Air Products’ end of Fiscal 2013 financial results indicate a year of mixed feelings for the company with final quarter sales and income up – but yearly profit down.
Sales of $10.2bn in 2013 are up 6% versus previous year for Air Products, as well as fourth quarter income. But yearly profit has sunk to $1.03bn in 2013, compared to 2012 figure of $1.19bn.
Earnings for the fourth quarter, which ended September 30, rose 4% - to $147.3m compared to $142.3m in the same quarter in 2012.
However, fourth quarter revenues of $2,587m decreased 1% versus previous year on 2% lower base volumes, and a -2% impact due to the previously announced decision to exit the Polyurethane Intermediates (PUI) business.
Higher energy pass-through and positive currency impacts partially offset the lower volumes. Sequentially, overall sales increased 2%, with underlying sales up 3% on higher volumes across all business segments.
Operating income of $421m for the quarter increased 3% versus prior year. Operating margin of 16.3% was up 60 basis points versus prior year despite higher pension costs. Sequentially, operating income increased 10% and operating margin improved 130 basis points, mostly due to higher volumes and lower costs.
For fiscal 2013, sales of $10,180m increased 6% versus prior year, with acquisitions contributing 5% and higher energy pass-through contributing 2%, partially offset by 1% lower volumes driven by the PUI business exit.
Underlying sales, excluding PUI, increased 1% on higher North America and Asia Tonnage Gases volumes, higher Performance Materials volumes, and LNG equipment activity.
Operating income of $1,566m improved 2% on the prior year. Operating margin was down 60 basis points, primarily due to higher pension costs.
Commenting on the fiscal year, John McGlade, chairman, president and chief executive officer, said, “We delivered on our key priorities and produced strong returns for shareholders, reflecting our continued focus on cost reduction, productivity improvements and disciplined project execution. Despite a weak economy, our volumes improved and our productivity initiatives more than offset inflation.”
Air Products expects first quarter EPS from continuing operations to be between $1.30 and $1.35 per share. The company’s guidance for continuing operations for fiscal 2014 is a range of $5.70 to $5.90 per share.
Looking ahead, McGlade said, “We are taking decisive actions to build momentum and accelerate earnings growth. Our priorities for 2014 remain consistent, executing against our backlog, winning profitable new projects, loading existing assets, and implementing further productivity and cost initiatives. The investments we have made over the past several years are key drivers for Air Products’ future and we believe shareholders will realise stronger returns because of these actions.”