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Praxair Reports Record Quarterly Results; EPS Up 15%; Sales Up 10%; Record Earnings Outlook

Danbury, CT. Praxair, Inc. (NYSE: PX) today reported the highest quarterly earnings in the company s history, with second-quarter net income of $122 million, or 76 cents per diluted share, compared to $107 million, or 66 cents per diluted share, in the second quarter of 1999. Sales increased 10 percent to $1,265 million -- also a quarterly record -- compared to $1,149 million in the 1999 quarter.

Demand for industrial gases was strong across all regions, and in all of Praxair s target industry segments, led by fast-growing semiconductor and fiber optics markets. In North America, volume gains in steel, chemicals and refinery markets were complemented by higher packaged-gases same-store sales to metal fabrication and health care customers. Praxair s South America business continued its strong recovery, while Praxair s European and Asian operations continued to perform at a high level. Praxair Surface Technologies results continue to be tempered by weak aerospace market conditions.

Operating profit grew 9 percent despite significant increases in electricity and diesel fuel costs, principally affecting merchant liquid products in the U.S. and Canada. "We are taking the most aggressive stance possible on pricing, particularly in the U.S., to mitigate the effects of higher electricity and diesel fuel costs," said Dennis H. Reilley, president and chief executive officer. "Customers understand the critical role industrial gases play in their business, and we want to ensure product availability - at an adequate profit level - during what we expect will be a record demand period this summer for both electricity and industrial gases."

The company improved its after-tax operating profit return on capital to 11.7 percent compared to 11.2 percent a year ago. Higher working capital and the successful stock tender offer for its South America affiliate increased the company s debt-to-capital ratio to 57 percent. With a previously announced divestiture in South America and improvements in working capital, the company expects to end the year close to its 50-percent debt-to-capital target. For the six months ending June 30, 2000, net income was $236 million, or $1.47 per diluted share, compared to $215 million, or $1.33 per diluted share, in the first half of 1999. These comparisons exclude the effect of an accounting change in 1999. Sales, at $2,495 million, were up 10 percent over the 1999 period.

The company continues to have a favorable outlook for demand in the second half of the year, even in a slower U.S. economic growth environment. Unprecedented U.S. electricity costs and power dislocations are expected to remain an issue for industrial gas production in the U.S. "We ll have a challenge for some time in this part of our portfolio, but we ve taken the necessary steps with pricing, power distribution and supply-system reliability programs to manage effectively in this environment," said Reilley. "And we see growth opportunities in helping customers facing these same issues through our productivity, energy conservation and services offerings. Overall, our earnings outlook remains quite favorable, and I look forward to reporting a record earnings year."

Praxair is the largest industrial gases company in North and South America, and one of the largest worldwide, with 1999 sales of $4.6 billion. The company produces sells and distributes atmospheric and process gases, and high-performance surface coatings. Praxair products, services and technology bring productivity and environmental benefits to a wide variety of industries, including aerospace, food and beverage, healthcare, electronics, steel, chemicals and refining, metal fabrication, water treatment, glass and others. More information on Praxair is available on the Internet at www.praxair.com.

Forward-Looking Statements: The forward-looking statements contained in this announcement concerning demand for products and services, earnings growth and other financial goals involve risks and uncertainties, and are subject to change based on various factors, including the impact of changes in worldwide and national economies, the cost and availability of electric power and other energy and the ability to achieve price increases to offset such cost increases, development of operational efficiencies, changes in foreign currencies, changes in interest rates, the continued timely development and acceptance of new products and services, the impact of competitive products and pricing, and the impact of tax and other legislation and regulation in the jurisdictions in which the company operates.

Contact: Susan Szita Gore, Media Tel: (203) 837-2311 susan_szita-gore@praxair.com

 

Susan Szita Gore, Media
Tel: (203) 837-2311
susan_szita-gore@praxair.com
 
E-mail: susan_szita-gore@praxair.com
Web site: http://www.praxair.com
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