April 30(Reuters) - Industrial gas manufacturer Air Products and Chemicals beat profit estimates for the quarter on Tuesday as higher margins offset lower sales.
It reported an adjusted profit of $2.85 per share for the second quarter, compared with the average analyst's estimate of $2.69 per share.
WHY IT'S IMPORTANT
Chemical companies experienced headwinds globally in 2023 due to softer demand in key markets like Europe and Asia where post-pandemic economic recovery had been sluggish.
In 2024, lower cost of feedstock such as natural gas , which fell 30% in the January-March period, along with some rebound in demand helped chemical companies such as Dow and LyondellBasell top profit estimates.
CONTEXT
Overall manufacturing output has been picking up, increasing in the U.S. in February and March, yet industrial profits fell in China in March and slowed gains for the quarter.
Additionally, manufacturing PMI fell to a three-month low in March in the Euro zone.
BY THE NUMBERS
Air Products reported sales of $2.98 billion for the quarter, as compared with the estimates of $3.05 billion per LSEG data.
All of the company's geographical segments reported lower sales, with Europe seeing the biggest drop of 11% from the same quarter in the previous year.
However, operating income rose in the Americas by 15% due to higher volumes and pricing, and 16% in Europe on lower energy cost pass-through.
Meanwhile, in Asia, a weaker renminbi and lower volumes during the Lunar New Year in China dropped operating income by 13%.
Air Products, however, maintained its full-year adjusted earnings forecast to range between $12.20 and $12.50 per share, and estimated third-quarter adjusted earnings to be between $3.00 to $3.05.
(Reporting by Seher Dareen in Bengaluru; Editing by Vijay Kishore)
((Seher.Dareen@thomsonreuters.com;))
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