Air Products Can’t Say When Delayed 2015 Targets Will Be Met
Air Products & Chemicals Inc. (APD), the world’s largest hydrogen producer, said it won’t be able to provide a new target for delayed 2015 financial targets until it can better forecast the economy.
Air Products needs “a clearer view of the economy” before it can reset the timetable for reaching its goals, which are unchanged, Chairman and Chief Executive Officer John McGlade told investors today at a meeting webcast from Houston. Air Products said on Oct. 19 it won’t reach an operating margin of 20 percent and returns on capital of 15 percent by 2015, targets established in June 2011.
“We are not going to sit here today and give you another set of timing,” McGlade said today.
McGlade said the company is restructuring its photovoltaics business and operations in Europe after last month posting quarterly earnings and forecasting fiscal 2013 profit that trailed analysts’ estimates. Operating profit in the three months through September fell to 15.7 percent of sales, from 17 percent in the preceding quarter and 16.3 percent a year earlier.
“Air Products’ inconsistent operating results over the last 18 months and the disappointing fiscal 2013 guidance and yet another round of restructuring actions have further reduced management credibility,” Don Carson, a New York-based analyst at Susquehanna Financial Group who rates the shares positive, said in a Nov. 6 note.
Praxair Inc. (PX), the biggest U.S. industrial-gases company, has improved its profit margin, undercutting Air Products’ argument that a weak economy is to blame for abandoning its goal, Carson said. Praxair, based in Danbury, Connecticut, widened its third-quarter operating margin to 22.5 percent from 21.7 percent a year earlier, according to data compiled by Bloomberg.
“We didn’t meet your expectations,” McGlade told investors. Cost reduction programs are taking effect and Air Products is working to get a better handle on uncertain national economies so the company won’t be “totally captive to the global economy,” he said.
Air Products said last month that Chief Financial Officer Paul Huck, 62, will retire Feb. 28 after 33 years with the company. Huck will be succeeded by Controller Scott Crocco, 48.
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