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News ReleaseAir Products Reports Q1 EPS Up 16% on Volume Growth and Improved Margins; Raises 2008 Full Year EPS Guidance

January 23, 2008 Lehigh Valley, Pa.

Air Products (NYSE:APD) today reported net income of $264 million, or diluted earnings per share (EPS) of $1.19, for its fiscal first quarter ended December 31, 2007. Net income increased 15 percent, and diluted EPS increased 16 percent compared with the prior year.

These results include $0.03 of discontinued operations related to a previously announced definitive agreement to divest Air Products’ interest in its polymers joint ventures to Wacker Chemie AG and the completed sale of the company’s High Purity Process Chemicals (HPPC) business to KMG Chemicals during the quarter. On a continuing operations basis, net income increased 16 percent, and diluted EPS increased 17 percent.

First quarter revenues of $2,474 million were up nine percent from the prior year on higher volumes, improved pricing across most segments, and a weaker dollar. Operating income of $372 million was up 17 percent versus the prior year.

John McGlade, president and chief executive officer, said, “Our fiscal year is off to a great start, thanks to the dedication and commitment of our 22,000 employees worldwide. We delivered double-digit earnings growth and significant margin improvement during the quarter. This strong performance reflects the continued emphasis we have placed on delivering profitable growth through our global focus and relentless drive for productivity.”

First Quarter Segment Performance

  • Merchant Gases sales of $897 million were up 21 percent and operating income of $175 million increased 26 percent over the prior year on higher volumes, improved pricing, a weaker dollar and productivity. Margins increased to 19.6 percent, up 80 basis points versus the prior year.
  • Tonnage Gases sales of $791 million were up 15 percent and operating income of $111 million increased 16 percent over the prior year. Revenues increased from higher volumes, increased natural gas costs and a weaker dollar. The operating income increases were driven by higher volumes, improved plant efficiencies and asset sales. These were partially offset by planned maintenance costs for a number of plant outages and higher bidding expenses related to the significant growth opportunities in this segment.
  • Electronics and Performance Materials sales of $514 million were up six percent and operating income of $66 million increased 33 percent over the prior year on improved volumes. Electronics sales were driven by higher specialty materials and bulk gas volumes, while Performance Materials volume gains were driven by demand for surfactants and specialty additives used in environmentally friendly formulations. Margins increased significantly to 12.8 percent, a 260 basis point improvement over the prior year, reflecting the impact of restructuring actions in Electronics and increased sales of formulated products in Performance Materials.
  • Equipment and Energy sales of $100 million and operating income of $9 million decreased from the prior year, as expected. The company received one new LNG heat exchanger order during the quarter.
  • Healthcare sales of $171 million were up 10 percent and operating income of $14 million increased 45 percent over the prior year, driven by volume growth and lower costs in Europe.


McGlade said, “Economic activity through the first quarter of this year is tracking in line with our expectations. Looking forward, we expect high bidding activity and solid demand from our customers, who rely on our products and services to improve energy efficiency, plant productivity, product quality and environmental performance.

“We believe the actions we have taken over the past few years have transformed us into a high performing company that is positioned to produce strong results in a slowing economic environment. Our focus on growth markets and geographies, productivity and streamlined operations, combined with a robust backlog of projects, should allow us to consistently deliver higher growth and higher returns in both the short and long-term.

“We are now expecting 15 to 19 percent* year-on-year earnings growth and therefore, are raising our guidance.”

The EPS guidance provided at the end of fiscal 2007 was $4.80 to $5.00, which included $0.17 of income for polymers for the full year and a $0.07 charge for pension settlements. Excluding these items, the underlying guidance was $4.70 to $4.90. On the same basis, the company is now forecasting a range of $4.85 to $5.00 for the year and $1.17 to $1.21 for the fiscal second quarter.

Annual Meeting of Shareholders

Air Products will host its Annual Meeting of Shareholders on Thursday, January 24, 2008 at 2:00 p.m. EST. Access the audio Webcast at:

Air Products (NYSE:APD) serves customers in industrial, energy, technology and healthcare markets worldwide with a unique portfolio of atmospheric gases, process and specialty gases, performance materials, and equipment and services. Founded in 1940, Air Products has built leading positions in key growth markets such as semiconductor materials, refinery hydrogen, home healthcare services, natural gas liquefaction, and advanced coatings and adhesives. The company is recognized for its innovative culture, operational excellence and commitment to safety and the environment. Air Products has annual revenues of $10 billion, operations in over 40 countries, and 22,000 employees around the globe. For more information, visit

 NOTE: This release contains “forward-looking statements” within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management’s reasonable expectations and assumptions as of the date of this presentation regarding important risk factors. Actual performance and financial results may differ materially from projections and estimates expressed in the forward-looking statements because of many factors, including, without limitation, overall economic and business conditions different than those currently anticipated; future financial and operating performance of major customers and industries served by Air Products; the impact of competitive products and pricing; interruption in ordinary sources of supply of raw materials; the ability to recover unanticipated increased energy and raw material costs from customers; costs and outcomes of litigation or regulatory activities; consequences of acts of war or terrorism impacting the United States’ and other markets; the effects of a pandemic or epidemic or a natural disaster; charges related to portfolio management and cost reduction actions; the success of implementing cost reduction programs and achieving anticipated acquisition synergies; the timing, impact and other uncertainties of future acquisitions or divestitures; unanticipated contract terminations or customer cancellation or postponement of sales; significant fluctuations in interest rates and foreign currencies from that currently anticipated; the impact of new or changed tax and other legislation and regulations in jurisdictions in which Air Products and its affiliates operate; the impact of new or changed financial accounting standards; and the timing and rate at which tax credits can be utilized. The company disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained in this presentation to reflect any change in the company’s assumptions, beliefs or expectations or any change in events, conditions or circumstances upon which any such forward-looking statements are based.

The presentation of non-GAAP measures is intended to enhance the usefulness of financial information by providing measures which the Company’s management uses internally to evaluate the Company’s baseline performance. Presented below is a reconciliation of reported GAAP results to non-GAAP measures.

CONSOLIDATED RESULTS Continuing Operations
Diluted EPS
  Q2 YTD
2007 GAAP   $4.50
Gain on contract settlement   (.11)
Global cost reduction plan   .04
Pension settlement   .03
Donation/sale of cost investment   (.09)
Tax audit settlements/adjustments   (.17)
2007 Non-GAAP Measure   $4.20
2008 Forecast GAAP $1.09-$1.13 $4.76-$4.91
Pension settlement .08 .09
2008 Forecast Non-GAAP $1.17-$1.21 $4.85-$5.00
2008 Forecast GAAP   $4.76-$4.91
2007 GAAP   $4.50
% Change GAAP   6%-9%
2008 Forecast Non-GAAP   $4.85-$5.00
2007 Non-GAAP   $4.20
% Change Non-GAAP   15%-19%

View the entire earnings release with all financial tables. (286 KB)

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Contact Information

  • Investor Contact
    Simon Moore
    (610) 481-7461
    Air Products and Chemicals, Inc.
    7201 Hamilton Boulevard
    Allentown, PA 18195-1501
    (610) 481-2729
  • Press Contact
    Katie McDonald
    Air Products and Chemicals, Inc.
    7201 Hamilton Boulevard
    Allentown, PA 18195-1501
    (610) 481-6642
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