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LEHIGH VALLEY, Pa. (January 22, 2002) — Air Products and Chemicals, Inc. (NYSE:APD) today reported net income from operations of $114 million, or diluted earnings per share of 52 cents, for its first fiscal quarter ended December 31, 2001. Net income from operations and diluted earnings per share were each down 16% compared with prior year results.

Revenues of $1.3 billion declined 11%. Sales were lower due to continued weakness in the global electronics market and in U.S. manufacturing, which led to lower volumes in most gas and chemical product lines.

Reported earnings per share are in line with guidance provided last quarter. Commenting on the quarter, Air Products Chairman and Chief Executive Officer John P. Jones said, "We anticipated a slow start to the year, and our operating results are consistent with that. While volumes remain soft, we continue improving our business fundamentals through capital discipline, cost reduction, margin expansion and portfolio management. For example, this month we announced an agreement to sell the majority of our U.S. packaged gas business, subject to regulatory approval. I am confident we are well positioned to capitalize on the pending economic recovery as a result of these actions to reinforce our growth businesses and refine our portfolio."

Industrial gas sales of $904 million declined 12%. Operating income declined 21% compared with the prior year. Results for electronics continued to be affected by a sharp reduction in customers' global silicon wafer processing due to soft demand. Chemicals and Processing Industries (CPI) results declined due to planned customer outages and associated plant maintenance turnaround expenses. In North America, margin expansion from liquid bulk pricing actions and lower energy costs more than offset softer volumes across most businesses. Asian operating results improved on increased loading. In Europe, better merchant pricing and strong packaged gas and medical sales more than offset merchant liquid bulk volume declines.

Equity affiliate results declined, mainly due to the divestiture of two cogeneration facilities in the fourth quarter of fiscal 2001.

Chemicals' sales of $349 million declined 11%, primarily due to the slower economy. Operating income improved 9% due to improved margins. Raw material, energy and overhead costs were lower.

Regarding Air Products' outlook, Mr. Jones said, "Visibility going forward continues to be a challenge, and we have not yet seen signs of recovery. Based on less favorable assumptions on the timing and pace of economic recovery, we believe operating earnings per share this year will be close to the lower end of our previous guidance of $2.35–$2.45, with second quarter operating earnings about equal to first quarter earnings. In response to this uncertain economic environment, we will continue doing all we can to aggressively reduce our costs, increase our margins, and refine our portfolio."

Mr. Jones concluded by saying, "If, as we originally anticipated, the economy recovers in the second half of our fiscal year, we have significant operating leverage across many of our growth and core businesses that should drive our earnings above the lower end of the range. Given our leadership positions in historically fast-growing markets and regions like electronics, CPI, Asia, and performance chemicals, I remain optimistic about Air Products' prospects. Our company will emerge from this slowdown stronger and more efficient than ever."

Air Products' guidance range includes a seven cents per share benefit from the adoption of the new accounting standard for goodwill, up from a preliminary estimate of five cents, and excludes the pending packaged gas business sale, which the company expects to be earnings neutral in its first full year following deal closure.

Air Products will hold its annual meeting of shareholders on Thursday, January 24, 2002 2:00 p.m., at Cedar Crest College in Allentown, Pennsylvania. The meeting can be listened to on the web at: www.airproducts.com/fin/annualmeeting.asp.

**NOTE: Fiscal first quarter earnings reflect a two cent per share benefit, and the fiscal 2002 earnings outlook reflects seven cents per share benefit from the adoption of a new accounting standard for goodwill.

***NOTE: The forward-looking statements contained in this release are based on current expectations regarding important risk factors. Actual results may differ materially from those expressed. Factors that might cause forward-looking statements to differ materially from actual results include, among other things, overall economic and business conditions, including the success of the world economy significantly strengthening in the second half of the fiscal year; demand and timing of the placing of orders for the goods and services of Air Products, including the success of recovery in the Air Products markets in the electronics industry in the second half of the fiscal year; competitive factors in the industries in which it competes; the ability to recover increased energy and raw material costs from customers; spikes in the pricing of natural gas; changes in government regulations; consequences of acts of terrorism impacting the United States' and other markets; the success of implementing cost reduction programs; the timing, impact and other uncertainties of future acquisitions or divestitures; significant fluctuations in interest rates and foreign currencies; the impact of tax and other legislation and regulations in jurisdictions in which Air Products and its affiliates operate; and the timing and rate at which tax credits can be utilized.

Please review the attached financial tables, including the Summary of Consolidated Financial Information, below:

Questions or comments about this news release may be directed as follows:

Media Inquiries:
Lisa Walsh
E-mail   •   Telephone (610) 481-5784

Investor Inquiries:
Alexander W. Masetti
E-mail   •   Telephone (610) 481-7461