Praxair, Inc. has reported its third quarter 2008 results and recorded net income of $355m for the period, a sharp growth of 16% compared to its respective results in the previous year.
The net income and diluted earnings per share of $1.11 in the third quarter, compared to $305m and 94 cents, respectively in 2007.
Praxair declared third quarter sales of $2.852m, a rise of 20% from $2.372m in the same quarter last year, while the company achieved strong sales growth in every geographic region - led by South America and Asia.
Operating profit stood at a record $544m, 18% above the comparable quarter in 2007 and driven by higher pricing and volume growth.
The company generated strong cash flow from operations, of $630m. Cash flow funded $405m of capital expenditures, largely for new production plants under contract for customers in North and South America, China and India.
The company also repurchased $537m of stock, net of issuances.
Commenting on the results and business outlook, Chairman and CEO Steve Angel said, “We had another very strong quarter despite some effect from the US Gulf Coast hurricanes, and slowing macroeconomic growth in the US and Europe.”
“Due to the financial crisis, we expect to see a contraction in manufacturing output in the US and Europe, combined with slowing growth in Asia and South America for the next several quarters. Additionally, we expect the recent strengthening of the dollar to impact consolidated sales and earnings growth by about 8% at current exchange rates.”
Angel concluded confidently, “We remain confident in our business strategy and the ability of the Praxair team to continue to perform given whatever economic challenges we face.”
In North America, the company’s third-quarter sales were $1.557m, 19% above the prior year, with acquisitions of US packaged gas distributors contributing 4% to sales growth.
Underlying growth of 9% was driven by diverse markets including energy, metals, manufacturing and chemicals. Operating profit grew 12% to reach $274m.
In Europe, sales in the third quarter of $384m grew 18% from $325m in the prior-year quarter. Underlying sales growth came primarily from higher merchant and on-site gases in Spain, Germany and Italy, while third-quarter operating profit of $96m rose 23% from the prior-year period.
In South America, one of the company’s leading regions in terms of performance, third-quarter sales of $527m grew 26% against the prior-year quarter. Higher prices and volumes drove 14% sales growth, and favourable currency effects contributed 12%.
Sales growth is thought to have derived primarily from higher sales to customers in metals, food and beverage, and general manufacturing markets.
Sales in Asia rose 26% to total $239m in the quarter, attributable primarily to new plant start-ups and growth in merchant liquid sales. Overall sales growth in the region was driven by demand from chemicals and electronics customers, and by applications in general industries such as food and water treatment.
Quarter and year to come
Looking ahead to the fourth quarter of 2008, Praxair expects diluted earnings per share in the range of $1.03 to $1.08, excluding the impact of potential restructuring costs.
This represents earnings growth of 5% to 10% above the fourth quarter of 2007 and assumes a negative impact due to currency translation in the area of 8% based on current exchange rates.
For the full year of 2008, Praxair expects sales of approx. $11bn, representing year-over-year growth of around 17%. The company expects diluted earnings per share to be in the range of $4.21 to $4.26, excluding the impact of potential restructuring costs, and the 3 cent pension settlement charge which occurred in the first quarter of 2008.