APD Air Products and Chemicals Inc

Effective July 1, 2011, Air Products & Chemicals Inc. (APD) will globally increase prices by 5%-10% for its range of epoxy curing agents, accelerators, adhesion promoters, diluents and specialty resins, and up to 25% on its range of Ancatherm hot melt adhesives and printing ink resins.

A few days back, Air Products also raised the prices for its products sold under the trade names Tomamine Surfactant, Tomadry Surfactant, Tomadyne Surfactant, Tomadol Surfactant, Nonidet Surfactant, Nonatell Surfactant and NEODOL Alcohol by $0.10 per pound. This price increase is effective from June 15, 2011.

For fiscal 2011, management seems confident and committed to improve operating performance driven by increased productivity along with growth in key markets to facilitate the company register strong results year over year.

Management expects double-digit growth in earnings and revenue, and improved return on capital while targeting a margin of 17%. The company has also raised its full-year earnings guidance range to $5.65 and $5.75 per share. The third-quarter EPS is projected in the range of $1.42 to $1.47 per share.

Based in Pennsylvania, Air Products benefits from a long-term take-or-pay contract, a consolidated industry structure, a diverse customer base and sustained pricing power. However, soaring energy and raw material costs pose a threat to margin expansion.

In order to compensate for escalating raw material costs, Air Products has been increasing the price for a range of chemicals it manufactures for industrial use. Air Products faces stiff competition from Praxair Inc. (PX) and The Linde Group.

We currently have a Zacks #2 Rank (short-term 'Buy' recommendation) on the stock.

 
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