In a bid to enhance the supply of Carbon Monoxide (CO), specialty chemical company Air Products & Chemicals Inc. (APD - Free Report) signed an agreement with world’s leading chemical company BASF for expanding its Syngas Separation Unit (SSU) in Geismar, Louisiana. The increased CO production will serve BASF’s upcoming large-scale formic acid plant at the Geismar Verbund site.
The expansion of the Syngas facility will enable Air Products to produce more hydrogen for refinery and petrochemical customers along its vast Gulf Coast hydrogen pipeline network system. The expanded facility will also help in filling CO from the existing Geismar transfill facility. It is expected to come online in the second quarter of 2014.
Air Products is the world’s leading supplier of hydrogen for processing cleaner burning transportation fuels and hydrogen infrastructure and fueling technology. The company currently fuels over 1,000 pieces of material handling equipment on a daily basis in the U.S. The company is a leading supplier in liquefied natural gas technology and equipments industry.
The company reported adjusted (excluding one-time items) earnings from continued operations of $1.41 a share for the third quarter of 2012, 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, which more than offset the impact of lower sales.
Revenues dipped 5% year over year to $2,340.1 million in the quarter, 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 - Free Report) , currently retains a Zacks #4 Rank, which translates into a short-term (1 to 3 months) Sell rating. We have a long-term (more than 6 months) Neutral recommendation on the stock.