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Inside Praxair’s Asian Segment in Q2 2018

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Praxair’s Asian segment in Q2 2018

Praxair’s (PX) Asian segment was its second-biggest revenue contributor in Q2 2018. Its share of the company’s overall revenue expanded by 1.5 percentage points YoY (year-over-year) to ~16.4% from 14.9%. PX’s Asian revenue grew 19.0% YoY in the second quarter, to $502 million from $422 million.

The segment’s revenue was primarily boosted by 11% volume growth driven by China, Korea, and India. Foreign currency exchange boosted the segment’s revenue by 4%. Product price increases raised it by 3%, and cost pass-through added 1%.

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Operating profit and margins

In Q2 2018, Praxair’s Asian operating profit grew 33.75% YoY to $107 million from $80 million, driven by volume growth, foreign currency, higher prices, and productivity initiatives. The segment’s operating profit margin expanded by 230 basis points YoY to 21.3% from 19.0%.

Outlook

The segment’s growth is expected to be driven by higher volumes supported by new projects, including the startup of its China National Offshore Oil project. However, going forward, the segment’s currency gain is expected to fall.

The iShares Global Materials ETF (MXI) provides investors with indirect exposure to Praxair, which comprises 2.4% of MXI. The fund also provides exposure to LyondellBasell (LYB), Air Products & Chemicals (APD), and PPG Industries (PPG), of 1.8%, 1.7%, and 1.4% respectively.

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