Air Products APD has won a significant contract from Saudi Aramco – the state-owned oil company of Saudi Arabia – to construct, own and operate the world’s biggest industrial gas complex. The industrial gases giant said that it will hold a conference call on Apr 20 to discuss about the project.
Air Products, under a joint venture with Saudi Arabian company, ACWA Holding, will build and operate the facility which will supply 75,000 metric tons per day of oxygen and nitrogen to Saudi Aramco refinery in Jazan for 20 years.
Air Products will design and construct the industrial gas complex using its proprietary technology. Following its construction, Air Products will own 25% of the facility with ACWA Holding retaining the balance stake. Founded in 2002, ACWA Holding addresses Saudi Arabia's growing demand for water and electricity.
The contract underscores Saudi Aramco’s confidence on Air Products as a reliable supplier of the critical gases needed for the refinery being constructed in Jazan.
Air Products is gaining from a diverse customer base, cost-reduction measures and sustained pricing power. New business deals and strategic investments are expected to support results in fiscal 2015. The company also remains on track in delivering on its cost reduction programs, which should support its margins in fiscal 2015.
However, Air Products’ industrial gases business faces certain challenges in the Europe, Middle East and Africa (EMEA) region. Challenging conditions in Europe is expected to keep industrial gases volumes under pressure in the region. Air Products is also faced with unfavorable currency impact stemming from weakening of most currencies against the U.S. dollar.
Air Products, last month, reiterated its adjusted earnings from continuing operations guidance of $1.50-$1.55 per share for second-quarter fiscal 2015, and $6.35-$6.55 per share for fiscal 2015. The company will release its second-quarter results ahead of the bell on Apr 30.
Air Products is a Zacks Rank #3 (Hold).
Other companies in the chemical industry worth considering include Innospec Inc. IOSP, Stepan Company SCL and Cytec Industries Inc. CYT. While Innospec and Stepan sport a Zacks Rank #1 (Strong Buy), Cytec holds a Zacks Rank #2 (Buy).
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