Responding to the Pace of Change
For the past several years in our Deliver the Difference journey, we have done a great deal
of heavy lifting internally—getting our own house in order to increase customer and shareholder
value while positioning for sustained, profitable growth. We simplified, standardized
and globalized our work processes, enabling a culture of continuous improvement.
We reorganized into four global businesses for maximum growth and returns. We worked
hard to eliminate waste and boost productivity.
Throughout this process, our ability to listen and build relationships remained the
primary differentiator in our commercial success. In 2007, for example, we continued to
win new business with long-term customers such as Samsung; Jushi Group Co., Ltd.;
Guofeng Steel Co Ltd; Eastman Chemical, Inc.; Wison Chemical Company Ltd.;
Hynix Semiconductor Inc.; NASA and many, many others. We increased capacity of nitrogen
trifluoride in Korea, nitrous oxide in Taiwan, and tungsten hexafluoride in the U.S. and
expanded our R&D activities to meet our global Electronics and Performance Materials customers’ growth. Our petroleum refining, chemical and metallurgical customers again depended on the operational excellence and reliability we provided from our Tonnage
plants and supply networks. And we continued to debottleneck and draw more volumes from our existing Merchant facilities while undertaking capacity expansions in regions where our customers need product the most.
As we look to the future, and the pace of change continues to accelerate, we’ll focus
on agility, speed and innovation to take our customer relationships to the next level. We
believe we are well positioned to do this—we have a long history of anticipating and
evolving with market events and trends that have driven our growth and helped make our
customers more successful. As
New York Times columnist Thomas Friedman says in his
book,
The World is Flat, successful companies thrive on change and on embracing the
challenges and opportunities that come with it.
You can read more about our drivers for growth on the pages that follow.
On Our Horizon
As John and I transition leadership, Air Products is positioned to become an even higher-growth,
higher-return company. Moving into 2008, we are positioned in the right markets
and geographies. We have a strong project workload, and bidding activity across our
segments remains high.
We will work to expand our margins and continue to reduce costs across all of our businesses,
with a goal of driving a 100 basis point margin improvement in fiscal 2008 and a
300 basis point increase over the next three years. And we expect to maintain a premium
to our cost of capital going forward.
What all of this translates into is our focus on achieving a fifth consecutive year of
double-digit earnings growth and continued improvement in return on capital in 2008.
Our people’s focus on continuing to develop our leadership positions today while relentlessly
pursuing the growth opportunities of tomorrow has never been sharper.
Certain amounts and comparisons to the prior year in this letter are considered non-GAAP measures.
Click here for the comparable GAAP amounts and reconciliations.
Sincerely,
John P. Jones III John E. McGlade
Chairman President and Chief Executive Officer
