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Air Products Hikes Product Prices - Analyst Blog

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Effective January 01, 2012, Air Products & Chemicals Inc. ( APD ) would increase the prices of all electronics materials and electronic formulated products in North America by 3.5% to 15% driven by to an increase in production costs.

Moreover, Air Products also intends to eliminate rental discounts on these products.

Recently, Air Products reported its 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 EPS of $5.73, up 14% year over year, in line with 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.

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.

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

We currently have a Zacks #3 Rank (short-term Hold recommendation) on the stock.

AIR PRODS & CHE ( APD ): Free Stock Analysis Report

PRAXAIR INC ( PX ): Free Stock Analysis Report

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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 Nasdaq, Inc.


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

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