Currency Devaluation Hurt Praxair’s Asia Segment Revenues Marginally in 3Q16
Praxair’s Asia segment
Praxair’s (PX) Asia segment reported revenues of $391 million in 3Q16, as compared to $395 million in 3Q15, which implies a 1.0% fall on a YoY (year-over-year) basis. The Asia segment represented ~14.4% of Praxair’s total revenues in 3Q16.
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Praxair’s Asia segment reported an operating profit of $68 million in 3Q16, as compared to $77 million in 3Q15, implying an 11.7% YoY fall. The segment’s operating profit margin fell 210 basis points YoY.
The weaker Chinese yuan and Indian rupee against the US dollar dragged the Asia segment’s revenues down by 2%. A new plant in China to serve the chemical customers improved the segment’s sales volumes and had a 2% positive impact on segment’s revenue, while pass-through costs boosted revenues by 1%. From an end market perspective, chemicals and metals reflected strong performances.
The Asia segment’s fall in operating profit margin was primarily due to lower volumes and pricing. Cost reduction initiatives partially offset the fall in volumes and pricing.
Notably, investors can indirectly hold Praxair by investing in the iShares Global Materials ETF (MXI), which had 2.0% of its portfolio in Praxair on October 28, 2016. The other top holdings of the fund include Dow Chemical (DOW), DuPont (DD), and BHP Billiton (BHP), which had weights of 3.8%, 3.8%, and 3.5%, respectively, on October 28, 2016.
In the next part, we’ll analyze the performance of Praxair’s Surface Technologies segment in 3Q16.