Air Products & Chemicals Inc.'s (APD) fiscal first-quarter earnings fell 7.6% as the industrial-gas company saw continued weakness in its equipment and energy segment and slower growth in its three other major segments.
The company forecast second-quarter earnings at $1.37 to $1.43 a share[unchanged from prior guidance], below estimates of $1.48 a share from analysts polled by Thomson Reuters. It said it expects slow economic activity in the period but predicted Asia and North America growth would accelerate in the second half of the year.
The specialty-gas supplier and chemical maker had also warned of softer first-quarter results due to economic uncertainty but said it was well-positioned with a large backlog of projects.
This month, the company agreed to sell its continental European home care business to Linde AG for EUR590 million as it looks to focus on its core gases business. It is also evaluating options for its remaining home care interests in the U.K., Ireland, Argentina and Brazil. Air Products had seen double-digit earnings growth and higher volume recently thanks to Asian demand, and the company hopes to continue that momentum with stepped-up investments in China and India.
For the period ended Dec. 31, Air Products reported a profit of $248.1 million, or $1.16 a share, down from $268.6 million, or $1.23 a share, a year earlier. Adjusted earnings[non-GAAP]were $1.36, up from $1.35. In October, the company predicted per-share earnings of $1.31 to $1.39.[The main differences between GAAP and non-GAAP are that the latter excludes costs associated with the aborted Airgas acquisition and a tax settlement in Spain.]
Revenue increased 1.3% to $2.42 billion, below analysts' expectations of $2.53 billion.
Gross margin narrowed to 26.8% from 28.1%.
Sales in the company's merchant gases segment were flat as lower volumes were offset by higher pricing. Air Products' tonnage gases segment, which provides gases to refineries and steelmaking industries, reported 6% higher revenue on improved volume from new plants. Sales in electronics and performance materials rose 2% on higher pricing and volume, while equipment and energy sales fell 21%, due to lower liquefied natural gas and air separation unit activity.‹
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