Pennsylvania based Industrial Gas Major; Air Products seems losing market due to stiff competitions in the pricing along with huge backlogs. According to company’s first quarter fiscal results, Air Products & Chemicals Inc reported mixed results as net sales amounted to $2.4 billion, up 1% year over year, but down 7% sequentially. The initial increase came due to higher prices in Merchant Gases and Performance Materials. It can be easily observed from the figures that how com soaring energy & raw materials costs pose a great threat to company’s future as well as expansion. Company also highlighted potential market growth from Asian markets, sign of relief for company in China & India.
Company core segment sales were $989 million, bit flat year over year as lower volumes were counterbalance by higher pricing in U.S./Canada and Europe Liquid Bulk and Packaged Gases. On the same lines, overall operating income came down 4% year over year to $192 million, largely due to decreased volumes and currency effects.
Sales here rose 6% year over year to $810 million because of higher volumes on the back of new projects. Operating income amounted to $111 million, down 4% year over year due to higher maintenance costs from outages.
Electronics and Performance Materials:
Company reported sales of $535 million, up 2% year over year, led by higher Electronics volumes and Performance Materials pricing. Operating income increased by 13% year over year to $78 million, mainly due to enhanced cost performance. This is only segment where company outlook appears as optimistic as expansion.
Equipment and Energy:
The worst cum poor performance came from Equipment & Energy markets, as sales declined 21% year over year to $89 million. The poor performance is due to worse LNG and air separation unit activity.
Presently company is planning to concentrate more on Core gases business instead of diversified business. With this concern, Air Products signed agreements with The Linde Group to acquire Homecare business in Belgium, Germany, France, Portugal and Spain. This business represents roughly 80% of the total Homecare business revenues. In coming months, company may sell the remaining portion of its Homecare business, which is primarily in the United Kingdom.
Asia & North America expected to boost the company’s business in the second quarter if market gives the supportive impression with improved performance & settling of backlogs. Due to backlogs, company is not taking any other major expansion plan as till 2015. Under the same notion, Air Products faces solid competition from Praxair Inc. (PX) and The Linde Group.