01—Abstract
Summary
Summary of the 10-K filed November 20, 2012. Cited figures are marked; the original filing is the authoritative source.
Air Products & Chemicals, Inc. (APD) reported a challenging fiscal year 2012, with sales down 1% to $9.6 billiona and operating income down 15% to $1.28 billion (or down 1% excluding special items).
This performance was impacted by a tougher-than-expected global economic environment, particularly in Europe, and a stronger U.S. dollar, which offset modest underlying volume growth and strategic acquisitions. Key strategic moves in 2012 included the sale of the Homecare business (completed in Europe) and significant acquisitions in Latin America (Indura S.A.) and Saudi Arabia (Abdullah Hashim Industrial Gases & Equipment Co. Ltd.). The company also took steps to restructure its Polyurethane Intermediates and Photovoltaic businesses to align with market conditions.
Despite the economic headwinds, APD continued its commitment to shareholders by increasing its quarterly dividend for the 30th consecutive year and maintained substantial share repurchase authorization. Looking ahead to 2013, APD anticipated modest economic growth globally, with potential earnings improvement from new plant onstreams and the Indura S.A. acquisition, tempered by higher pension expenses and ongoing restructuring impacts.
02—Key points
Key Highlights
- Sales for fiscal year 2012 were $9.61 billion, a slight decrease of 1% from the prior year, impacted by currency headwinds and lower energy cost pass-through.
- Operating income on a GAAP basis was $1.28 billion, down 15%, but on a non-GAAP basis (excluding restructuring charges and other items), it decreased only 1% to $1.53 billion, indicating operational resilience.
- The company completed the sale of its European Homecare business in April 2012 and recorded a gain of $207.4 million.
- Significant strategic acquisitions were made in Latin America (Indura S.A.) and Saudi Arabia (Abdullah Hashim Industrial Gases & Equipment Co. Ltd.) to bolster its global presence.
- APD increased its quarterly dividend to $0.64 per share, marking the 30th consecutive annual dividend increase.
- Capital expenditures increased significantly to $2.56 billion (GAAP basis) and $2.78 billion (non-GAAP basis), driven largely by the Indura S.A. acquisition and new plant construction.
- The company incurred substantial business restructuring and cost reduction charges totaling $327.4 million in 2012, primarily related to its Polyurethane Intermediates, Electronics, and European Merchant businesses.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2012, Air Products & Chemicals, Inc. kept $0.12.
- Revenue$9.61B100.0%
- Cost of revenue−$7.05B73.4%
- Gross profit$2.56B26.6%
- Operating costs−$1.28B13.3%
- Operating income$1.28B13.3%
- Interest, other & tax−$115.1M1.2%
- Net income$1.17B12.1%
Where FY2012 revenue went
$9.61B- Cost of revenue: $7.05B, 73% of revenue
- Net income: $1.17B, 12% of revenue
- R&D: $126.4M, 1.3% of revenue
- SG&A: $946.8M, 9.9% of revenue
- Other operating costs: $204.2M, 2.1% of revenue
- Interest, other & tax: $115.1M, 1.2% of revenue
Kept 12% as net incomeNet income $1.17B · 12%R&D $126.4M · 1.3%Interest, other & tax $115.1M · 1.2%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2012filed November 20, 2012Financial Statements
FY2012 against FY2011
| Line item | FY2012FY2011 | Change |
|---|---|---|
| Revenue | $9.61B$9.67B | −0.6% |
| Cost of Revenue | $7.05B$7.10B | −0.7% |
| Gross Profit | $2.56B$2.58B | −0.6% |
| R&D Expenses | $126.40M$118.80M | +6.4% |
| SG&A Expenses | $946.80M$941.70M | +0.5% |
| Operating Income | $1.28B$1.51B | −15.0% |
| Interest Expense | $123.70M$115.50M | +7.1% |
| Net Income | $1.17B$1.22B | −4.6% |
| EPS (Basic) | $5.53$5.75 | −3.8% |
| EPS (Diluted) | $5.44$5.63 | −3.4% |
| Shares Outstanding (Basic) | 211.20M213.00M | −0.8% |
| Shares Outstanding (Diluted) | 214.70M217.60M | −1.3% |
05—Questions
Frequently Asked Questions
What were the main drivers of Air Products' financial performance in fiscal year 2012?
The company's financial performance in fiscal year 2012 was primarily driven by a challenging global economic environment, which led to slower demand, particularly in Europe. A stronger U.S. dollar also negatively impacted reported sales and earnings. Strategic acquisitions, such as Indura S.A., and ongoing operational initiatives provided some offset.
What strategic actions did Air Products take in 2012 to improve its business portfolio?
In 2012, Air Products took several key strategic actions. They initiated the sale of their Homecare business, completing the divestiture of European operations. They also acquired a controlling stake in Indura S.A., the largest independent industrial gas company in South America, and invested in Saudi Arabia's largest industrial gas company. Additionally, they restructured underperforming businesses, including their Polyurethane Intermediates and Photovoltaic operations.
How did the company's profitability compare on a GAAP versus non-GAAP basis?
On a GAAP basis, operating income decreased by 15% to $1.28 billion, and income from continuing operations decreased by 12% to $999 million. However, when excluding significant charges like business restructuring ($327.4 million) and other specific items, the non-GAAP operating income decreased by only 1% to $1.53 billion, and non-GAAP income from continuing operations saw a 1% increase to $1.16 billion, highlighting the underlying operational performance.
What is the company's outlook for fiscal year 2013?
Air Products anticipated a modest global economic growth of 2%-4% in 2013, with specific regional expectations for the U.S. (2%-4%), Europe (flat), Asia (3%-5%), and South America (2%-4%). The company expected higher earnings from new plant onstreams and the Indura S.A. acquisition, partially offset by increased pension expenses, unfavorable currency impacts, and ongoing restructuring costs. They remained focused on productivity and cost management.
06—Continue