Air Products and Chemicals Inc.
) announced the acquisition of an Air Separation Unit (ASU) and
integrated gases liquefier in Guiyang, China, from Guizhou Kaiyang
Chemical Co. Ltd. Guizhou Kaiyang Chemical is a subsidiary of the
Yankuang Group, a state owned coal-mining company in China.
The ASU is expected to produce about 2,000 tons per day (TPD) of
gaseous oxygen and nitrogen, which will be supplied to Guizhou
Kaiyang Chemical's coal to ammonia conversion plant. Meanwhile, the
liquid gas will be supplied to industries in Guiyang, with some
portion being sold to Guizhou Kaiyang Chemical. Both the ASU and
the liquefier are expected to come online next month.
This is the second contract that Air Products has signed with a
Yankuang Group member. Air Products already has a contract with
another Yankuang Group member, Shaanxi Future Energy Chemical Co.,
Ltd., in Yulin, Shaanxi Province. The company plans to operate the
largest on-site ASU under the contract. Shaanxi's coal chemical
plant will become operational from 2014 and expects to produce
12,000 TPD of oxygen and significant volumes of nitrogen and
compressed dry air.
Recently, Air Products also struck a deal with Jinxin Glass in
Jiyuan, located in Henan Province in China, to supply its
integrated oxy-fuel solution. The supply will help in reducing
emissions in the glass melting process as it will replace the
conventional air-fuel combustion.
In July 2012, Air Products released its third-quarter results
for fiscal 2012 ended June 30, 2012. The company reported adjusted
(excluding one-time items) earnings from continued operations of
$1.41 a share for the quarter, in line with the Zacks Consensus
Consolidated net income, as reported, surged 48% year over year
to $484.5 million or $2.26 a share compared with $326.5 million or
$1.50 a year ago. The increase in profit was attributable to lower
costs and one-time gains, which more than offset the impact of
Revenues dipped 5% year over year to $2,340.1 million, missing
the Zacks Consensus Estimate of $2,455 million. Challenging
conditions in Europe and Asia as well as unfavorable currency due
to a stronger dollar weighed on the company's top line in the
Air Products' healthy project backlog and solid bidding activity
strongly positions it to achieve long-term growth target. Given its
leading position in the gases business, the company is well
positioned to capitalize on the cyclical recovery in its core
industrial end markets. Further, new business deals are expected to
boost its profits in 2012. However, soaring energy and raw material
costs pose a threat to margin expansion.
Air Products, which competes with
), has a short-term Zacks #3 Rank (Hold) currently and we have a
long-term Neutral recommendation on its shares.
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