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In a bid to counter rising costs, specialty chemical company Air Products and Chemicals Inc. (APD - Analyst Report) is set to raise the price of its products and monthly service charges in North America, effective October 1, 2012.

The company will increase the price of liquid oxygen, liquid nitrogen, liquid and bulk hydrogen and liquid carbon dioxide by up to 10%. It plans to increase prices for liquid argon and bulk carbon monoxide by approximately 20%.

Air Products believes that the price hike will help offset the increase in operating costs as well as higher input costs. The company also intends to mitigate the rising costs by improving efficiency and maintaining reliable supply.

In July 2012, Air Products released its third-quarter results for fiscal 2012 ended June 30, 2012. The company reported adjusted (excluding one-time items) earnings from continued operations of $1.41 a share for the quarter, in line with the Zacks Consensus Estimate.

Consolidated net income, as reported, 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 profit 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 due to a stronger dollar weighed on the company’s top line in the quarter.

Air Products’ healthy project backlog and solid bidding activity strongly positions it to achieve 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 its profits in 2012. However, soaring energy and raw material costs pose a threat to its margin expansion.

Air Products, which competes with Praxair Inc. (PX - Analyst Report), has a short-term Zacks #3 Rank (Hold) currently and we have a long-term Neutral recommendation on its shares.

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