For the quarter the North American industrial gas giant reported GAAP EPS from continuing operations of $2.01, down 9%, including an estimated $0.35-$0.40 per share negative impact from the coronavirus pandemic.
GAAP net income of $457m was down 9%, primarily reflecting the negative impacts from coronavirus and a prior year gain on an exchange of equity affiliates, partially offset by pricing actions, LNG project execution, and a prior year charge for cost reduction actions.
Commenting on the results, Air Products’ Chairman, President and CEO Seifi Ghasemi said, “As the world continues to navigate challenging conditions related to COVID-19, I am very proud of the Air Products team who have demonstrated their true character and commitment in keeping our plants running and our customers supplied with essential products.”
“Meanwhile our onsite business—which represents more than half of our sales—remains stable, and we continued to execute on our growth strategy, announcing two new megaprojects in Saudi Arabia and Indonesia which together represent planned Air Products investment of approximately $5.7 billion.”
Results by business segment
Industrial Gases – Americas sales of $850m decreased 11% from the prior year. Due to 6% lower energy pass-through; 5% lower volumes, mainly due to lower merchant demand impacts from COVID-19; and 2% unfavourable currency, which were partially offset by 2% higher pricing. Operating income of $248m decreased 5%, primarily due to the lower volumes. Operating margin of 29.2% increased 180 basis points, with about a 150-basis point improvement due to lower energy cost pass-through. Adjusted EBITDA of $411m was flat. Adjusted EBITDA margin of 48.4% increased 550 basis points, with about a 250-basis point improvement due to lower energy cost pass-through.
Industrial Gases – EMEA sales of $430m decreased 13% from the prior year. This was due to 7% lower volumes, primarily due to lower merchant demand impacts from COVID-19; 6% lower energy pass-through; and 3% unfavourable currency, which were partially offset by 3% higher pricing. Operating income of $105m decreased 15%, primarily due to the lower volumes. Operating margin of 24.5% decreased 40 basis points, with about a 120-basis point improvement due to lower energy cost pass-through. Adjusted EBITDA of $170m decreased 11%, primarily due to the lower volumes. Adjusted EBITDA margin of 39.5% increased 110 basis points, with about a 200-basis point improvement due to lower energy pass-through.
Industrial Gases – Asia sales of $652m decreased 4%, driven in part by 3% unfavourable currency. Volumes decreased 3%, as COVID-19 impacts and planned maintenance outages were only partially offset by new plants that were brought onstream. Pricing increased 2%, with positive pricing across most major product lines. Operating income of $222m decreased 4%, and operating margin of 34% decreased 10 basis points. Adjusted EBITDA of $327m decreased 2%, and adjusted EBITDA margin of 50.1% increased 90 basis points.
Ghasemi added, “Significant uncertainty in the global economy remains, and the COVID-19 recovery is showing mixed results around the world. Despite these challenges, we have shown that with our stable business model, financial position, significant growth opportunities and the total commitment of our people, we can and will continue creating value for shareholders over the long term, growing our dividend and investing in world-scale, sustainability-focused projects.”