Industrial chemical and gas producer Air Products & Chemicals, Inc. (APD: Quote) reported Tuesday a profit for the third quarter that surged from last year, primarily reflecting improved margins and gains on previously held equity interest as well as discontinued operations.
Adjusted earnings per share from continuing operations met analysts' expectations, while quarterly revenues trailed their estimates. The company also issued earnings forecast for the fourth quarter, below Street view, and trimmed its earnings guidance for the full-year 2012.
"Economic growth this quarter was below what we expected in Asia, Europe and Electronics. Despite headwinds from the economy and a stronger dollar, we were able to deliver earnings within expectations due to excellent cost performance," Chairman, President and CEO John McGlade said in a statement.
The company also noted that it recently executed several key strategic activities. These included the purchase of a majority position in Chilean industrial gas company Indura S.A. for $884 million, taking full ownership of DA NanoMaterials joint-venture and the sale of its Continental Europe Homecare business.
Allentown, Pennsylvania-based Air Products reported net income of $484.5 million or $2.26 per share for the third quarter, sharply higher than $326.5 million or $1.50 per share in the prior-year quarter.
The latest results primarily include a gain of $0.70 per share associated with the sale of the Continental Europe Homecare business.
Income from continuing operations for the quarter increased about 20 percent to $357.2 million or $1.66 per share from $297.0 million or $1.37 per share in the year-ago quarter.
Results for the latest quarter includes a $0.25 per share gain associated with acquiring the additional 50 percent equity interest in Air Products' existing DA NanoMaterials joint venture.
Excluding items, adjusted income from continuing operations grew to $302.6 million or $1.41 per share from $297.0 million or $1.37 per share last year.
On average, 17 analysts polled by Thomson Reuters expected the company to report earnings of $1.41 per share for the third quarter. Analysts' estimates typically exclude special items.
Revenues for the quarter decreased 5 percent to $2.34 billion from $2.47 billion in the same quarter last year. Fourteen Wall Street analysts had a consensus revenue estimate of $2.46 billion for the quarter.
Operating margin for the quarter expanded 490 basis points to 20.6 percent, and adjusted operating margin improved 130 basis points to 17 percent from last year on lower costs.
Looking ahead to the fourth quarter, the company expects adjusted earnings from continuing operations in a range of $1.42 and $1.47 per share. Analysts expect the company to earn $1.50 per share for the quarter.
For fiscal 2012, the company trimmed its guidance for adjusted earnings from continuing operations to a range of $5.40 to $5.45 per share from the prior forecast in the range of $5.47 to $5.60 per share. Street is currently looking for full-year 2012 earnings of $5.51 per share.
"The current economic uncertainty continues to impact our near-term volume growth. To offset this, we will continue to deliver productivity and cost reduction to the bottom line. In the longer-term, we remain confident in the growth prospects for industrial gases and Air Products," McGlade added.
In Tuesday's regular trading session, APD is currently trading at $78.55, down $1.03 or 1.29% on a volume of 0.32 million shares.
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by RTT Staff Writer
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