Wednesday, diversified chemicals company Air Products & Chemicals Inc. (APD) posted a decline in fourth-quarter profit, dragged down by weak sales reflecting lower energy and raw material cost pass-throughs and unfavorable currency. Moreover, per share earnings from continuing operations declined from last year, yet topped Street view. Further, the company issued earnings forecast for the first quarter and fiscal 2010.
The Trexlertown, Pennsylvania-based company's fourth-quarter net income was $243.9 million or $1.13 per share, lower than net income of $261.6 million or $1.21 per share reported in the prior-year quarter.
Net income from continuing operations for the quarter declined to $246.0 million or $1.14 per share from $273.4 million or $1.26 per share in the same quarter of last year.
On average, analysts polled by Thomson Reuters expected the company to post earnings of $1.12 per share. Analysts' estimates typically exclude special items.
Quarterly sales totaled $2.13 billion, down 22% from the previous year's sales of $2.71 billion, but surpassed the $2.09 billion consensus estimate of 11 analysts polled by Thomson Reuters.
The company noted that lower energy and raw material cost pass-throughs and unfavorable currency impacted sales by 12% and 3%, respectively. Underlying sales dropped 7% on lower volumes in the Merchant Gases, and Electronic and Performance Materials segments, and lower pricing in Electronics and Performance Materials.
John McGlade, chairman, president and chief executive officer, said, "The beginning of our fiscal 2009 coincided with the start of the global financial crisis, driving the recession that resulted in unprecedented declines in demand for our products worldwide. While this affected our fiscal year results, we were able to offset some of the decline with aggressive cost controls."
The company's Merchant Gases segment generated fourth-quarter sales of $932 million, down 15% from last year, on weaker volumes across manufacturing end-markets globally and unfavorable currency, partially offset by favorable pricing. Tonnage Gases sales were down 32% to $640 million from the prior year hurt by lower energy and raw material cost pass-throughs.
Electronics and Performance Materials sales declined 22% to $434 million, primarily on lower volumes and Electronics pricing, while Equipment and Energy sales dropped 3% to $123 million from last year.
For the fiscal year 2009, the company reported net income of $631.3 million or $3.01 per share, compared to $909.7 million or $4.29 per share in the year-ago period.
Net income from continuing operations decreased to $639.9 million or $3.05 per share, compared to $1.09 billion or $5.14 per share in the corresponding period of the previous year.
On a non-GAAP basis, income from continuing operations amounted to $866.2 million or $4.06 per share, compared to $1.11 billion or $5.05 per share a year-ago. Analysts expected earnings of $4.03 per share for fiscal 2009.
Annual sales for fiscal 2009 dropped 21% to $8.26 billion from $10.4 billion reported in the year-earlier period, on lower volumes, lower energy and raw material cost pass-throughs and unfavorable currency. Underlying sales decreased 8%. Thirteen Wall Street analysts had a consensus revenue estimate of $8.21 billion for the full year.
Looking ahead, the company projects first-quarter earnings to be in the range of $1.07 - $1.15 per share. Earnings for fiscal 2010 is expected to range between $4.65 and $4.90 per share, representing year-over-year earnings growth on a continuing operations basis of 15% - 21%. The company also expects capital spending in fiscal 2010 to be between $1.3 billion and $1.5 billion, approximately equal to fiscal 2009. Analysts are looking for earnings of $1.14 per share for the first quarter, and $4.76 per share for fiscal 2010.
Among Air Products' rivals, Praxair Inc. (PX) is set to report third-quarter results on October 28, with analysts expecting earnings of $1.00 per share on revenues of $2.30 billion. The company projects third-quarter earnings to be in the range of $0.95 - $1.00 per share. For fiscal 2009, Praxair narrowed its earnings outlook to a range of $3.85 - $4.05 per share from prior issued guidance range of $3.85 - $4.15 per share. Praxair continues to forecast full-year sales to be in the area of $9 billion.
McGlade said, "We also continue to drive to a low-cost structure to enable us to grow faster than our competition. While the pace of the recovery is unknown, our people remain committed to achieving our margin, return and growth goals."
Air Products shares, which have been trading between $41.46 and $84.43 in the past 52 weeks, closed Tuesday's trading session at $83.24.
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