Specialty chemical company Air Products & Chemicals Inc. (APD - Analyst Report) announced that it has lent its industry-leading hydrogen fueling technology and infrastructure to Mercedes-Benz U.S. International, Inc. facility in Tuscaloosa, Alabama. The technology is expected to convert a significant portion of a lift truck fleet at the plant.
The 72 converted lifts at the plant have started using hydrogen-powered fuel cell, moving Mercedes vehicle parts for assembly after the employees returned to the from an annual week-long shutdown. Air Products' equipment and infrastructure includes an outdoor liquid hydrogen storage and compression system, as well as piping to multiple indoor fueling dispensers.
The material handling units at the plant are powered by Plug Power's (PLUG) GenDrive hydrogen fuel cell, which can be quickly refueled, without requiring to change, store, charge and maintain multiple lead acid batteries for each lift. Air Products also provides mobile fueling technology to Mercedes for initial fueling before placing the permanent equipment on stream,
The usage of hydrogen-powered forklifts and material handling equipment has a number of advantages. Hydrogen powered equipments need refueling once or twice daily, depending on the usage while the traditional battery-powered equipment requires battery replacement or recharging approximately every four to six hours. They provide consistent power strength and are free from any wear down compared to battery units, which wear down quickly when nearing change-out or recharge time.
Hydrogen-powered fuel cells are not affected by any temperature changes while operational in coolers, freezers or arid warehouse conditions, unlike battery-powered forklifts. They are also more environment friendly and do not involve lead-acid battery storage or disposal issues.
Air Products is the world’s leading supplier of hydrogen for processing cleaner burning transportation fuels and hydrogen infrastructure and fueling technology. The company is fueling over 1,000 pieces of material handling equipment on a daily basis in the U.S. The company also holds a leadership position in liquefied natural gas technology and equipments.
In July 2012, the company released its third quarter 2012 results. 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 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 profits 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 weighed on the company’s top line in the quarter.
Air Products’ healthy project backlog and solid bidding activity strongly positions it to achieve its 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 profits in 2012. However, soaring energy and raw material costs are likely to hamper margins.
Air Products, which competes with Praxair Inc. (PX - Analyst Report) , has a short-term Zacks #2 Rank (Buy). Currently, we have a long-term Neutral recommendation on the stock.