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News ReleaseAir Products Reports Fiscal 2009 Third Quarter Earnings

July 22, 2009 Lehigh Valley, Pa.

Air Products (NYSE:APD) today reported income from continuing operations of $115 million, or diluted earnings per share (EPS) from continuing operations of $0.54, for its fiscal third quarter ended June 30, 2009. These results included charges of $110 million, or $0.51 per share, for the company's global cost reduction plan, a customer bankruptcy and other asset actions, and a pension settlement.

Excluding the impact of these items, income from continuing operations was $225 million and diluted EPS was $1.05, down 24 and 22 percent, respectively, compared with the prior year.

Approximately three-quarters of the fiscal third quarter global cost reduction plan is for severance and pension costs related to the elimination of approximately 1,150 positions from the company's global workforce. These reductions are targeted at continued cost and productivity efforts, including closure of certain manufacturing facilities. The remainder is for a write-down of certain assets held for sale to net realizable value.

The global cost reduction plan is expected to reduce fixed costs by approximately $30 million in fiscal 2010, with annual benefits of $50 million in fiscal 2011 and beyond.

The discussion of third quarter results in this release is based on non-GAAP comparisons. It excludes the impacts of the above items. A reconciliation can be found at the end of this release.*

Third quarter revenues of $1,976 million decreased 28 percent from the prior year on weaker volumes, lower energy and raw material cost pass-throughs, and unfavorable currency. Underlying sales were down 11 percent. Operating income of $308 million declined 22 percent from the prior year on weaker volumes and unfavorable currency impacts, partially offset by lower operating and overhead costs.

John McGlade, chairman, president and chief executive officer, said, "While we are still seeing the impact of the global recession on our volumes, we've seen signs of improvement during this quarter in some of our end markets, particularly in Electronics and Asia. The productivity and continuous improvement efforts of our employees are having an impact, as margins improved substantially both sequentially and versus prior year."

Third Quarter Segment Performance

  • Merchant Gases sales of $883 million declined 19 percent from the prior year on weaker volumes across manufacturing end-markets globally and unfavorable currency, partially offset by favorable pricing. Operating income of $169 million declined 17 percent from the prior year on weaker volumes and unfavorable currency, partially offset by favorable pricing and cost performance.
  • Tonnage Gases sales of $565 million were down 42 percent from the prior year, principally on lower energy and raw material cost pass-throughs, and to a lesser extent, weaker volumes in steel and chemical end-markets and unfavorable currency. Operating income of $88 million decreased 30 percent on weak volumes, customer outages, lower operating efficiencies, and unfavorable currency.
  • Electronics and Performance Materials sales of $409 million declined 29 percent and operating income of $39 million decreased 45 percent from the prior year on significantly lower volumes. While Electronics sales increased 21 percent sequentially due to improved customer run rates, year-on-year sales were down 35 percent. Performance Materials volumes improved 26 percent sequentially, reflecting seasonal improvement and stronger Asian sales, but declined 23 percent from the prior year on weaker demand from coatings, autos, housing and other end markets.
  • Equipment and Energy sales of $119 million were up 12 percent over the prior year on higher air separation unit activity. Operating income of $13 million increased from the prior year on favorable cost performance.


McGlade said, "The global recession remains challenging; however, we believe the actions we are taking to drive improvement in costs are positioning the company for continued margin improvement. We are focused on and remain committed to achieving our 17 percent margin goal."

Air Products now expects fourth quarter EPS from continuing operations to be between $1.04 and $1.14 per share and full-year EPS from continuing operations to be between $3.95 and $4.05 per share, excluding the impact of disclosed items in the fiscal first and third quarters.

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. In fiscal 2008, Air Products had revenues of $10.4 billion, operations in over 40 countries, and 21,000 employees around the globe.

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NOTE: The information above contains "forward-looking statements," within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including earnings guidance for the fourth quarter and full year. These forward-looking statements are based on management's reasonable expectations and assumptions as of the date of this press release. 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, longer than anticipated delay in global economic recovery; renewed 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; 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 is a reconciliation of reported GAAP results to non-GAAP measures.

  Continuing Operations
2009 GAAP $143.8 $114.6 $.54    
2008 GAAP 393.7 295.0 1.35    
% Change GAAP (63)% (61)% (60)%    
2009 GAAP $143.8 $114.6 $.54    
Global cost reduction plan 124.0 84.2 .39    
Customer bankruptcy and asset actions 32.1 21.0 .10    
Pension settlement 8.0 5.0 .02    
2009 Non-GAAP Measure $307.9 $224.8 $1.05    
% Change Non-GAAP Measure (22)% (24)% (22)%    
2009 Forecast GAAP       $1.04-$1.14 $2.89-$2.99
Global cost reduction plan

Customer bankruptcy and asset actions         .10
Pension settlement         .02
2009 Forecast Non-GAAP Measure       $1.04-$1.14 $3.95-$4.05

View entire earnings release with all financial tables. (62 KB)

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  • Investor Contact
    Simon Moore
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    Air Products and Chemicals, Inc.
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    (610) 481-2729
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