Air Products & Chemicals Inc.
), the US supplier of specialty gas products, announced its plan to
sell its Continental Europe Homecare business to The Linde Groupe
of Germany for 590 million euros (approximately $750 million).
The Continental Europe Homecare business provides oxygen
therapy, sleep therapy, and infusions, and operates in Germany,
France, Spain, Portugal and Belgium. The operations have a base of
about 260,000 patients.
Air Products intends to sell off its Europe Homecare business as
it does not fit with its core gases business. On the contrary, this
acquisition will boost Linde's position in the structural growth
market while making it one of the market leaders in the European
respiratory homecare business.
Air Products is also evaluating its options for its home care
business in the U.K., Ireland, Argentina, and Brazil. The company
will continue to operate these businesses as part of its portfolio.
In addition, Air Products will compete to win new businesses while
providing quality patient care.
Linde achieved sales of 1.1 billion euros in the healthcare
segment as a whole, in the 2010 financial year. The company is the
second largest supplier of medical gases and related services in
In late October 2011, Air Products reported an increase in
profit for the fourth quarter, primarily reflecting revenue growth
amid double-digit increases at three of its four operational
Air Products reported fourth-quarter 2011 EPS of $1.51 versus
$1.35 in the year-earlier quarter, in line with the Zacks Consensus
Estimate of $1.51. For full-year 2011, the company reported an EPS
of $5.73, up 14% year over year, matching the Zacks Consensus
Estimate of $5.73.
Net sales amounted to $2.6 billion versus $2.4 billion in the
prior-year quarter, in line with the Zacks Consensus Estimate of
$2.6 billion. The improved results were mainly driven by growth in
the emerging markets and strong performance in its Tonnage Gases
business. Despite a slowing global economy in the second half of
2011, the company won several projects and also witnessed
double-digit sales and earnings growth.
For fiscal 2011, sales increased 12% year over year to $10,082
million driven by a 9% volume increase, which was in line with the
Zacks Consensus Estimate.
Though the near-term economic outlook looks bleak and has a lot
of global economic and policy uncertainties, Air Products remains
confident of its large backlog of projects backed by signed
customer contracts while remaining committed to achieve its 2015
goals for growth, margin, and return on capital.
The company expects fiscal year 2012 EPS to be in the range of
$5.90 to $6.30 per share, representing year-over-year earnings
growth of 3% to 10%. For the first quarter of fiscal 2012, the
company expects to earn $1.31 to $1.39 per share.
The company also forecasts capital spending in fiscal 2012 to be
between $1.9 and $2.2 billion.
Based in Pennsylvania, Air Products benefits from a long-term
take-or-pay contract, a consolidated industry structure, a diverse
customer base and sustained pricing power. However, soaring energy
and raw material costs pose a threat to margin expansion.
Air Products, which faces stiff competition from
), has a Zacks #2 Rank (Buy) on its stock for the short
term. We currently provide a long-term Neutral recommendation
on the stock .
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