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Air Products Closes European Carbon Dioxide Business Buyout

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Air Products and Chemicals, Inc. (APD - Free Report) recently completed the purchase of ACP Europe SA, the biggest independent carbon dioxide business in Continental Europe. Financial terms of the deal were not divulged.

ACP caters to customers across a bevy of applications including beverage, chemical, food and horticulture. It has four liquid carbon dioxide production plants and two dry ice production locations in Europe.

The buyout will enable Air Products to serve existing customers better and tap new industrial gas growth opportunities. Customers will gain from a broader liquid carbon dioxide supply position across additional regions of Europe as well as greater density throughout Continental Europe. Air Products noted that the acquisition gives it a strong platform to pursue further industrial gas growth in Europe and deliver value to customers.

Air Products saw its profits from continuing operations jump more than two-fold year over year to $347.5 million or $1.57 per share in first-quarter fiscal 2019 (ended Dec 31, 2018).

Adjusted earnings for the quarter rose 4% year over year to $1.86 per share, but trailed the Zacks Consensus Estimate of $1.87.

The company logged first-quarter revenues of $2,224 million, flat year over year as higher pricing and favorable energy pass-through were offset by lower volumes and unfavorable currency impact. Sales also missed the Zacks Consensus Estimate of $2,289 million.

Sales from the company’s Industrial Gases — Europe, Middle East, and Africa (“EMEA”) segment rose 2% year over year to $524 million driven by favorable energy pass-through and positive volumes and pricing, partly masked by unfavorable currency.

Air Products continues to expect adjusted earnings for fiscal 2019 to be in the range of $8.05 to $8.30 per share, reflecting a 10% increase at the midpoint year over year. The company expects adjusted earnings to be in the band of $1.80 to $1.90 per share for second-quarter fiscal 2019, up 8% at the midpoint year over year.

Air Products’ strategic investments in high-return projects, new business deals and acquisitions should drive its fiscal 2019 results. The Lu'An syngas project in China, which is now fully onstream, contributed to the results in the company’s Industrial Gases – Asia segment in the fiscal first quarter. The company expects the Lu'An project to contribute more than 25 cents per share to its earnings in fiscal 2019.

Air Products and Chemicals, Inc. Price and Consensus

Zacks Rank & Stocks to Consider

Air Products currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks worth considering in the basic materials space include Kirkland Lake Gold Ltd. (KL - Free Report) , Ingevity Corporation (NGVT - Free Report) and Israel Chemicals Ltd. (ICL - Free Report) .

Kirkland Lake Gold has an expected earnings growth rate of 8.8% for the current year and carries a Zacks Rank #1 (Strong Buy). Its shares have shot up around 113% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.

Ingevity has an expected earnings growth rate of 17.9% for the current year and carries a Zacks Rank #1. Its shares have rallied roughly 50% in the past year.

Israel Chemicals has an expected earnings growth rate of 10.8% for the current year and carries a Zacks Rank #2 (Buy). The company’s shares have rallied around 27% over the past year.  

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