Air Products to Sell European Unit - Analyst Blog
January 10 2012 - 3:45AM
Zacks
Air Products &
Chemicals Inc.(APD), the US supplier of specialty gas
products, announced its plan to sell its Continental Europe
Homecare business to The Linde Groupe of Germany for 590 million
euros (approximately $750 million).
The Continental Europe Homecare
business provides oxygen therapy, sleep therapy, and infusions, and
operates in Germany, France, Spain, Portugal and Belgium. The
operations have a base of about 260,000 patients.
Air Products intends to sell off
its Europe Homecare business as it does not fit with its core gases
business. On the contrary, this acquisition will boost Linde’s
position in the structural growth market while making it one of the
market leaders in the European respiratory homecare business.
Air Products is also evaluating its
options for its home care business in the U.K., Ireland, Argentina,
and Brazil. The company will continue to operate these businesses
as part of its portfolio. In addition, Air Products will compete to
win new businesses while providing quality patient care.
Linde achieved sales of 1.1 billion
euros in the healthcare segment as a whole, in the 2010 financial
year. The company is the second largest supplier of medical gases
and related services in the world.
In late October 2011, Air Products
reported an increase in profit for the fourth quarter, primarily
reflecting revenue growth amid double-digit increases at three of
its four operational segments.
Air Products reported
fourth-quarter 2011 EPS of $1.51 versus $1.35 in the year-earlier
quarter, in line with the Zacks Consensus Estimate of $1.51. For
full-year 2011, the company reported an EPS of $5.73, up 14% year
over year, matching the Zacks Consensus Estimate of $5.73.
Net sales amounted to $2.6 billion
versus $2.4 billion in the prior-year quarter, in line with the
Zacks Consensus Estimate of $2.6 billion. The improved results were
mainly driven by growth in the emerging markets and strong
performance in its Tonnage Gases business. Despite a slowing global
economy in the second half of 2011, the company won several
projects and also witnessed double-digit sales and earnings
growth.
For fiscal 2011, sales increased
12% year over year to $10,082 million driven by a 9% volume
increase, which was in line with the Zacks Consensus Estimate.
Though the near-term economic
outlook looks bleak and has a lot of global economic and policy
uncertainties, Air Products remains confident of its large backlog
of projects backed by signed customer contracts while remaining
committed to achieve its 2015 goals for growth, margin, and return
on capital.
The company expects fiscal year
2012 EPS to be in the range of $5.90 to $6.30 per share,
representing year-over-year earnings growth of 3% to 10%. For the
first quarter of fiscal 2012, the company expects to earn $1.31 to
$1.39 per share.
The company also forecasts capital
spending in fiscal 2012 to be between $1.9 and $2.2 billion.
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.
Air Products, which faces stiff
competition from Praxair Inc. (PX), has a Zacks #2
Rank (Buy) on its stock for the short term. We currently
provide a long-term Neutral recommendation on the stock .
AIR PRODS & CHE (APD): Free Stock Analysis Report
PRAXAIR INC (PX): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
Air Products and Chemicals (NYSE:APD)
Historical Stock Chart
From May 2024 to Jun 2024
Air Products and Chemicals (NYSE:APD)
Historical Stock Chart
From Jun 2023 to Jun 2024