Air Products reported strong fiscal 2016 third quarter results today, with double-digit increases across the board resulting from operational improvements and restructuring benefits, according to the company.
Net income from continuing operations was up 11% versus the previous year, totalling $356m, adjusted operating income of $535m swelled by 26% comparatively and adjusted EBITDA of $833m grew by 10% over the prior year.
Third quarter sales actually decreased 1% to $2.4bn, as Air Product’s 4% higher sales volumes were more than offset by a 3% lower energy pass-through and 2% unfavourable currency. But the company underlined that the volume improvement was driven by its Global Industrial Gases divisions, as well as segments in Asia and North America.
This is the eighth consecutive quarter that Air Products has reported double-digit EPS growth
Seifi Ghasemi, Chairman, President and CEO of the US-based corporation, enthused, “I am very pleased to report that our team at Air Products delivered another set of excellent results this quarter. Despite sluggish economic growth worldwide and continued currency headwinds, our team stayed focused on executing our strategic Five-Point Plan, delivering earnings per share (EPS) of $1.92, up 16% over last year, and improving EBITDA margin by more than 300 basis points.”
“This is the eighth consecutive quarter that Air Products has reported double-digit EPS growth. Also, our ROCE increased 200 basis points and now stands at 13.5%.”
“I want to thank the people of Air Products for coming together to prove that they have the determination and the capability to deliver outstanding results and move our company forward to be the best in the industry.”
Spotlight on business units
The US-based industrial gas conglomerate amassed sales of $832m in its Americas business segment – a 7% drop comparatively as lower energy pass-through and unfavourable currency reduced sales by 5% and 2% respectively. Even a strong hydrogen (H2) demand and commissioning of a new plant in North America weren’t enough to stop weak merchant demand in South America dragging Air Products’ overall volume down by 1%.
Despite this, operating income of $235m in its Americas segment actually increased 14% over the prior year and adjusted EBITDA of $362m increased by 11%, with Air Products again citing operational improvements and restructuring actions as reasons behind the upswing.
Performance in its Asia Industrial Gases sector also demonstrated growth with sales up 7% versus the prior year, grossing $448m. Volume growth of 14%, which was driven by new plants and “strong underlying business,” was partially offset by the unfavourable currency and lower pricing. Overall, operating income in Asia of $118m increased 17%, whilst adjusted EBITDA of $182m also increased by 10% on the benefits from productivity actions and higher volumes.
Even though pricing increased by 1% in its Europe, Middle East and Africa (EMEA) Industrial Gas business unit, sales volume decreased by 1%. This had a knock-on effect on its overall sales in the region, which declined by 6% to settle at $427m. However, its operating income of $103m and adjusted EBITDA of $160m increased 18% and 9% respectively from the prior year which Air Products attributes to “benefits from productivity and pricing actions.”
Air Products estimates its capital expenditure forecast for fiscal 2016 to be approximately $1.2bn. Full-year financials will incorporate Air Products’ recent high-purity gases plant start up in Nanjing, China and all commissions associated with the spin-off of its Materials Technologies’ Electronic Material Division (EMD), which is currently scheduled for September.