Air Products reports sales decrease in Q4 2023 financial results

Pennsylvania-based Air Products has today (7^th Nov) reported its fiscal fourth quarter (Q4), noting sales of $3.2bn, an 11% decrease from the prior year.

Q4 did, however, see the industrial gas giant report GAAP EPS from continuing operations of $3.08, up 20% from the prior year. GAAP net income of $694m was up 17% and higher equity affiliates’ income, partially offset by higher costs due to higher pricing.

For the quarter, on a non-GAAP basis, adjusted EPS from continuing operations of $3.15 increased 11% over the prior year. Adjusted EBITDA of $1.3bn was up 10% due to higher pricing and higher equity affiliates’ income, partially offset by higher costs.

SeifiGhasemi, Chairman, President and CEO of Air Products, said the company continues to demonstrate stability and resilience, despite challenging economic conditions.

He added, “As we invest strategically for growth, we have also continued to increase the dividend, paying out approximately $1.5bn to our shareholders during the year.”

Americas sales of $1.4bn were down 12% versus the prior year, as 4% higher pricing and 3% higher volumes were more than offset by 19% lower energy cost pass-through.

Operating income of $398m increased 20% and adjusted EBITDA of $601m increased 17%, in each case due to higher pricing and higher volumes, partially offset by higher costs.

Operating margin of 29.4% increased 780 basis points and adjusted EBITDA margin of 44.5% increased 1,110 basis points. The operating margin and adjusted EBITDA margin improvements included positive impacts from lower energy cost pass-through of approximately 450 basis points and 750 basis points, respectively.

Asia sales of $802m decreased 7% over the prior year, as 2% higher pricing and 2% higher energy cost pass-through were more than offset by 7% lower volumes and 4% unfavourable currency.

Operating income of $197m decreased 25% and adjusted EBITDA of $318m decreased 15%, primarily due to unfavourable volume.

Operating margin of 24.6% decreased 600 basis points and adjusted EBITDA margin of 39.6% decreased 370 basis points.

Europe sales of $712m decreased 18% from the prior year, as 7% favourable currency and flat volumes were more than offset by 24% lower energy cost pass-through and one percent lower pricing.

Operating income of $168m increased 12% and adjusted EBITDA of $250m increased 15%, primarily driven by lower variable costs. Operating margin of 23.6% increased 620 basis points and adjusted EBITDA margin of 35.1% increased 1,000 basis points.

The operating margin and adjusted EBITDA margin improvements included positive impacts from lower energy cost pass-through of approximately 400 basis points and 600 basis points, respectively.

Middle East and India equity affiliates’ income of $91m increased 44% compared to the prior year, primarily due to the completion of the second phase of the Jazan project in January 2023.

Corporate and other sales of $290m increased 11% compared to the prior year, driven by higher LNG sale of equipment activity.

Outlook

Air Products expects full-year fiscal 2024 adjusted EPS guidanceof $12.80 to $13.10, up 13% at the midpoint over prior year adjusted EPS.

For the fiscal 2024 first quarter, Air Products’ adjusted EPS guidance is $2.90 to $3.05, up 13% at the midpoint over fiscal 2023 first quarter adjusted EPS.

Air Products expects capital expenditures of $5bn to $5.5bn for full-year fiscal 2024.