Praxair, Inc. has reported fourth quarter (Q4) net income and diluted earnings per share of $302m and $1.03, respectively, as part of declared net income of $1.694bn for the year (2014).

The company described the results – which in Q4 include charges to net income related to Venezuela currency devaluation, a bond redemption and a pension settlement – as demonstrating Praxair’s resilience against a ‘challenging’ global backdrop.

Excluding the above items, adjusted net income and diluted earnings per share in Q4 were $460m and $1.57, respectively.

Sales in the fourth quarter were $2.990bn, 3% above the prior-year quarter (excluding negative currency translation effects), with organic sales growth driven by increased volumes – including volume growth from new plant start-ups – and higher pricing across both the Americas and Asia.

Reported operating profit in the fourth quarter was $525m, while adjusted operating profit of $663m was steady with the prior-year quarter, excluding currency translation effects. Adjusted operating profit as a percentage of sales remained strong at 22.2%.

Fourth-quarter cash flow from operations of $772m funded $482m of capital expenditures.

Full year

For full year 2014, reported net income was $1.694bn and diluted earnings per share were $5.73. On an adjusted basis, full-year net income was $1.852bn and diluted earnings per share were $6.27 – 5% and 6% above the prior year, respectively.

Full-year sales were $12.273bn, 6% above 2013 excluding negative currency translation; Praxair noted that growth was driven by a combination of higher volumes, pricing and acquisitions.

Reported operating profit was $2.608bn, with adjusted operating profit of $2.746bn 6% above 2013, excluding negative currency translation.

For the full year, cash flow from operations was strong at $2.868bn – equivalent to 23% of sales. After capital expenditures of $1.689m, free cash flow was a record $1.179m. The company invested $206m in acquisitions, including several US packaged gas distributors.

“…The acquisitions that we executed during the year were consistent with our strategy of improving geographic density in our core gases business”

Steve Angel, Chairman, President and CEO

Chairman, President and CEO Steve Angel reflected, “Praxair’s operational and capital discipline again yielded high-quality results in 2014, despite a challenging global environment. We generated strong operating cash flow of $2.9bn that represented 23% of sales and record free cash flow of $1.2bn. Operating and EBITDA margins grew to new highs.”

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“Sales growth of 6% and EPS growth of 9%, ex-currency, reflect strong price attainment across all of our businesses, relentless cost control and volume growth in the Americas and Asia. The acquisitions that we executed during the year were consistent with our strategy of improving geographic density in our core gases business.”

In terms of business outlook, Angel added, “Looking forward to 2015, we expect modest global growth. More than half of our sales are generated in North America and with our industry-leading presence we will continue to take advantage of the underlying economic strengths of the region.”

“While we continue to see slowing macro-economic trends in the rest of the world, our diverse end-markets and strong local teams will continue to drive resilient operating results and increasing cash flow. We are committed to high-quality growth and expect continued strong cash flow generation to fund new projects, increased dividends and ongoing share repurchases.”

For full-year 2015, Praxair expects sales in the range of $12bn to $12.4bn. This sales guidance assumes a negative currency impact of about 6% versus 2014, the company clarified.

 

Regional results

World financial analysis

In North America, Praxair’s Q4 sales were $1.589bn, up 3% from the prior-year quarter excluding currency translation, and demonstrating the region’s significance to the company’s operations.

Organic sales growth of 2% was driven by higher pricing and growth in merchant and packaged gas volumes, Praxair explained, while acquisitions of US packaged gas distributors contributed a further 1% growth.

Operating profit of $388m grew 2% from the prior year, excluding negative currency translation, primarily due to higher volumes, higher price and acquisitions.

Meanwhile in South America, where Praxair is the largest industrial gas major, fourth-quarter sales were $473m, 2% below the prior-year quarter. Organic sales, excluding negative currency translation, grew 8% primarily from growth to food and beverage and healthcare end-markets. Operating profit was $105m, above the prior-year quarter excluding currency translation, due primarily to volume growth and higher pricing.

In Europe, Q4 sales were $356m, 12% below the prior-year quarter. Excluding currency effects, cost pass-through and net divestitures, organic sales were 1% below prior year due primarily to weaker sales in Northern Europe. Operating profit was $63m.

Sales in Asia were $407m in the quarter, 6% above the prior year excluding currency and cost pass-through, driven by volume growth in on-site, including new plant start-ups, and merchant. Operating profit was $77m as compared to $80m in the prior year.