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Air Products & Chemicals (APD)
Q4 2012 Earnings Call
October 19, 2012 10:00 am ET
Simon R. Moore - Former Director of Investor Relations
John E. McGlade - Chairman, Chief Executive Officer, President and Chairman of Executive Committee
Paul E. Huck - Chief Financial Officer and Senior Vice President
P.J. Juvekar - Citigroup Inc, Research Division
Duffy Fischer - Barclays Capital, Research Division
Jeffrey J. Zekauskas - JP Morgan Chase & Co, Research Division
Donald Carson - Susquehanna Financial Group, LLLP, Research Division
Michael J. Harrison - First Analysis Securities Corporation, Research Division
Laurence Alexander - Jefferies & Company, Inc., Research Division
Robert Koort - Goldman Sachs Group Inc., Research Division
David L. Begleiter - Deutsche Bank AG, Research Division
Abhiram Rajendran - Crédit Suisse AG, Research Division
Kevin W. McCarthy - BofA Merrill Lynch, Research Division
Michael J. Sison - KeyBanc Capital Markets Inc., Research Division
Previous Statements by APD
» Air Products & Chemicals Management Discusses Q3 2012 Results - Earnings Call Transcript
» Air Products & Chemicals Management Discusses Q2 2012 Results - Earnings Call Transcript
» Air Products & Chemicals Management Discusses Q1 2012 Results - Earnings Call Transcript
Beginning today's call is Mr. Simon Moore, Director of Investor Relations. Mr. Moore, you may begin.
Simon R. Moore
Thank you, Leah. Good morning, and welcome to Air Products' Fourth Quarter Earnings Teleconference. This is Simon Moore. I'm pleased to be joined today by John McGlade, our CEO; and Paul Huck, our CFO. John will first provide our overall perspective on the year, Paul will review our 2012 and Q4 results, I will review the segment results, Paul will provide an outlook for Q1 and 2013 and finally, John will provide some longer-term perspectives. Our comments today are slightly longer than normal so we would ask you to limit yourselves to one question and one follow-up, please.
We issued our earnings release this morning. It is available on our website, along with the slides for this teleconference. Please go to airproducts.com to access the materials. Instructions for accessing the replay of this call beginning at 2 p.m. Eastern Time are also available on our website.
Please turn to Slide 2. As always, today's teleconference will contain forward-looking statements based on current expectations and assumptions. Please review the information on these slides and at the end of today's earnings release, explaining factors that may affect these expectations.
Now I'll turn the call over to John.
John E. McGlade
Thank you, Simon. Good morning, everyone, and thanks for joining us. Before I share my perspective on the year, I did want to make a few comments. As you've seen from our earlier announcement, Paul has decided to retire from Air Products at the end of February. After 33 years of exemplary service to this organization, he has decided now is the right time to step back and spend more time with family and on other endeavors. Paul has been with Air Products since 1979 and has served as our Chief Financial Officer since 2004. Over that time, he has exemplified the best of everything we stand for. He has seen this company grow tremendously during his tenure and has been a key player in every step of the way as a leader, mentor and trusted colleague.
I think I speak for the entire Air Products' Board of Directors and the entire Air Products community when I say he will be greatly missed. Paul will remain with Air Products through February in order to transition his role to Scott Crocco.
Scott has been at Air Products for 22 years and has extensive experience in all areas of finance, including serving as the financial manager for many of our businesses. Scott currently serves as Vice President, Controller and Chief Accounting Officer. I know that Paul plans to introduce Scott to many of you over the coming weeks and months so that you'll have the chance to get to know him as he moves into his new role. While we are sorry to be losing Paul, we understand his decision and have every confidence in Scott's ability to help take this organization forward.
Now please turn to Slide #3 for a review of the key highlights from our fiscal year 2012. Let me begin by saying the global economy certainly proved to be more challenging than we expected for 2012, and we did not see the anticipated step up in economic growth in the second half of our fiscal year.
To summarize, for the year, we saw global manufacturing growth of about 3%, toward the low end of our planning range. This obviously impacted our volume growth, particularly in our Merchant and Electronics and Performance Materials segments.
During the year, we did take important steps to position our portfolio for future success. We sold our European Homecare business and implemented a significant restructuring program to bring our costs in line with a slower economy in Europe. And as we announced this morning, we are exiting our polyurethane intermediates business and are restructuring our photovoltaic business to reflect current market conditions. Paul will provide more details on these actions shortly.
We continue to execute on acquisition opportunities to support our strategies. In July, we closed on the purchase of a majority position in Indura, the largest independent gas company in Latin America.
This year, we also invested in a 25% position in Abdullah Hashim Group, the largest industrial gas company in Saudi Arabia. And this week, we announced a complementary joint venture with ACWA, the Arabian company for power and water development, to focus on large-scale industrial gas opportunities within the Kingdom of Saudi Arabia. Finally, we purchased the remaining 50% of our DA NanoMaterials joint venture.
We also continue to be successful in winning profitable projects in the key energy, environmental and emerging markets. Our 2012 capital expenditure was a record $2.8 billion, including significant wins in oxygen for coal gasification in China. We are now executing 6 projects in this exciting growth market, totaling over 28,000 tons per day of oxygen. Bidding activity remains strong as these projects are driven by China's drive for energy independence.