QUOTE AND NEWS
Jutia Group  1 hr ago  Comment 
[PR Newswire] - LEHIGH VALLEY, Pa., Sept. 16, 2014 /PRNewswire/ -- Air Products (APD), the global leader in liquefied natural gas (LNG) technology and equipment, announced today an agreement to provide two sets of its proprietary LNG technology,...
SeekingAlpha  8 hrs ago  Comment 
By Mitu Anand: Industrial gases company Air Products And Chemicals (NYSE:APD) looks like a smart investment if we dig deeper into its prospects and fundamentals. Thus, it is not surprising to see that the stock has gained almost 14% in 2014,...
Jutia Group  Sep 15  Comment 
[PR Newswire] - LEHIGH VALLEY, Pa., Sept. 15, 2014 /PRNewswire/ -- Effective October 1, 2014, or as contracts permit, Air Products (NYSE: APD) will increase product pricing and monthly service charges for merchant customers ... Read more on this. ...
Market Intelligence Center  Sep 8  Comment 
The patented option-trade picking algorithms that power MarketIntelligenceCenter.com's Artifical Intelligence Center found a trading opportunity with Air Products and Chemicals Inc. (APD) that should provide a 2.98% return in just 103 days. Sell...
StreetInsider.com  Aug 25  Comment 
Visit StreetInsider.com at http://www.streetinsider.com/Corporate+News/Air+Products+%26+Chemicals+%28APD%29+Enters+Cryogenic+Machining+Tech+Licensing+Agreement+with+ARS/9780241.html for the full story.
SeekingAlpha  Aug 14  Comment 
By Willow Street Investments: Introduction Recently, we wrote more detailed articles on Air Products and Chemicals (NYSE:APD) and Eli Lilly (NYSE:LLY). However, given the importance we believe substantial insider purchases should have, we are...
SeekingAlpha  Aug 12  Comment 
By Northport Investments: Air Products and Chemicals (NYSE:APD) is a company that is most known to investors for their very long history of dividend increases. This global industrial gas producer has become far more exciting to investors in the...
Jutia Group  Aug 11  Comment 
[PR Newswire] - LEHIGH VALLEY, Pa., Aug. 11, 2014 /PRNewswire/ -- Air Products (NYSE: APD) today announced that, effective September 1, 2014, or as contracts allow, it will increase prices globally by up to 20 cents per ... Read more on this. Air...
Forbes  Aug 4  Comment 
As the saying goes, there are many possible reasons for an insider to sell a stock, but only one reason to buy -- they expect to make money.  So let's look at two noteworthy recent insider buys.
Market Intelligence Center  Aug 1  Comment 
After Thursday’s trading in Air Products and Chemicals Inc. (APD) MarketIntelligenceCenter.com's option trade-picking algorithms uncovered a trade that offers a 2.40% or 17.54% (for comparison purposes only), while providing 3.79% downside...




 
TOP CONTRIBUTORS

Air Products and Chemicals sells gases such as hydrogen, helium, nitrogen, and oxygen to industrial manufacturers and commercial end-users of industrial and lab-purity gas.

Gases are vital inputs to many manufacturing processes, and APD is one of the largest global bulk gas sellers. For large customers, APD will put one of its own plants next to the customers' factory and supply gas directly via pipeline.

Business Overview

Business & Financial Metrics[1]

In 2009, APD generated $631.3 million in net income on $8.26 billion in total revenues. This represents a 30.6% decrease in net income on a 20.7% decrease in total revenues from 2008, when the company earned $909.7 million on revenues of $10.41 billion.

Business Segments

Merchant Gases ($3.61 billion, or 44% of total revenues)[2]

This segment industrial and lab purity species of gases such as oxygen, nitro, and hydrogen. This segment chiefly supplies the metals, glass, chemical processing, manufacturing, and energy industries. The distinction between this segment and the Tonnage Gases segment is chiefly one of how the product is delivered. Volume in Merchant gases is lower, and often delivered by tanker or tube trailer, or smaller containers.[3]

APD's old "Healthcare" segment, which sells home-based medical treatment, including chemical therapy, beds, and wheelchairs, is now a part of the "Merchant Gases" segment.

Tonnage Gases ($2.57 billion, or 31% of total revenues)[4]

In this segment, gases are supplied in very large quantities, and Air Products often places its plants adjacent to its customers, delivering gas via pipeline, and thus saving on transportation costs. This arrangement leads to reliable supply of gas as well as significant discounting of costs for the client, and often plants are designed with contractual arrangements in mind ensuring a steady relationship between APD and its client.[5]

Electronics and Performance Materials ($1.58 billion, or 19% of total revenues)[6]

This segment specializes in delivery of products relevant to the electronics industry, for the manufacture of silicon, semiconductors, displays, and photovoltaic devices. APD also has a chemical materials business that also sells related products to clients in this segment. [7]

Equipment and Energy ($489.8 million, or 6% of total revenues)[8]

This segment designs and sells equipment for energy production, and also partially owns and operates several small energy plants around the world.

Key Trends & Forces

Significant Manufacturing Exposure to Electronics and Energy

APD's gases are inputs to many chemical and energy processes necessary for the production of energy and the manufacture of electronic devices. In addition, APD is the largest mover of hydrogen gas worldwide[9], which offers tremendous upside in any potential future hydrogen-based energy economy - such as one in which cars are powered by hydrogen fuel cells instead of gasoline.[10]

On the other hand, this exposure can be a double-edged sword. Significant economic contraction would impact consumer consumption, which will reduce consumer demand for goods and energy. Consumer demand is the lifeblood of manufacturing, and even more so for high-risk industries like electronics, where goods are typically consumer wants, rather than consumer needs.

APD's business is subject to legislation and regulation

Although the majority of APD's gases are environmentally innocuous, many of its customers use industrial gases in ways that are facing scrutiny. In addition, regulation adds to administrative costs to APD. For example, the European Union now requires volume producers of chemicals to register their chemicals and all their uses with the European Chemicals Agency.[11] This has both positive and negative effects for APD, as industrial gases can be used to improve energy efficiency as well as environmental performance, but demand for gases will decrease if regulation makes client businesses less profitable.[12]

Increasing energy costs pose a risk to APD's business, as energy is a significant input to its operations

Cost of electricity is the most significant component in cost of goods sold in the gases segments, and significant amounts of energy are required in any of APD's plants.[13] If prices were to substantially rise, APD will either be forced to pass-through costs to clients, or if it is not able to do so, take a hit to its margins.

Historically, this complicated relationship with energy was evidenced during the 1970s energy crisis. Increasing petrochemical fuel costs lowered revenues in that segment, but increased popularity of oxygen as a fuel. In addition, the higher input costs were offset by higher demand for other gases to create cheaper energy sources, such as liquified natural gas.[14]

Competitors

Global competitors

These 3 global suppliers operate on similar platforms to Air Products and Chemicals. Firms compete on a variety of factors, including price, performance or specifications, continuity of supply, and customer service.

Regional (domestic)

Since another large component of cost of goods sold is transportation, regional players can compete effectively against APD when they have on-site or cheaper delivery options.

References

  1. APD 2009 10-K pg. 43  
  2. APD 2009 10-K pg. 24  
  3. Air Products and Chemicals. "2007 Financial Review". pg.14
  4. APD 2009 10-K pg. 25  
  5. Morningstar: "APD, Air Products and Chemicals" July 31, 2007
  6. APD 2009 10-K pg. 26  
  7. Air Products and Chemicals. "2007 Financial Review". pg.14
  8. APD 2009 10-K pg. 7  
  9. Air Products and Chemicals, 2007 Financial Review "Tonnage Gases."
  10. Seeking Alpha. "Air Products, Fuel Cell Energy building High Efficiency Hydrogen Power Plant". March 23, 2007
  11. Air Products and Chemicals "REACH"
  12. APD FY 2008 Q1 Call transcript, Seeking Alpha.
  13. Chemical Market Reporter "Energy costs drive Air Products" October 3-9, 2005
  14. Answers.com "Air Products & Chemicals"
Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki