Air Products Reports Net Income From Operations of 54 Cents

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Apr 23, 2001, 01:00 ET from Air Products and Chemicals, Inc.

    LEHIGH VALLEY, Pa., April 23 /PRNewswire Interactive News Release/ -- Air
 Products and Chemicals, Inc. (NYSE:   APD) today reported net income from
 operations of $118 million, or diluted operating earnings per share of
 54 cents for the March quarter.  Excluding disclosed special items in both
 years, diluted operating earnings per share declined 13 percent compared with
 prior year earnings of 62 cents per share.  Net income from operations
 declined 11 percent compared with prior year earnings of $133 million,
 primarily due to higher natural gas prices and lower volumes in the chemicals
 business.
     As reported net income for the March 2001 quarter was $95 million, or
 43 cents on a diluted earnings per share basis.  Prior year net income as
 reported was $48 million, or 22 cents per share.  The following discussion
 excludes special items.
     Revenues of $1.5 billion increased 11 percent compared with prior year
 revenues.  Industrial gas sales were particularly strong in global markets
 such as electronics and the chemicals and processing industries (CPI) and in
 Asia.
     Commenting on the quarter, Air Products Chairman and Chief Executive
 Officer John P. Jones said, "As expected, this quarter's earnings were
 affected by the weaker economy and higher energy and raw material prices,
 which hit our chemicals business particularly hard.  In the face of these
 short-term challenges, our strategies continue to generate growth, and our
 long-term fundamentals remain positive.  The entire Air Products team remains
 focused on execution.  We continue to develop ways to better serve our
 customers and manage costs in all areas."
     Industrial gas sales increased 24 percent and operating income increased
 11 percent compared with the prior year.  Excluding natural gas and currency
 effects, industrial gas sales were up 14 percent.  Sales to the electronics
 market, including premier specialty gases and high purity specialty chemicals,
 grew by more than 50 percent, significantly driving profitability.  CPI
 continued to perform well despite higher natural gas costs early in the
 quarter, which impacted demand.  In Asia, strength in electronics and better
 plant loading increased profitability.  Adjusted for currency effects, sales
 of bulk and packaged gases, particularly to the medical gases market, led to
 solid European results.  Exceptionally high energy and raw material costs and
 a slower economic environment led to lower operating results for North
 American gases.
     The worldwide gases operating margin of 17.6 percent was affected by
 higher natural gas prices.  Adjusted for the pass-through effects of natural
 gas on revenues, the margin was approximately 19.6 percent?equal to last
 year's margin.
     Chemicals' sales declined three percent compared with last year, excluding
 the polyvinyl alcohol business divestiture.  The chemicals business was
 severely affected by lower volumes, higher natural gas costs and lower margins
 as price increases continued to lag raw material cost increases.  As a result,
 operating income fell by more than 50 percent.
     Commenting on the outlook for Air Products' chemicals business, Mr. Jones
 noted the company anticipates lower raw material costs in the second half of
 its fiscal year.  "We also expect volumes to recover on normal seasonality.
 While the economy may temper the pace of recovery, we don't expect the
 combination of factors that drove Chemicals' disappointing results this
 quarter to continue."
     Regarding the company's gases and equipment businesses, Mr. Jones said,
 "Thanks to our leadership positions in the higher growth electronics and CPI
 markets, and our #2 position in the European healthcare market, weaker
 economic conditions had less impact on our gases business.  Additionally, in
 many cases we can recover increased natural gas and power costs.  These
 strengths more than offset weaker demand in our North American merchant and
 packaged gases businesses.  Based on continued strength in our key markets and
 regions, we expect gases will continue to perform.  We are also experiencing
 accelerated activity in our natural gas liquefaction or LNG equipment
 business, which will contribute to this year's bottom line results."
     Mr. Jones concluded, "Together, these factors lead us to anticipate our
 earnings per share from operations for fiscal 2001 will be in the range of
 $2.40 to $2.45."
 
     ***NOTE: The forward-looking statements contained in this release are
 based on current expectations regarding important risk factors.  Actual
 results may differ materially from those expressed.  Factors that might cause
 forward-looking statements to differ materially from actual results include,
 among other things, overall economic and business conditions; demand and
 timing of the placing of orders for the goods and services of Air Products;
 competitive factors in the industries in which it competes; whether prices of
 natural gas and other raw materials fall in the second half of fiscal 2001;
 the ability to recover increased energy and raw material costs from customers;
 the availability of utilities, particularly in California, to provide
 electrical power; changes in government regulation; success of implementing
 cost reduction programs; the timing, impact and other uncertainties of future
 acquisitions or divestitures; fluctuations in interest rates and foreign
 currencies; the impact of tax and other legislation and regulations in the
 jurisdictions in which Air Products and its affiliates operate; and the timing
 and rate at which tax credits can be utilized.
 
     Financial Table follows:
 
 
                        AIR PRODUCTS AND CHEMICALS, INC.
                 SUMMARY OF CONSOLIDATED FINANCIAL INFORMATION
                                  (Unaudited)
 
     (Millions of dollars, except per share)
                                Three Months Ended         Six Months Ended
                                     31 March                  31 March
                                 2001         2000       2001          2000
     Sales                   $1,498.3      $1,347.2    $2,939.6  $2,611.6
 
     Net Income:
       As reported              $94.6         $47.6      $230.2     $98.2
       Exclusive of special
        items                  $118.3(a)     $133.2(b)   $253.9(a) $254.4(c)
 
     Basic Earnings Per Share:
       As reported                $.44          $.22       $1.07      $.46
       Exclusive of special
        items                    $ .55          $.62       $1.18     $1.19
 
     Diluted Earnings Per Share:
       As reported                $.43          $.22       $1.05      $.46
       Exclusive of special
        items                     $.54(a)       $.62(b)    $1.16(a)  $1.18(c)
 
     Operating Return on
      Net Assets                 11.3%         10.1%
 
     Capital Expenditures      $329.3        $604.0
 
     Depreciation              $143.3        $144.6      $291.7    $276.3
 
     (a) Excludes an after-tax charge of $20.0 million, or $.09 per share, for
 a global cost reduction plan and an after-tax charge of $3.7 million, or $.02
 per share, for costs related to a litigation settlement.
     (b) Excludes an after-tax charge of $84.1 million, or $.39 per share, for
 costs related to the BOC transaction, an after-tax charge of $5.5 million, or
 $.03 per share, for a global cost reduction plan, and an after-tax gain of
 $4.0 million, or $.02 per share, on the sale of packaged gas facilities.
     (c) Excludes an after-tax charge of $154.7 million, or $.72 per share, for
 costs related to the BOC transaction, an after-tax charge of $5.5 million, or
 $.03 per share, for a global cost reduction plan, and an after-tax gain of
 $4.0 million, or $.02 per share, on the sale of packaged gas facilities.  The
 costs related to the BOC transaction consist primarily of charges recorded on
 purchased option and forward exchange contracts entered into to hedge the
 currency exposure of the transaction.
 
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SOURCE Air Products and Chemicals, Inc.
    LEHIGH VALLEY, Pa., April 23 /PRNewswire Interactive News Release/ -- Air
 Products and Chemicals, Inc. (NYSE:   APD) today reported net income from
 operations of $118 million, or diluted operating earnings per share of
 54 cents for the March quarter.  Excluding disclosed special items in both
 years, diluted operating earnings per share declined 13 percent compared with
 prior year earnings of 62 cents per share.  Net income from operations
 declined 11 percent compared with prior year earnings of $133 million,
 primarily due to higher natural gas prices and lower volumes in the chemicals
 business.
     As reported net income for the March 2001 quarter was $95 million, or
 43 cents on a diluted earnings per share basis.  Prior year net income as
 reported was $48 million, or 22 cents per share.  The following discussion
 excludes special items.
     Revenues of $1.5 billion increased 11 percent compared with prior year
 revenues.  Industrial gas sales were particularly strong in global markets
 such as electronics and the chemicals and processing industries (CPI) and in
 Asia.
     Commenting on the quarter, Air Products Chairman and Chief Executive
 Officer John P. Jones said, "As expected, this quarter's earnings were
 affected by the weaker economy and higher energy and raw material prices,
 which hit our chemicals business particularly hard.  In the face of these
 short-term challenges, our strategies continue to generate growth, and our
 long-term fundamentals remain positive.  The entire Air Products team remains
 focused on execution.  We continue to develop ways to better serve our
 customers and manage costs in all areas."
     Industrial gas sales increased 24 percent and operating income increased
 11 percent compared with the prior year.  Excluding natural gas and currency
 effects, industrial gas sales were up 14 percent.  Sales to the electronics
 market, including premier specialty gases and high purity specialty chemicals,
 grew by more than 50 percent, significantly driving profitability.  CPI
 continued to perform well despite higher natural gas costs early in the
 quarter, which impacted demand.  In Asia, strength in electronics and better
 plant loading increased profitability.  Adjusted for currency effects, sales
 of bulk and packaged gases, particularly to the medical gases market, led to
 solid European results.  Exceptionally high energy and raw material costs and
 a slower economic environment led to lower operating results for North
 American gases.
     The worldwide gases operating margin of 17.6 percent was affected by
 higher natural gas prices.  Adjusted for the pass-through effects of natural
 gas on revenues, the margin was approximately 19.6 percent?equal to last
 year's margin.
     Chemicals' sales declined three percent compared with last year, excluding
 the polyvinyl alcohol business divestiture.  The chemicals business was
 severely affected by lower volumes, higher natural gas costs and lower margins
 as price increases continued to lag raw material cost increases.  As a result,
 operating income fell by more than 50 percent.
     Commenting on the outlook for Air Products' chemicals business, Mr. Jones
 noted the company anticipates lower raw material costs in the second half of
 its fiscal year.  "We also expect volumes to recover on normal seasonality.
 While the economy may temper the pace of recovery, we don't expect the
 combination of factors that drove Chemicals' disappointing results this
 quarter to continue."
     Regarding the company's gases and equipment businesses, Mr. Jones said,
 "Thanks to our leadership positions in the higher growth electronics and CPI
 markets, and our #2 position in the European healthcare market, weaker
 economic conditions had less impact on our gases business.  Additionally, in
 many cases we can recover increased natural gas and power costs.  These
 strengths more than offset weaker demand in our North American merchant and
 packaged gases businesses.  Based on continued strength in our key markets and
 regions, we expect gases will continue to perform.  We are also experiencing
 accelerated activity in our natural gas liquefaction or LNG equipment
 business, which will contribute to this year's bottom line results."
     Mr. Jones concluded, "Together, these factors lead us to anticipate our
 earnings per share from operations for fiscal 2001 will be in the range of
 $2.40 to $2.45."
 
     ***NOTE: The forward-looking statements contained in this release are
 based on current expectations regarding important risk factors.  Actual
 results may differ materially from those expressed.  Factors that might cause
 forward-looking statements to differ materially from actual results include,
 among other things, overall economic and business conditions; demand and
 timing of the placing of orders for the goods and services of Air Products;
 competitive factors in the industries in which it competes; whether prices of
 natural gas and other raw materials fall in the second half of fiscal 2001;
 the ability to recover increased energy and raw material costs from customers;
 the availability of utilities, particularly in California, to provide
 electrical power; changes in government regulation; success of implementing
 cost reduction programs; the timing, impact and other uncertainties of future
 acquisitions or divestitures; fluctuations in interest rates and foreign
 currencies; the impact of tax and other legislation and regulations in the
 jurisdictions in which Air Products and its affiliates operate; and the timing
 and rate at which tax credits can be utilized.
 
     Financial Table follows:
 
 
                        AIR PRODUCTS AND CHEMICALS, INC.
                 SUMMARY OF CONSOLIDATED FINANCIAL INFORMATION
                                  (Unaudited)
 
     (Millions of dollars, except per share)
                                Three Months Ended         Six Months Ended
                                     31 March                  31 March
                                 2001         2000       2001          2000
     Sales                   $1,498.3      $1,347.2    $2,939.6  $2,611.6
 
     Net Income:
       As reported              $94.6         $47.6      $230.2     $98.2
       Exclusive of special
        items                  $118.3(a)     $133.2(b)   $253.9(a) $254.4(c)
 
     Basic Earnings Per Share:
       As reported                $.44          $.22       $1.07      $.46
       Exclusive of special
        items                    $ .55          $.62       $1.18     $1.19
 
     Diluted Earnings Per Share:
       As reported                $.43          $.22       $1.05      $.46
       Exclusive of special
        items                     $.54(a)       $.62(b)    $1.16(a)  $1.18(c)
 
     Operating Return on
      Net Assets                 11.3%         10.1%
 
     Capital Expenditures      $329.3        $604.0
 
     Depreciation              $143.3        $144.6      $291.7    $276.3
 
     (a) Excludes an after-tax charge of $20.0 million, or $.09 per share, for
 a global cost reduction plan and an after-tax charge of $3.7 million, or $.02
 per share, for costs related to a litigation settlement.
     (b) Excludes an after-tax charge of $84.1 million, or $.39 per share, for
 costs related to the BOC transaction, an after-tax charge of $5.5 million, or
 $.03 per share, for a global cost reduction plan, and an after-tax gain of
 $4.0 million, or $.02 per share, on the sale of packaged gas facilities.
     (c) Excludes an after-tax charge of $154.7 million, or $.72 per share, for
 costs related to the BOC transaction, an after-tax charge of $5.5 million, or
 $.03 per share, for a global cost reduction plan, and an after-tax gain of
 $4.0 million, or $.02 per share, on the sale of packaged gas facilities.  The
 costs related to the BOC transaction consist primarily of charges recorded on
 purchased option and forward exchange contracts entered into to hedge the
 currency exposure of the transaction.
 
                      MAKE YOUR OPINION COUNT - Click Here
                http://tbutton.prnewswire.com/prn/11690X13214985
 
 SOURCE  Air Products and Chemicals, Inc.