US based Praxair’s fourth quarter and full year 2009 results show a slow but definite recovery.
Praxair has reported fourth-quarter net income and diluted earnings per share of $340m and $1.09, respectively.
Net income and earnings per share increased 70% from the previous year quarter, largely due to a cost reduction programme charge in the previous year quarter. Excluding this previous year charge, net income and diluted earnings per share increased 8%.
Sales in the fourth quarter were $2,407m, compared to $2,403m in the previous year.
Excluding foreign currency and cost pass-through effects, sales were 4% below the previous year quarter, due to lower volumes.
Sales rose 5% sequentially from the third quarter due to moderately higher volumes, positive currency effects, and higher natural gas cost pass-through.
Operating profit in the fourth quarter of $512m was 4% above adjusted operating profit in the previous year as higher pricing and cost reduction offset the impact of lower volumes. Sequentially, operating profit grew from higher volumes and positive foreign currency effects.
The company generated record cash flow from operations. Fourth-quarter cash flow of $709m funded $355m of capital expenditures, largely for new production plants under long-term contracts with customers.
The company paid $123m of dividends and repurchased $64m of stock, net of issuances. The after-tax return-on-capital ratio and return on equity for the quarter were 14.1%, and 26.2%, respectively.
In North America, fourth-quarter sales were $1,180m. Excluding the negative effect of cost pass-through, primarily from lower natural gas prices, sales were 7% below the previous year, largely attributable to lower sales to chemicals, manufacturing, and energy markets.
In Europe, fourth-quarter sales were $351m. Excluding positive currency effects, sales were slightly below the previous year due to lower volumes.
In South America, fourth-quarter sales were $461m. Excluding currency effects, sales were 4% below the previous year quarter due to lower volumes, partially offset by higher pricing.
Sales in Asia grew sharply to $274m in the quarter. Excluding currency translation and cost pass-through effects, underlying sales grew 24% from the previous year. Sales growth in the region was primarily driven by higher on-site volumes in China, India and Korea to metals, chemicals, electronics and manufacturing customers and new plant start-ups.
For the full year of 2009, reported net income was $1,254m.
Full-year sales were $8,956m, down 17% due to lower volumes and negative foreign currency and cost pass-through effects, partially offset by higher pricing.
Reported operating profit was $1,575m. Adjusted operating profit was 9% below 2008 excluding charges in both years, as significant cost reduction and higher pricing mitigated the negative impacts of lower volumes and currency translation.
For the full year, cash flow from operations was a record $2,168m, 6% higher than the previous year. Capital expenditures were $1,352m - moderately below the previous year.
The company paid $491m of dividends and repurchased $141m of stock, net of issuances. Cash flow also funded acquisitions of $131m and a modest decrease in debt.
Commenting on the results and business outlook, Chairman and Chief Executive Officer Steve Angel said, $quot;So far, the rate of recovery from the recession has been mixed.”
He added, “Our businesses in Asia and South America are showing strong improvement. However, in North America and Europe our volumes are still sluggish in manufacturing, metal fabrication and non-residential construction markets. While sales to our steel and chemical customers have begun to pick up, they are still well below 2008 levels.”
$quot;For 2010, we are cautiously optimistic that growth in the US and Europe will continue to improve, but we expect the climb to be slow and deliberate.”
“We are therefore holding a tight rein on our costs which will give us strong operating leverage as volumes improve.”
“In the emerging economies of Brazil, China and India, we expect our businesses to show strong sales growth in 2010, based on our existing project backlog and the current levels of new project and business development activity.”
“Growth will be driven by starting up new on-site projects, and from application of environmental and energy technologies. Our project backlog currently stands at 40 large projects with a record capital value of over $2 billion.$quot;
For the first quarter of 2010, Praxair expects adjusted diluted earnings per share in the range of $1.05 to $1.10. This guidance excludes the impact of an 8 cent one-time charge resulting from Venezuela currency devaluation, and any potential effect from participation in a tax amnesty program recently announced by the State of Rio de Janeiro, Brazil.
For the full year of 2010, Praxair expects sales in the area of $10bn.