Praxair Inc. reported record sales and earnings in the fourth quarter and full year of 2007, as fourth-quarter and full-year diluted earnings per share grew 20% and 21% to reach 98 cents and $3.62 respectively and signal strong performances in the South American and Asian markets.
Sales in the fourth quarter totalled $2,523m and for the year stood at $9,402m, the highest in the company's history. Sales growth rose 19% in the fourth quarter and 13% overall for the whole year, as Praxair achieved strong sales growth in every geographic region from new business and new plant start-ups.
Operating profit of $484m grew 23% in the Q4, while full-year operating profit of $1,786m increased 18% from the prior year. The strong operating leverage has been attributed to new business, improved pricing and cost savings from productivity initiatives.
Commenting on the year's results and business outlook, Chairman and Chief Executive Officer Steve Angel said, “We finished an outstanding year with a strong fourth quarter. Sales growth was robust globally, led by South America and Asia. We leveraged sales growth into record earnings due to our intensive focus on pricing, productivity, and capital and operational discipline. Demand for new energy supplies, tightening environmental regulations, and infrastructure development in emerging markets will continue to drive significant new business opportunities for Praxair globally.”
In South America, Q4 sales of $444m grew 26% against the previous year quarter, due to favourable currency effects of 17% and higher prices and volumes. Full-year sales reached $1,604m, up 19%, including 10% from currency appreciation. Higher sales to metals and healthcare markets, new project start-ups, and growth from new applications technologies in food and manufacturing drove the underlying sales growth. Operating profit rose 25% to $85m in the quarter, and 23% to $311m for the year. Similarly in Asia, sales rose 24% to $210m in the quarter and grew 17% to $746m for the year. Sales to electronics, metals and manufacturing markets continued to be strong in China, India, and Korea as operating profit in the quarter grew to $34m from the prior-year period.
In North America, fourth-quarter and full-year sales reached $1,381m and $5,185m, respectively, while operating profit grew 26% in the fourth quarter and 15% for the full year. From a European perspective, sales of $354m in Q4 grew 16% and for the year, sales reached $1,345m - up 16%. Underlying sales growth came primarily from new business in Spain and Germany. Fourth-quarter operating profit of $86 million and full-year operating profit of $315 million both rose 18% from the prior-year period.
In terms of the outlook ahead, for the full year of 2008 Praxair expects year-over-year sales growth in the range of 10-14% and diluted earnings per share to be in the range of $4.00 to $4.20, with sustainable growth in store for the future. Angel added, “Our record project backlog and our focus on operational excellence in our base business will allow us to continue to produce sustainable earnings growth and strong cash flow. The 25% increase in our dividend which we announced this morning, demonstrates our confidence in our ability to continue to grow free cash flow throughout the economic cycle.”
The board of directors of Praxair Inc. had declared a quarterly dividend of 37.5 cents per share, a 25% increase from the previous quarter and with the dividend payable on 17th March 2008 to shareholders of record as of 7th March 2008.