Industrial gas giant
Air Products and Chemicals Inc.
) logged second-quarter fiscal 2014 (ended Mar 31, 2014) earnings
from continued operations of $1.32 a share, down roughly 4% from
$1.37 a share in the year-ago quarter. The results also missed
the Zacks Consensus Estimate of $1.35 per share.
Higher underlying volumes and strong execution of planned
maintenance outages despite adverse weather conditions helped Air
Products to deliver earnings within the guided range. However,
net income from continuing operations decreased 2% to $283.5
million in the quarter from $289.3 recorded in the last-year
Revenues rose 4% year over year to $2,582 million, beating the
Zacks Consensus Estimate of $2,564 million. Higher energy
pass-through and stronger underlying volumes in Merchant Gases,
and Electronics and Performance Materials segments boosted sales.
Underlying sales, barring the company's exit from the
Polyurethane Intermediates (PUI) business, rose 2% year over
Revenues from the core Merchant Gases segment increased 4%
year over year to $1,040 million in the reported quarter, aided
by higher volumes in the U.S./Canada, Asia and Latin America,
partly marred by lower helium volumes due to continued global
Sales from the Tonnage Gases division rose 4% year over year
to $840 million, backed by higher energy pass-through, which more
than offset lower volumes resulting from planned customer outages
and the negative impact of the exit from the PUI business.
Revenues from the Electronics and Performance Materials
segment rose 8% year over year to $592 million on increased
volumes. Electronics sales rose 6% on the back of higher delivery
systems sales. Performance Materials sales moved up 10% with
growth witnessed across all product lines and key regions.
In the Equipment and Energy division, sales declined 11% year
over year to $110 million. Sales backlog increased 3% to $338
Air Products ended the quarter with cash and cash equivalents
of $357 million, down 11% year over year. Total long-term debt
rose 7.5% year over year to $4,993 million. Operating cash flow
almost doubled year over year to $1,024.7 million for six months
ended Mar 31, 2014.
The company is confident about its future prospects and thus
raised its quarterly dividend by 8.5%.
Air Products revised its earnings guidance for fiscal 2014 and
now anticipates earnings from continuing operations to be in the
range of $5.70-$5.85 per share versus its previous guidance of
$5.70 to $5.90 per share. For the third quarter, earnings from
continuing operations are expected in the band of $1.42-$1.47 per
share. The company has reaffirmed its capital expenditure
forecast of roughly $2 billion for fiscal 2014.
Air Products expects its strategic actions including
productivity improvement, better asset utilization, disciplined
project execution and cost management initiatives to drive
earnings in fiscal 2014. The company anticipates stronger
momentum in the second half of the year.
Air Products should benefit from a diverse customer base,
sustained pricing power and cost-reduction measures. New business
deals and strategic investments are expected to support results
in fiscal 2014. The company expects to recover the costs
associated with planned maintenance outages and adverse weather
in the second half of the year.
Air Products currently holds a Zacks Rank #4 (Sell).
Other companies in the chemical industry worth considering
), all carrying a Zacks Rank #2 (Buy).
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