The 2020 Mid-Year Economic Update_long

Air Products 2Q Sales Up 6%

Organic sales fell 2 percent for the manufacturer of specialty gases.

Air Products (NYSE:APD), Lehigh Valley, PA, reported sales for the second quarter ended March 31 were $2.5 billion, up 6 percent over the same period a year ago. Underlying sales were down 2 percent due to the decision to exit the Polyurethane Intermediates business (PUI). Acquisitions contributed 6 percent.

Profit attributable to Air Products declined 2 percent to $290.4 million.

Sequential sales declined 3 percent, with underlying sales down 3 percent on lower Tonnage Gases volumes due to planned customer maintenance. Operating income increased 5 percent sequentially, primarily from the inventory accounting revaluation last quarter and better cost performance.

"Good cost performance helped offset weaker than expected volumes in the second quarter," said John McGlade, president and CEO. "Global economic growth continued to be a challenge, with a slower U.S., contraction in Europe, softness in China, and an electronics market much weaker than we expected."

Merchant Gases sales of $1 billion increased 14 percent versus the prior year due largely to the Indura acquisition. Underlying sales declined 1 percent. Operating income of $168 million increased 10 percent.

Tonnage Gases sales of $809 million increased 3 percent versus the prior year on new plant volumes and higher energy pass-through, partially offset by lower PUI volumes. Operating income of $123 million decreased 2 percent.

Electronics and Performance Materials sales of $549 million declined 3 percent versus prior year, with lower electronics materials and equipment sales partially offset by the DA NanoMaterials acquisition. Operating income of $78 million decreased 9 percent.

Equipment and Energy sales of $124 million increased 12 percent versus prior year, due to higher LNG project activity. Operating income of $21 million more than doubled versus prior year.

For the first six months of the fiscal year, sales were $5 billion, up 8 percent over the same period a year ago. Profit increased 4.5 percent to $568.7 million.

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