to take advantage of the attractive fundamentals for the energy, manufacturing and materials industries.”
“In Brazil, growth should be positive, although uneven, given ongoing macroeconomic challenges. We expect strong cash flow generation to fund new projects and return cash to shareholders in the form of dividends and share repurchases.”
For Danbury, Connecticut-based Praxair, fourth quarter sales of $3.010m were actually 10% above the prior-year quarter when excluding currency translation effects, while organic sales increased 7% with growth across all geographic segments due primarily to energy, metals, chemicals and manufacturing markets.
Acquisitions in North America and Europe contributed 3% growth in the quarter. The company invested $1.323bn in acquisitions in the year, including the NuCO2 micro-bulk carbon dioxide business in the US, Dominion Technology Gases and several US packaged gas distributors.
Sales were steady sequentially from the third quarter due primarily to higher prices offset by seasonally lower volumes.
Operating profit in the fourth quarter was $690m, 12% above the prior-year quarter, with operating profit as a percentage of sales at a record 22.9%. Fourth-quarter cash flow from operations was also a record $964m, while cash flow funded up to $516m of capital expenditures – largely for new production plants under long-term contracts with customers.
A brief analysis of fourth quarter results by region demonstrates a comparatively strong showing in both Europe and North America.
Fourth quarter sales in North America were $1.567bn, up 11% from the prior-year quarter. Organic sales growth of 6% was driven by strong growth in the energy end market, primarily driven by hydrogen project start-ups for refinery customers.
In Europe, fourth quarter sales were $404m, 11% above the prior-year quarter. Excluding currency, sales were 7% above prior year. Organic sales were 2% above the prior-year quarter due to higher volumes including project start-ups and higher pricing.
In the South America and Asia regions, fourth quarter sales were $481m (1% below the prior-year quarter) and $394m (5% above the prior year), respectively. Sales in Asia were driven by strong growth in on-site and merchant volumes due to project start-ups.
Looking ahead to full year 2014, Praxair expects sales in the range of $12.3bn to $12.8bn, assuming a negative currency impact of around 3% versus 2013, based on current exchange rates. Full-year capital expenditures are expected to be in the range of $1.8bn to $2.0bn, and the effective tax rate is forecasted to remain at about 28%.