uploads///PX Q  South America

Why Praxair’s South American Revenue Fell in Q2 2018

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Jul. 31 2018, Updated 10:32 a.m. ET

Praxair’s South American segment in Q2 2018

Praxair’s (PX) South American segment’s revenue contribution contracted by 1.8 percentage points YoY (year-over-year) in Q2 2018, to 11.4% from 13.2%. Its revenue fell YoY to $349 million from $373 million.

The company’s South American revenue has declined for a third consecutive quarter, due to foreign currency exchange. The Brazilian real’s and the Argentine peso’s weakness against the US dollar dragged down the segment’s revenue by 10%. This decline was offset by volumes increasing 4%, driven by the metals and healthcare businesses.

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Operating profit and margins

In Q2 2018, South Americas’ operating profit fell 12.5% YoY to $56 million from $64 million, impacted by foreign currency and Brazilian truckers’ nationwide strike. The segment’s margin contracted by 120 basis points YoY to 16% from 17.2%.

Outlook

If the situations in Argentina and Brazil improve, Praxair’s volumes could increase, and the impact of foreign currency exchange could be reduced.

Investors can get indirect exposure to Praxair through the Invesco Russell Top 200 Equal Weight ETF (EQWL), of which Praxair comprises 1.4%. The fund also provides exposure to Sherwin-Williams (SHW), PPG Industries (PPG), and LyondellBasell (LYB), of 1.5%, 1.4%, and 1.3%, respectively.

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