Praxair, Inc. is seeing strengthening global demand and economic recovery, reflected in second quarter sales growth of 24% against the prior year quarter and sequential increases in both sales and operating profit.
The company reported second-quarter (Q2) net income and diluted earnings per share of $371m and $1.19, respectively, both up 24% from Q2 2009.
At just over $2.5m, Q2 sales were 18% above the previous-year quarter. Sales increased due to double-digit volume growth in all geographic regions, led by South America and Asia – where Praxair has a strong foothold.
By end market, sales to chemicals, metals and electronics showed the strongest growth compared to the prior year. Compared to the Q1 2010, overall sales growth was 4% and broad-based across all major end-markets, Praxair notes.
As a result, operating profit in Q2 of $547m grew 22% from the prior-year quarter, and 8% sequentially, reflecting higher volumes and the benefits of previous cost-reduction actions.
Commenting on the financial results and business outlook, Chairman and CEO Steve Angel said, “The global economic environment continued to improve this quarter, with South America and Asia showing the strongest recovery. Our sales growth reflects strengthening global demand and new project start-ups. We leveraged our strong sales growth into higher earnings growth as a result of continued productivity improvements and prior-year cost reduction.”
“We expect volume growth to continue in the second half of 2010, perhaps at a more modest pace. We are keeping a sharp focus on our costs, and executing well on our productivity initiatives, which will continue to allow us to leverage earnings growth. We are encouraged by the number of new large-project opportunities we are pursuing around the world, primarily in the emerging markets. Our project backlog continues to increase, which will contribute significantly to sales and earnings growth in 2012 and beyond.”
The company generated strong cash flow of $536m from operations in the quarter. Operating cash flow funded $325m of capital expenditures, primarily for new production plants under long-term contracts with customers, and dividends of $137m.
Looking ahead and for the third quarter of 2010, Praxair expects diluted earnings per share in the range of $1.15 to $1.20. For the full year of 2010, the company expects sales in the area of $10bn.