Air Products Buys ROVI - Analyst Blog

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Air Products and Chemicals Inc. ( APD ) announced that it has acquired Schluchtern, Germany-based ROVI Cosmetics International GmbH at undisclosed terms. ROVI Cosmetics specializes in delivery systems for skin care and hair care products. It has 18 employees.

Air Products considers the acquisition as an opportunity to develop into a company providing differentiated personal care products. The combined companies will provide advanced skin care products.

Air Products believes that ROVI's technically advanced product lines will complement its current offering of polymers, including temperature switch polymers under the Intelimer brand, functional-feel polymers under Deposilk brand, and Hybridur urethane-acrylic interpenetrating network polymers.  

Recently, Air Products released its first-quarter 2012 results. The company reported an EPS of $1.36 in the quarter versus $1.35 in the year-earlier quarter, which is in line with the Zacks Consensus Estimate.

Net sales amounted to $2.4 billion, up 1% year over year, but down 7% sequentially. The increase was due to higher prices in Merchant Gases and Performance Materials. However, sales were below the Zacks Consensus Estimate of $2.5 billion.

Looking ahead, management expects second-quarter 2012 results to remain disappointing. However, growth in Asia and North America is expected to accelerate in the second half of 2012, coupled with improved operating performance and new plant on-streams, leading to stronger sales and earnings growth in the later half of 2012. The company's recent orders, strong project backlog and robust bidding activity position it well to achieve 2015 goals for growth, margin and returns.

Air Products continues to maintain EPS guidance in the range of $5.90 to $6.30 for fiscal 2012. The company expects second-quarter EPS to be between $1.37 and $1.43.

Based in Pennsylvania, Air Products benefits from a long-term take-or-pay contract, a consolidated industry structure, diverse customer base and sustained pricing power. However, soaring energy and raw material costs pose a threat to margin expansion.

In order to compensate for escalating raw material costs, Air Products has been increasing the price for a range of chemicals manufactured for industrial use. Air Products faces stiff competition from Praxair Inc. ( PX ) and The Linde Group.

Currently, the company retains a Zacks #3 Rank, which translates into a short-term (1 to 3 months) Hold rating and we have recommended the shares of the company as Neutral for the long-term (more than 6 months).


 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: APD , PX

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