What were the main drivers for the decline in earnings per share compared to the prior year?

The primary reasons for the 13% decline in diluted operating earnings per share were higher natural gas prices and lower volumes experienced in the chemicals business. These factors significantly impacted the profitability of the chemicals segment.

How did the different business segments perform during the quarter?

The industrial gases segment showed strong performance, with sales up 24% and operating income up 11%, driven by global markets like electronics and CPI, and particularly in Asia. The equipment segment saw modest revenue growth. However, the chemicals segment experienced a revenue decline and a sharp decrease in operating income due to the aforementioned cost and volume pressures.

What is the company's outlook for the remainder of fiscal year 2001?

Air Products anticipates an improvement in its chemicals business in the second half of the fiscal year due to expected lower raw material costs and a recovery in volumes. The company expects its gases business to continue performing well, supported by leadership positions in growth markets. Overall, APD projects fiscal year 2001 earnings per share from operations to be in the range of $2.40 to $2.45.

Were there any significant one-time charges or gains impacting the reported results?

Yes, for the March 2001 quarter, the company reported net income as reported of $95 million ($0.43 per share), which excluded a global cost reduction plan charge and a litigation settlement charge. For comparison, the prior year's reported net income of $48 million ($0.22 per share) included significant charges related to the BOC transaction and a gain on the sale of packaged gas facilities.

APD 8-K SEC Disclosure — Apr 23, 2001

Summary

Air Products & Chemicals, Inc. (APD) reported its results for the March quarter of 2001, facing headwinds from a weaker economy and higher energy and raw material prices. Despite these challenges, overall revenues increased by 11% to $1.5 billion, driven by strong performance in the industrial gases segment, particularly in electronics and the chemicals and processing industries (CPI) globally, and in Asia. However, diluted operating earnings per share declined by 13% to $0.54, compared to $0.62 in the prior year, reflecting a significant impact on the chemicals business. The company highlighted that its industrial gases business showed resilience, with sales up 24% and operating income up 11%. Sales to the electronics market, including specialty gases, grew by over 50%. Conversely, the chemicals business experienced a 3% revenue decline (excluding divestitures) and a more than 50% drop in operating income due to lower volumes, higher natural gas costs, and lagging price increases. Looking ahead, APD anticipates improved raw material costs and volume recovery in the latter half of the fiscal year for its chemicals segment, while continuing to see strength in its gases business, especially in key growth markets and regions. The company projects fiscal year 2001 earnings per share from operations to be in the range of $2.40 to $2.45.

Key Highlights

1Total revenues increased 11% to $1.5 billion for the March quarter, driven by strong industrial gas sales.
2Diluted operating earnings per share (excluding special items) decreased 13% to $0.54, down from $0.62 in the prior year.
3Industrial gas sales grew 24%, with significant growth (over 50%) in the electronics market.
4The chemicals business was significantly impacted, with operating income falling by over 50% due to higher natural gas costs and lower volumes.
5The company incurred special charges for a global cost reduction plan and a litigation settlement in the March 2001 quarter.
6APD provided guidance for fiscal year 2001 operating earnings per share to be between $2.40 and $2.45.
7Capital expenditures for the six months ended March 31, 2001, were $302.3 million, a decrease from $378.6 million in the prior year's comparable period.

Air Products & Chemicals, Inc. 8-K Report (Apr 23, 2001)

Summary

Key Highlights

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