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- In our Merchant Gases segment, we saw strong volume performance in all regions, supported by
new customer signings and price increases to recover higher costs despite hurricane impacts. Sales
of $2.7 billion increased 10%, and operating income of $470 million was up 18% over the prior
year. We saw particular strength in Asia, where liquid oxygen/nitrogen volumes were up 23%.
- The Tonnage Gases segment delivered strong volumes from our six new refinery hydrogen
plants and base business growth. Sales of $2.2 billion increased 28% over the prior year, with
customer shutdowns and onstream delays from Hurricanes Katrina and Rita tempering the
increase. Operating income of $341 million increased 39% over the prior year from higher
volumes, insurance recoveries and a favorable change in customer mix and efficiencies.
- Our Electronics and Performance Materials segment had another strong year of volume
growth, primarily from electronic specialty materials volumes driven by semiconductor and
flat-panel display market demand. Sales of $1.9 billion were up 12%, and operating income
of $195 million increased 48% over the prior year on these strong volumes and the Tomah3
acquisition.
- Equipment and Energy segment sales of $537 million increased 45%, and operating income
of $69 million was up significantly, driven primarily by orders for our liquefied natural gas
(LNG) heat exchangers and air separation units. At the end of the year, we had 10 LNG
heat exchangers in the backlog. Our AP-X® LNG technology continues to set a new, worldclass
standard in the industry, with the ability to produce 50% more capacity from a single
liquefaction plant.
- Our Healthcare segment had a disappointing 2006 due to operational issues in our U.S.
business and higher than anticipated start-up costs from our new home oxygen contract in
the U.K. Sales of $571 million increased 5% over the prior year on the new Europe volumes,
including a small acquisition and the full-year effect of our U.S. acquisitions in 2005, offset by
volume declines in our U.S. business. Operating income of $8 million decreased $71 million
on higher costs, including a fourth quarter U.S. inventory adjustment of $17 million. Turning
this business around is a top priority, and we see this as an upside going forward.
- The Chemicals segment includes our remaining polymers business, which is currently being
marketed to potential buyers, and our polyurethane intermediates (PUI) business, which is
being restructured. Sales of $908 million declined 4%, and operating income of $64 million
declined 21% over the prior year, primarily due to customer shutdowns and the divestiture of
our DNT plant in the PUI business.
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