Industrial gas giant Air Products (APD - Free Report) declared that its South American joint venture INDURA intends to construct a new plant in Antofagasta, Chile, and expand production capacity at its Graneros plant located south of Santiago. INDURA will be investing over $15 million for these initiatives.
Investments in these new endeavors attempt to meet the increasing demand for industrial gases in the northern and central regions of Chile, driven mostly by the mining, metal fabrication and food industries.
The new plant in Antofagasta is expected to produce oxygen, nitrogen and argon. Its construction follows the opening of a new facility in Puerto Varas, Chile, in 2012, that was built to support local industries, including the growing aquaculture market.
Chilean industrial gas company INDURA has annual sales of $478 million and its integrated gas and retail business comprise liquid bulk, small on-sites and packaged gases. Air Products acquired 67% stake in INDURA in Jul 2012. It has ushered in a substantial growth opportunity for Air Products.
Air Products’ second-quarter fiscal 2013 (ended Mar 31, 2013) earnings from continued operations was $1.37 a share, in line with the Zacks Consensus Estimate. Revenues rose 6% year over year to $2,484.2 million aided by acquisitions, but missed the Zacks Consensus Estimate of $2,585 million. Management cut its earnings guidance for fiscal 2013 citing challenging economic conditions.
Air Products benefits from a diverse customer base, sustained pricing power and cost-reduction measures. New business deals and strategic investments are expected to support results in fiscal 2013.
Air Products retains a short-term (1 to 3 months) Zacks Rank #4 (Sell).
Other companies in the chemical industry with favorable Zacks Rank are Shin-Etsu Chemical Co., Ltd. (SHECY - Free Report) , Celanese Corporation (CE - Free Report) and Methanex Corporation (MEOH - Free Report) . All of them hold a Zacks Rank #1 (Strong Buy).