Praxair, Inc. reports Q2 net income of $480m, diluted earnings per share of $1.65 and makes big leaps with Linde merger.

Praxair’s sales in the second quarter were $3,061m, 8% above the prior-year quarter, driven by 2% higher pricing and 5% volume growth across all segments.

Second quarter reported operating profit was $689m, 14% above the prior-year quarter. Adjusted operating profit was $713m, 15% above last year. Reported and adjusted operating profit margins were 22.5% and 23.3%, respectively, improving from 21.4% and 21.9% in the prior-year quarter. For the second quarter, EBITDA margin was 33.1% and adjusted EBITDA margin was 33.9%.

The company generated second-quarter operating cash flow of $790m, 26% of sales. Capital expenditures were $351m, dividends paid were $237m and the company decreased net debt by $318m.

Commenting on the financial results, Chairman and CEO Steve Angel said, “We continue to see positive economic activity, primarily in Asia and North America where overall business sentiment remains high. This led to strong sales growth across all geographic segments and supported a project backlog increase to $1.7bn from new on-site wins in electronic and chemical end-markets.”

“In the second quarter, we delivered record earnings per share of $1.72 which was 18% above prior year. Operating and EBITDA margins expanded to 23.3% and 33.9% respectively, as incremental volumes and price actions outpaced cost inflation. This profit growth coupled with prudent capital management improved return on capital 150 basis points to 13.6%.”

He continued, “In addition to the strong performance, we made substantial progress on the merger with Linde. We achieved additional regulatory approvals and earlier this month, we announced an agreement to sell the majority of our European business in support of our efforts to gain EC approval.”

“I am proud of the accomplishments and focus from Praxair employees worldwide and look forward to integrating our organisation with Linde to create an even more valuable, high-performing company,” Angel concluded.

Results by segment

In North America, second-quarter sales were $1,594m, 6% above the prior-year quarter, driven primarily by higher price attainment and strong volumes in the manufacturing, chemicals and food and beverage end-markets. Operating profit of $432m grew 14% above the prior year due to higher volumes and price.

Europe sales grew 16% in the second quarter to $444m. Underlying sales growth reflects increased business activity and higher pricing in Italy, Spain and Germany. Second-quarter operating profit of $87m rose 18% from the prior-year period driven by higher volumes to all major end-markets and price.

In South America,second-quarter sales were $349m, 4% above the prior-year quarter, excluding currency translation. Sales growth was driven by higher volumes to metals and healthcare end-markets. Operating profit was $56m.

Sales in Asiawere $502m in the quarter, up 19% from the prior year. Excluding currency and higher cost pass-through, sales grew 14% from the prior year, driven by 3% price, project start-ups and higher organic volumes in China, Korea and India. Operating profit was $107m, 34% above prior year, reflecting continued strong operating leverage from incremental volume, price and ongoing productivity initiatives.

Praxair Surface Technologies had second-quarter sales of $172m, up 14% from prior-year quarter. Overall strong pricing and demand, including further ramping of EBPVD coating capacity serving the aviation market, drove higher sales and margin expansion. Operating profit of $31m was up 24% versus prior-year quarter.