Diversified chemicals company Air Products & Chemicals Inc. (APD) reported Wednesday a rise in third-quarter profit that primarily reflected the prior-year's loss from discontinued operations. On a continuing operations basis, income more than halved from the prior year, reflecting a 28% decline in revenues. The company also provided a revised outlook for fiscal 2009.
The Trexlertown, Pennsylvania-based company's net income for the quarter increased to $113.2 million or $0.53 per share from $70.1 million or $0.32 per share in the previous year.
Income from continuing operations was $114.6 million or $0.54 per share, compared to $295 million or $1.35 per share in the prior year.
Results for the quarter included charges of $110 million or $0.51 per share related to the company's global cost reduction plan, a customer bankruptcy and other asset actions, and a pension settlement. Excluding items, income from continuing operations was $225 million or $1.05 per share.
According to the company, charges related to its cost reduction plan included $90 million for severance and other benefits, including pension-related costs, associated with the elimination of nearly 1,150 positions of its global workforce. An impairment charge of $34 million was also recorded to write-down certain assets held for sale to net realizable value.
On average, 15 analysts polled by Thomson Reuters expected the company to report earnings of $0.98 per share for the quarter. Analysts' estimates typically exclude special items.
During the recent quarter, the company reported loss from discontinued operations of $1.4 million or $0.01 per share, in comparison with a loss of $224.9 million or $1.03 per share in the preceding year. The company has discontinued operations of its U.S. Healthcare business, Polymer Emulsions business and the High Purity Process Chemicals business last year.
In the immediately preceding second quarter, the company had posted net income of $205.6 million or $0.97 per share, compared to $314.3 million or $1.43 per share in the prior year quarter. Net income from continuing operations declined 31% to $189 million from $259.8 million last year, and earnings per share from continuing operations totaled $0.89, a decrease of 29%, compared to $1.18 per share in the corresponding quarter of the previous year.
Revenues for the third quarter declined 28% to $1.98 billion from $2.75 billion in the year-ago quarter, impacted by weaker volumes, lower energy and raw material cost pass-throughs, and unfavorable currency. Underlying sales were down 11%. Nine analysts had a consensus revenue estimate of $2.13 billion for the quarter.
Segment-wise, revenues from Merchant Gases declined 19% to $882.6 million from $1.09 billion in the prior year. Tonnage Gases revenues were $565 million, down 42% from $975.8 million last year. Electronics and Performance Materials generated revenues of $409.2 million were 29% lower than $579.7 million in the same period a year ago, while Equipment and Energy revenues increased 12% to $119.4 million from $106.9 million in the preceding year.
During its second quarter, the company had posted revenues of $1.96 billion, down 23% from the previous year's $2.54 billion.
For the nine-month period, the company posted net income of $387.4 million or $1.82 per share, compared to net income of $648.1 million or $2.95 per share in the previous year. Income from continuing operations declined to $393.9 million or $1.85 per share from $817.1 million or $2.95 per share in the earlier year.
Revenues for the period decreased to $6.13 billion from $7.7 billion a year ago.
The company noted that the global cost reduction plan is expected to reduce fixed costs by about $30 million in fiscal 2010, with annual benefits of $50 million in fiscal 2011 and beyond.
John McGlade, chairman, president and chief executive officer commented, "While we are still seeing the impact of the global recession on our volumes, we've seen signs of improvement during this quarter in some of our end markets, particularly in Electronics and Asia. The productivity and continuous improvement efforts of our employees are having an impact, as margins improved substantially both sequentially and versus prior year."
Looking ahead to the fourth quarter, Air Products expects earnings per share from continuing operations in the range of $1.04 to $1.14. Street analysts expect earnings of $1.12 per share for the quarter.
Further, for the full-year 2009, the company now expects earnings per share from continuing operations in the range of $3.95 to $4.05, excluding the impact of disclosed items in the fiscal first and third quarters. GAAP earnings for the full year are now expected to be in the range of $2.89 to $2.99. Eighteen analysts anticipate earnings of $3.95 per share for the full year.
Among others in the industry, Praxair Inc. (PX) is slated to release second-quarter results on July 29. Fifteen Street analysts are looking for earnings of $0.99 per share for the quarter. During its first quarter, the Danbury, Connecticut-based company posted net income of $290 million and $0.93 per share, down from $307 million and $0.96 per share in the prior-year quarter.
APD is currently trading at $69.52, down $0.18 or 0.26%, on a volume of 669 thousand shares.
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