Industrial gas supplier, Praxair Inc. (PX) recently entered into its third major contract in Russia, thereby strengthening its foothold in the region.
The company’s Russian subsidiary, Praxair Rus signed a 15 year-agreement with Guardian Industries to supply nitrogen and hydrogen to the latter’s new float glass facility in Rostov. Praxair will set up a new air separation unit and a hydrogen plant at its client’s site and expects the operation to begin by the third quarter of 2012.
The company’s first two major Russian projects were signed in October 2010 and January 2011. The earlier contract to supply atmospheric gases was signed with Plastkard, a division of the Nikochem Group and Russia’s largest producer of polyvinyl chloride. Praxair’s second contract was with NTMK, a division of the EVRAZ Group, to supply oxygen, nitrogen and argon.
It is evident from the present scenario that the growth prospects of industrial gas producers are very bright going forward, with demand for gases expected to increase manifold due to their wide application areas. Hydrogen for refining; oxygen for healthcare; and nitrogen and carbon dioxide for oil and gas production are being increasingly used.
Praxair aims to achieve annual organic sales growth in the range of 8%-12%, with emerging markets, including South America, Asia, and Mexico, accounting for an estimated target of 45% of total sales by 2015.
The current Zacks Consensus Estimate for the third quarter is $1.39, representing a year-over-year increase of 14.88%. Estimates for the fiscal years 2011 and 2012 are $5.48 and $6.22, reflecting annual growth of 15.53% and 13.66%, respectively.
The company faces stiff competition from its rivals like Air Products and Chemicals Inc.(APD) and Airgas Inc. (ARG). We currently maintain a Neutral recommendation on Praxair.
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