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LEHIGH VALLEY, Pa. - Air Products (NYSE:APD), an industrial gases company currently trading at $309.39 with a market capitalization of $68.75 billion, announced today that it will record a pre-tax charge not exceeding $3.1 billion in its fiscal second quarter of 2025. According to InvestingPro data, 12 analysts have recently revised their earnings expectations downward for the upcoming period, suggesting careful monitoring of the company’s financial outlook is warranted. This charge is primarily due to asset write-downs and termination of contractual commitments as the company exits three major projects in the United States.
The decision, influenced by the company’s newly-elected Board of Directors and Chief Executive Officer, Eduardo Menezes, includes the termination of an agreement with World Energy for a Sustainable Aviation Fuel expansion project in Paramount, California. Additionally, plans for a green liquid hydrogen production facility in Massena, New York, and a carbon monoxide project in Texas have been canceled.
Air Products cited challenging commercial aspects, recent regulatory changes, and slower market development as reasons for these exits. The company emphasized that these actions are aimed at streamlining operations and focusing resources on projects that will deliver shareholder value.
Despite the sizable charge, Air Products has stated that the move will not affect its adjusted earnings per share for fiscal 2025. The company also noted that the estimated costs related to contract cancellations and project terminations are subject to refinement and may differ from the actual costs recorded in the second quarter.
The announcement also highlighted ongoing progress in other major projects, including the NEOM green hydrogen project in Saudi Arabia, which is nearing 80% completion, and the Louisiana Clean Energy Complex, slated for startup in 2028. Air Products is actively seeking equity partners to reduce capital outlay for the latter project.
With over 80 years of operation, Air Products has established itself as a leader in the industrial gases sector, focusing on energy, environmental, and emerging markets. The company reported sales of $12.1 billion in fiscal 2024 and maintains a strong market position with a P/E ratio of 17.94. Notably, InvestingPro analysis shows the company has maintained dividend payments for 55 consecutive years, demonstrating remarkable financial stability. The stock generally trades with low price volatility, making it potentially attractive for conservative investors.
The company reassured that it will continue to evaluate its project backlog but does not anticipate any additional significant cancellations going forward. More details will be provided during the fiscal second-quarter earnings release, and updates on major projects will be discussed in the next earnings call. For investors seeking deeper insights, InvestingPro offers comprehensive analysis including Fair Value estimates and detailed financial health metrics, with Air Products currently showing a GOOD overall financial health score of 2.53. The platform’s Pro Research Report provides extensive coverage of APD among 1,400+ top US stocks, helping investors make informed decisions through expert analysis and actionable intelligence.
This report is based on a press release statement.
In other recent news, Air Products & Chemicals Inc. reported first-quarter earnings per share of $2.86, slightly surpassing the analyst estimate of $2.85, but the revenue of $2.93 billion fell short of the expected $2.96 billion. The company provided guidance for the second quarter of fiscal 2025 with an adjusted EPS range of $2.75 to $2.85, which is below the consensus estimate of $3.07. This cautious outlook contributed to a downgrade by BMO Capital Markets from ’Outperform’ to ’Market Perform,’ with a lowered price target of $346. Similarly, JPMorgan downgraded the stock to ’Neutral’ and reduced the price target to $320, citing potential risks in earnings growth due to industrial gas price stabilization and currency effects.
Jefferies, however, raised its price target for Air Products to $417, maintaining a ’Buy’ rating, and anticipates a gradual unveiling of the company’s strategic plan under new management. In a move to enhance governance, Air Products updated its corporate bylaws to include the role of Vice Chairman and appointed Dennis H. Reilley to this position, alongside Wayne T. Smith as Chairman. These changes are part of broader efforts to strengthen the company’s leadership and governance framework. Investors continue to monitor these developments closely, as the company’s strategic decisions and financial performance remain pivotal in shaping its future trajectory.
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