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How APD’s Industrial Gases–EMEA Segment Performed in Fiscal Q3

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Industrial Gases–EMEA

In the fiscal third quarter, Air Products and Chemicals’ (APD) Industrial Gases–EMEA[1. Europe, the Middle East, and Africa] segment’s total revenue contribution expanded 3.5 percentage points YoY (year-over-year) from 21.3% to 24.8%. This segment reported revenues of $561.1 million, implying YoY revenue growth of 24.2%. In the fiscal third quarter of 2017, the segment reported revenues of $415.7 million.

The segment’s revenues were driven by growth in its increased merchant business base and its new hydrogen plant in India. The segment’s volumes grew 12.0%, and the price increase of several gases in the region pushed its revenues up 3.0%. 

The energy and natural gas cost pass-through benefited the segment’s revenues by 2.0%, and the favorable impact of foreign currency enhanced its revenue growth by 7.0%.

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Operating income and margin

In the fiscal third quarter, the Industrial Gases–EMEA segment reported operating income of $118.8 million. This was a 23.5% increase compared to $96.2 million in the fiscal third quarter of 2017. 

The factors mentioned above have influenced the segment’s income growth. However, the rise in fuel costs resulted in a slight decline in the segment’s margin. The segment’s operating profit margin narrowed by ten basis points YoY to 21.2% from 21.3%.

Outlook

APD’s Industrial Gases–EMEA segment expects to benefit from the new hydrogen plants in India. However, the gain from favorable foreign currency impacts could narrow due to the strengthening of the US dollar.

Investors can indirectly hold APD through the PowerShares DWA Basic Materials Momentum Portfolio ETF (PYZ), which has 3.8% exposure to APD. The fund’s other holdings include Ashland (ASH), Chemours (CC), and FMC (FMC), which had portfolio weights of 4.1%, 4.0%, and 3.8%, respectively, on July 26.

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