Replies to post #2567 on The Rising Influence of Rising Affluence

[DewDiligence]

APD Forecasts 12% Sales Growth/Higher Margins Through 2015

[APD held its Investor Day presentation yesterday and issued the updated guidance discussed below.

How does APD tie in with The Global Demographic Tailwind? Please see #msg-46518659.]

http://www.bloomberg.com/news/2011-06-09/air-products-sees-margins-sales-increasing-through-2015-1-.html

›By Jack Kaskey - Jun 9, 2011 4:25 PM ET

Air Products & Chemicals Inc. (APD), the second-biggest U.S. industrial-gas producer, said profit margins [i.e. pre-tax operating margin] will expand 3 percentage points from 17% to 20%] through 2015 and sales will rise about 12 percent annually, led by growth in energy and electronics markets.

Revenue will climb to more than $15 billion in fiscal 2015, from $9 billion in the year ended in September, for an annual growth rate of 11 percent to 13 percent, Chief Executive Officer John McGlade said today in a presentation to investors in New York. Operating profit will rise to 20 percent by then, from 17 percent in the last quarter, the Allentown, Pennsylvania-based company said in a statement.

Air Products plans to leverage its leading positions in hydrogen, used to produce low-sulfur fuels, and gases used to make electronics to exceed anticipated annual industry growth of 9 percent, Chief Financial Officer Paul Huck said in the presentation. The company, thwarted this year in a $5.9 billion hostile bid for Airgas Inc., also plans to make acquisitions boosting sales as much as 2 percent a year, he said.

“Air Products investor day set targets slightly better than expected, with a balance between growth targets and a theme of secular productivity gains,” Laurence Alexander, a New York- based analyst at Jefferies & Co. who rates the shares “buy,” said today in a note.

Analysts project sales to rise 11 percent in the fiscal year through September to $9.99 billion and 9 percent to $10.9 billion the following year, according to average estimates in a Bloomberg survey.‹

[DewDiligence]

APD Shares Fall on FY4Q11 Forecast

[The 4% selloff following this earnings release provides a good entry point, IMO, insofar as the company’s 2015 forecast in #msg-64095618 remains unchanged. APD actually raised the lower bound of its FY2011 EPS guidance from $5.65 to $.70; however, the market treated this as a negative because APD left the upper bound of the range unchanged at $5.75. More important, APD maintained its 2015 outlook presented in #msg-64095618.

Please see #msg-46518659 for a dated but still accurate description of how APD ties in with The Global Demographic Tailwind. Also see #msg-46518659 for how APD participates in the global LNG buildout.]

http://www.reuters.com/article/2011/07/22/airproducts-idUSN1E76J0OX20110722

›Jul 22, 2011 12:09pm EDT
By Ernest Scheyder

NEW YORK, July 22 (Reuters) - Operational challenges and higher costs hampered Air Products and Chemicals Inc's (APD) quarterly profit and led executives to forecast a tepid fiscal fourth quarter, pushing the company's stock down 2.4 percent. [The stock closed Friday down 3.7%.]

Air Products, which supplies argon, oxygen and other industrial gases to retail, manufacturing and construction customers, said its operations in North America remain the weakest, hurt by lackluster consumer demand and uncertainty about U.S economic policy.

"The economy in North America has kind of hit a soft patch," Chief Financial Officer Paul Huck said on a conference call with reporters. "There's still a lot of uncertainty around there."

Asian growth remains strong, and the company plans to increase its capital spending there, Huck said.

Planned customer plant shutdowns during the fiscal third quarter dented Air Products' tonnage business, which operates industrial gas facilities on-site for customers.

Higher costs ate into the merchant business, which supplies industrial gas for retail and construction customers.

Chief Executive John McGlade said he was "very disappointed" about the weak performance.

"With the Tonnage planned maintenance outages behind us and the actions we are taking to improve Merchant performance, we expect margins to improve significantly" in the current quarter, McGlade said in a statement.

Mixed results could continue, the company said. Air Products forecast a profit of $1.48 to $1.53 per share for the current quarter. Analysts expect $1.52.

"As uncertainties surrounding policy, fiscal and sovereign debt issues begin to resolve over the coming months, we would expect growth to pick up early in our fiscal 2012," said Huck.

For the third quarter, ended June 30, the company posted net income of $326.5 million, or $1.50 per share, compared with $253.2 million, or $1.17 per share, a year earlier.

Excluding a gain from the sale of its healthcare business in 2009, Air Products earned $1.46 per share. That met analysts' expectations, according to Thomson Reuters I/B/E/S.

Revenue rose 15 percent to $2.58 billion. Analysts expected $2.53 billion.

Sales to electronics customers showed the fastest growth, up 21 percent to $602 million. The electronics segment, which supplies gases that Apple Inc (AAPL) and Intel Corp (INTC) use to make their popular products, should continue to grow, Huck said.

"We expect continued strong performance from this segment," he said.

Shares of Air Products were down 2.4 percent to $93.16 in midday trading. The stock has traded between $69.89 and $98.00 in the past 52 weeks.‹