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News ReleaseAir Products Reports Fiscal 2009 Second Quarter Earnings

April 22, 2009 Lehigh Valley, Pa.

Air Products (NYSE: APD) today reported income from continuing operations of $189 million, or diluted earnings per share (EPS) of $0.89 for its fiscal second quarter ended March 31, 2009. Income from continuing operations decreased 31 percent and diluted EPS from continuing operations decreased 29 percent from the prior year. Prior year results included a pension settlement charge of $0.08 per share, which is excluded from prior year comparisons.

Second quarter revenues of $1,955 million declined 23 percent on weaker volumes, unfavorable currency, and lower natural gas and raw material cost pass-through. Operating income of $260 million was down 31 percent from the prior year on weaker volumes and unfavorable currency.

John McGlade, chairman, president and chief executive officer, said, “The unprecedented deterioration in global manufacturing continued into our second quarter, as producers extended their holiday shutdowns. As expected, we saw weaker volumes, contributing to what we said would be our low point for our fiscal year. However, we were able to partially offset these declines with benefits from our cost and productivity actions.”

Second Quarter Segment Performance

  • Merchant Gases sales of $870 million declined 14 percent on unfavorable currency, weaker volumes across end-markets globally, and the impact of extended customer outages, partially offset by continued strong pricing. Operating income of $156 million declined 17 percent from the prior year on unfavorable currency and weaker volumes, partially offset by strong pricing and cost reduction.
  • Tonnage Gases sales of $625 million were down 28 percent, principally on lower natural gas and raw material cost pass-through and a stronger dollar, and to a lesser extent, weaker volumes, particularly in steel and chemical end-markets. Operating income of $98 million decreased 12 percent from the prior year on weaker volumes and unfavorable currency.
  • Electronics and Performance Materials sales of $332 million declined 41 percent and the segment saw an $11 million operating loss, driven by significantly lower volumes in Electronics due to further declines in semiconductor and liquid crystal display manufacturing. While Performance Materials volumes were impacted by pronounced weakness in coatings, autos and housing end-markets, the business remained profitable in the quarter.
  • Equipment and Energy sales of $128 million were up 22 percent on higher air separation unit activity. Operating income of $16 million increased 63 percent from the prior year on favorable cost performance.

Outlook

McGlade said, “In this economic environment, visibility is limited, and the business climate remains weak. We expect to see some seasonal volume pick up in Merchant Gases and Performance Materials, and a modest improvement in Electronics in the second half of our fiscal year. Our continued discipline and cost reduction actions will also further benefit earnings. Despite the challenging environment, we continue to pursue profitable growth opportunities serving energy, environmental and emerging markets.”

Air Products now expects third quarter EPS from continuing operations to be between $0.93 and $1.02 per share and full-year EPS from continuing operations to be between $3.85 and $4.05 per share. Given the lack of economic momentum, the company continues to look at additional cost actions that could result in a charge in its fiscal third quarter. This guidance excludes the impact of these potential cost reduction charges.

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 had fiscal 2008 revenues of $10.4 billion, operations in over 40 countries, and 21,000 employees around the globe. For more information, visit www.airproducts.com.

NOTE: The information above 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 document 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, continuing deterioration in economic and business conditions; weakening demand for the Company's products, future financial and operating performance of major customers and industries served by the Company; unanticipated contract terminations or customer cancellations or postponement of projects and sales; asset impairments due to economic conditions or specific product or customer events; 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 current 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; the ability to attract, hire and retain qualified personnel in all regions of the world where the Company operates; significant fluctuations in interest rates and foreign currencies from that currently anticipated; the continued availability of capital funding sources in all of the Company's foreign operations; the impact of new or changed environmental, healthcare, tax or other legislation and regulations in jurisdictions in which the Company 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 and other risk factors described in the Company’s Form 10K for its fiscal year ended September 30, 2008 and Form 10-Q for the quarter ended December 31, 2008. The Company disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained in this document 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 are reconciliations of reported GAAP results to non-GAAP measures.

Consolidated Results

    Continuing Operations
Millions of Dollars Q2
Operating
Income
Q2
Income
Q2
Diluted
EPS
Q3
Diluted
EPS
YTD
Diluted
EPS
2009 GAAP $260.4 $189.3 $.89    
2008 GAAP 348.6 259.8 1.18    
% Change GAAP (25)% (27)% (25)%    
2008 GAAP $348.6 $259.8 $1.18    
Pension settlement 26.3 16.5 .08    
2008 Non-GAAP Measure $374.9 $276.3 $1.26    
% Change Non-GAAP Measure (31)% (31)% (29)%    
2009 Forecast GAAP       $.93 - $1.02* $3.30- $3.50*
Global Cost Reduction Plan – Q1 charge       -- $.55
2009 Forecast Non-GAAP Measure       $.93 - $1.02 $ 3.85-$4.05
*This forecast excludes potential charges for future cost reduction plans and pension settlements.

View the entire earnings release with all financial tables. (61 KB) 

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  • Press Contact
    Katie McDonald
    610-481-3673
    Air Products and Chemicals, Inc.
    7201 Hamilton Boulevard
    Allentown, PA 18195-1501
    USA
    (610) 481-6642
  • Investor Contact
    Simon Moore
    (610) 481-7461
    Air Products and Chemicals, Inc.
    7201 Hamilton Boulevard
    Allentown, PA 18195-1501
    USA
    (610) 481-2729
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