Industrial gas supplier, Praxair Inc's (PX) German subsidiary, Praxair Deutschland, recently commenced operation at a new air separation plant with a daily capacity of 1,800 tons. The plant is located at the company's Hurth complex in Germany and more than doubles the company’s production capacity.
The capacity expansion positions Praxair well to meet the ever growing demand for gases in the region, while the new energy- efficient plant reduces production cost.
Earlier in June, the company decided to enhance its hydrogen capacity in Texas and Louisiana and announced expansion of its Mississippi River corridor hydrogen pipeline system.
We believe Praxair's expansionary efforts will be profitable for the company in the years ahead and enable it to achieve its long-term goals. Annual organic sales growth target is set at 8%-12%, with emerging markets, including South America, Asia, and Mexico, accounting for an estimated target of 45% of total sales by 2015.
Globally, demand for industrial gases is on the rise with the growth in their application areas. Hydrogen for refining; oxygen for healthcare; and nitrogen and carbon dioxide for oil and gas production are being increasingly used.
Praxair is slated to release its second quarter financial results on July 27, 2011. Zacks Consensus Estimate for the second quarter is $1.37, representing a year- over-year increase of 15.44%. Estimate for the fiscal year 2011 and 2012 is $5.47 and $6.26, respectively.
Praxair faces stiff competition from Air Products and Chemicals Inc.(APD) and Airgas Inc. (ARG). We currently maintain a Neutral recommendation on Praxair.
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