Surface Technologies in Q2 2018
Praxair’s (PX) Surface Technologies segment was its smallest revenue contributor in Q2 2018. Its contribution expanded 0.3 percentage points YoY (year-over-year) to 5.6% of the company’s overall revenue from 5.3%. In the second quarter, PX’s Surface Technologies revenue rose 13.9% YoY to $172 million from $151 million.
The segment’s revenue growth was driven primarily by higher volumes and prices, which boosted it by 10%. Foreign currency boosted it by 3%, and cost pass-through raised it by 1%. Volume growth was seen in all end markets, particularly in aviation.
Operating profit and margins
In Q2 2018, Praxair’s Surface Technologies operating profit grew 24% YoY to $31 million from $25 million, boosted by volume growth and higher prices. However, ramp-up costs offset its operating margin expansion. In the second quarter, the segment’s operating profit margin expanded by 150 basis points YoY to 18% from 16.5%.
Higher growth due to new projects is expected to continue to drive the segment’s revenue and margins. Investors can get indirect exposure to Praxair through the First Trust Materials AlphaDEX ETF (FXZ), of which Praxair comprises 1.4%. The fund also has exposure to Westlake Chemical (WLK), FMC (FMC), and W.R. Grace (GRA), of 3.6%, 1.9%, and 1.3%, respectively.