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Air Products and Chemicals Sees Growth across the Board in 2Q18

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Air Products and Chemicals revenue in 2Q18

Air Products and Chemicals’ (APD) revenue rose 9.0% YoY (year-over-year) to $2.16 billion in fiscal 2Q18, missing analysts’ estimate of $2.2 billion. In 2Q17, APD’s revenue stood at $1.98 billion.

APD’s revenue growth was driven by volumes, which grew 4%, boosted by new order wins and the execution of backlogs. Price increases boosted revenue by 1%, but were offset by energy cost pass-through. Continued weakness in the US dollar boosted APD’s revenue by 5%. All of APD’s reporting segments reported revenue growth, led by the EMEA (Europe, the Middle East, and Asia) and Americas. We’ll look at each segment in detail in the next few parts.

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Outlook

APD’s revenue is set to continue its growth, driven by new orders building its backlog—the execution of the backlog on time could drive growth. APD has a couple of backlogs scheduled to be completed by fiscal 3Q18. Also, APD’s and Lu’An’s joint venture is expected to start up in phases by 3Q18. Foreign currency exchange may continue to support APD’s revenue growth.

Management comments

Air Products and Chemicals CEO Seifi Ghasemi said, “Our team’s performance continues to have us operating from a position of great strength. Air Products people around the world are working hard, every day, to drive our safety, productivity and operational performance higher. In addition, our very strong balance sheet and cash flow position mean we have the capability to invest at least $13 billion over the next five years in many growth opportunities we see, including acquisitions, asset buybacks and large projects. Our absolute focus on these two areas — delivering operational excellence and strategically deploying capital for growth — are our playbook for continuing to create value for our customers and shareholders.”

Investors seeking indirect exposure to APD could consider the iShares US Basic Materials ETF (IYM), which invests 5.4% of its portfolio in Air Products and Chemicals. The fund’s other holdings include DowDuPont (DWDP), Monsanto (MON), and Praxair (PX) with weights of 22.4%, 8.2%, and 6.7%, respectively (as of April 26).

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