Air Products and Chemicals’ (APD) Industrial Gases–Asia segment accounted for 25.9% of APD’s total revenue in fiscal 2Q18, narrowing by 3.2 percentage points YoY (year-over-year) from 22.7%. The segment’s revenue rose 27.9% YoY to $557.6 million from $435.9 million.
The segment’s revenue growth was primarily driven by higher volumes, foreign currency, and higher prices. New client wins in the region boosted the segment’s volumes, which rose 17%. Price increases in China improved overall pricing, resulting in 3% price growth. Finally, continued US dollar weakness boosted the segment’s revenue by 8%.
Operating income and margin
In 2Q18, the Industrial Gases–Asia segment’s operating income rose 32.4% YoY to $148.7 million from $112.3 million.
Revenue growth and foreign currency exchange boosted the segment’s operating income and margin. The segment’s operating margin expanded 90 basis points YoY to 26.7% from 25.8% in fiscal 2Q17.
Strong growth in China is expected, and backlogs are scheduled to be completed in fiscal 3Q18. Also, APD’s and Lu’An’s joint venture is expected to start up in phases in 3Q18.
Investors can get indirect exposure to Air Products and Chemicals through the Vanguard Materials ETF (VAW), which has invested 4.0% of its portfolio in Air Products and Chemicals. The fund’s other holdings include DowDuPont (DWDP), Monsanto (MON), and Praxair (PX), which had weights of 16.6%, 6.1%, and 4.9%, respectively, as of April 26.