Industrial gas giant Air Products & Chemicals Inc. (APD - Analyst Report) declared that it will raise the price of its products and monthly charges for North American merchant customers. The price hike will be effective Oct 1, 2013, or as per the contracts.
The price increase is expected to be up to 12% for liquid oxygen, liquid nitrogen, and liquid carbon dioxide. The price for liquid argon, liquid and bulk hydrogen, and bulk carbon monoxide is expected to rise by 20%. The pricing adjustments for liquid and bulk helium will be determined on a contract by contract basis. However, some price revisions may be kept out of these ranges depending on some specific situations.
The price hike was attributable to various supply and demand product imbalances, which resulted in higher costs and higher operating expenses such as employee labor and benefits, natural gas and energy, and maintenance.
Air Products, on Jul 23, logged third-quarter fiscal 2013 (ended Jun 30, 2013) earnings from continued operations of $1.36 a share. The results were at par with the Zacks Consensus Estimate, but dropped from the year-ago earnings of $1.66 (or $1.41 per share as adjusted).
Productivity and strong execution of plans, which offset the continued economic weakness, helped Air Products to deliver earnings within guidance. However, net income from continuing operations decreased 19% year over year to $287.8 million.
Revenues rose 9% year over year to $2,547.3 million, beating the Zacks Consensus Estimate of $2,543 million. Acquisitions and higher energy cost pass-through boosted sales. Underlying sales declined 2% due to Air Products’ previously announced decision to exit the Polyurethane Intermediates business.
Air Products’ healthy project backlog strongly positions it to achieve its long-term growth target. Given its leading position in the gas business, the company is well positioned to capitalize on the cyclical recovery in its core industrial end markets.
Air Products currently maintains a Zacks Rank #3 (Hold).
Other companies in the chemical industry having favorable Zacks Rank are Cytec Industries Inc. (CYT - Snapshot Report), Eastman Chemical Co. (EMN - Analyst Report) and Akzo Nobel NV (AKZOY - Snapshot Report). All of them retain a Zacks Rank #2 (Buy).