Specialty chemical company Air Products & Chemicals Inc. (APD) announced that it has opened an industrial gas producing plant with a capacity of 84 tons per day (tpd) in Puerto Varas, Chile. The plant will primarily produce liquid oxygen, nitrogen and argon and will be operated through Indura, a South American joint venture where Air Products holds a majority stake.
The facility will include a cylinder filling system. It will serve the local industry including the burgeoning aquaculture market and cater to metalworking, health and food industries.
The favorable location of the new facility in Puerto Varas, which is more than 1,000 miles south of Santiago, makes it the world's southernmost industrial gas plant serving the merchant market.
In July, Air Products acquired a majority stake in Chilean industrial gas company, Indura to bolster its presence in Latin America. Santiago-based Indura is the largest independent industrial gas company in Latin America with annual sales of $478 million. The entity, whose offerings include liquid bulk, small on-sites and packaged gases, has more than 20 production sites and over 100 retail outlets across the continent.
Air Products is the world’s leading supplier of hydrogen for processing cleaner burning transportation fuels and hydrogen infrastructure and fueling technology. The company currently fuels over 1,000 pieces of material handling equipment on a daily basis in the U.S. The company also holds a leadership position in liquefied natural gas technology and equipments.
The company reported adjusted (excluding one-time items) earnings from continued operations of $1.41 a share for the third quarter of 2012, in line with the Zacks Consensus Estimate. Consolidated net income surged 48% year over year to $484.5 million or $2.26 a share compared with $326.5 million or $1.50 a year ago. The increase in profits was attributable to lower costs and one-time gains, which more than offset the impact of lower sales.
Revenues dipped 5% year over year to $2,340.1 million, missing the Zacks Consensus Estimate of $2,455 million. Challenging conditions in Europe and Asia as well as unfavorable currency weighed on the company’s top line in the quarter.
Air Products’ healthy project backlog and solid bidding activity strongly positions it to achieve its long-term growth target. Given its leading position in the gases business, the company is well positioned to capitalize on the cyclical recovery in its core industrial end markets. Further, new business deals are expected to boost profits in 2012. However, soaring energy and raw material costs are likely to hamper margins.
Air Products, which competes with Praxair Inc. (PX), has a short-term Zacks #2 Rank (Buy). Currently, we have a long-term Neutral recommendation on the stock.
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