Air Products Profit Rises Amid Cost Cuts

Air Products & Chemicals Inc. reported better-than-expected earnings and issued strong guidance for the current quarter, citing in part the company's recent cost cuts.

Following the report Thursday, shares of the company rose as much as 7.4%.

Air Products, like other companies, has faced foreign-exchange volatility and fallout from sagging commodity prices. Thursday, Air Products noted the benefit from recent cost cuts, particularly job reductions, since last year.

After becoming chief executive in June 2014, Seifi Ghasemi launched a sweeping restructuring that included the elimination of about 1,500 positions over the first nine months of the company's fiscal year, which began in October.

On a Thursday conference call, Mr. Ghasemi once again underscored his strategy, saying that the company eventually would see about $600 million in annual savings.

"This quarter's operating margin is the highest in more than 25 years," he said in the earnings release.

Air Products said it expects fourth-quarter earnings per share of $1.75 to $1.85, above analysts' forecasts of $1.58. The company also raised its full-year adjusted-earnings guidance to a range of $6.50 to $6.60 a share from its previous $6.35 to $6.55.

The company also named corporate lawyer Charles Cogut, a notable mergers and acquisitions lawyer at Simpson Thacher & Bartlett LLP, to its board Thursday, which may have piqued the interest of investors and stirred speculation of a deal. Management has waved off talk of a major acquisition.

Overall, Air Products reported a third-quarter profit of $318.8 million, or $1.47 a share, up from $314 million, or $1.46 a share, a year earlier. Excluding certain items such as a pretax charge of $59.8 million linked to restructuring costs and a pension settlement, earnings per share came in at $1.65.

The adjusted per-share figure topped Air Products's estimate of $1.55 to $1.60, though the range was below analysts's estimates when the company issued it.

Revenue fell 6.2% to $2.47 billion from $2.63 billion in the same quarter in 2014. Analysts surveyed by Thomson Reuters had called for revenue of $2.48 billion.

Americas sales in the latest quarter fell 16% to $898 million as lower energy prices strained the coffers of some Air Products customers. Sales in the Europe, Middle East and Africa came in at $455 million representing a 15% decline, driven mostly by unfavorable currency impacts.

Earlier this week, rival Praxair Inc. reported that profits had slipped as it also was unable to shake the foreign-exchange headwinds and lower commodity prices that have pressured the industrial gas sector's top line all year.

Write to Ezequiel Minaya at [e-mail]

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