Air Products Net Income Down, USA

Air Products reported net income of $288 million and diluted earnings per share (EPS) of $1.36, on a continuing operations basis, for its fiscal third quarter ended June 30, 2013, down five percent and four percent respectively versus prior year.

Third quarter revenues of $2,547 million increased nine percent versus prior year, with underlying sales down two percent due to the previously announced decision to exit the Polyurethane Intermediates (PUI) business.

Acquisitions contributed six percent, and higher energy cost pass-through increased sales five percent. Operating income of $383 million decreased three percent versus prior year. Operating margin of 15 percent was down 200 basis points versus prior year, primarily on higher pension costs, higher energy pass-through, acquisitions and under-recovery of higher power costs in Merchant Gases.

Sequential sales increased three percent, primarily due to seasonally stronger volumes in Merchant Gases and Performance Materials. Operating income declined two percent sequentially on higher Merchant costs and pension costs.

Commenting on the third quarter, John McGlade, chairman, president and chief executive officer, said, “Productivity and solid execution offset continued economic weakness, enabling us to deliver earnings within guidance. We remain focused on delivering on our commitments and executing on our $3 billion backlog―and we expect these projects to be immediately accretive to earnings and cash flow as they come online. As stated previously, we are actively assessing additional actions that we can take that would result in increased value to our shareholders. While our review continues, we have already identified further actions we expect to take to improve margins and returns.”