Praxair has announced third quarter sales of $3bn, an increase of 9% when compared to the same quarter of the previous year.
Third-quarter net income and diluted earnings per share of $445m and $1.49, respectively. These results include the impact of a pension settlement charge of $9m pre-tax, or 2 cents of diluted earnings per share. Excluding this item, adjusted net income and diluted earnings per share were $451m and $1.51, 8% and 9% above the prior-year quarter, respectively.
Sales in the third quarter were $3,013m, 9% above the prior-year quarter. Organic sales increased 7% with growth across all geographic segments. On-site sales in North America and Asia had strong growth, driven by new project start-ups, including refinery hydrogen supply. South American organic sales reflect higher price and growth including the metals, manufacturing and healthcare end markets. Acquisitions in North America and Europe contributed 3% growth in the quarter.
Sales were steady sequentially from the second quarter due primarily to higher volumes from new project start-ups offset by weaker currency translation. Reported operating profit in the third quarter was $670m. Adjusted operating profit was $679m, up 9% compared to the prior-year quarter.
The increase was driven by higher overall volumes, higher pricing and acquisitions, partially offset by negative currency translation effects. Adjusted operating profit as a percentage of sales was 22.5%. The company generated record cash flow from operations in the quarter of $904m.
Operating cash flow funded $516m of capital expenditures, primarily for new production plants under long-term contracts with customers. The company paid dividends of $176m and repurchased $81m of stock, net of issuances. The debt-to-capital ratio was 56.4% and debt-to-adjusted EBITDA was 2.2x. The after-tax return on capital and return on equity for the quarter were 12.8% and 28.4%, respectively.
Commenting on the financial results and business outlook, Chairman, President and Chief Executive Officer Steve Angel said, “On-site project start-ups in Asia and North America, including refinery hydrogen supply, drove solid volume growth in the quarter. We are beginning to reap the benefits of capital projects contracted after the recession, but just coming on stream now. In addition, the results of our relentless approach to operational excellence and contract management are reflected in the quarter’s record operating cash flow and continued strong industry-leading operating margin.”
“We are cautious about volume growth in our base business in the fourth quarter as we do not expect much growth, if any, in industrial production in North America and Europe. Brazil is stabilising and growth in China and the rest of Asia continues to be solid.”
For the fourth quarter of 2013, Praxair expects diluted earnings per share in the range of $1.52 to $1.57. For the full year of 2013, the company expects diluted earnings per share to be in the range of $5.80 to $5.85 and adjusted diluted earnings per share to be in the range of $5.90 to $5.95. Praxair expects full-year sales in the area of $12bn.