Air Products Opens New Lab in China

Zacks

Air Products and Chemicals Inc. (APD) has announced the opening of a 1200-square-meter advanced gas applications laboratory within its Asia Technology Center in the Zhangjiang Hi-Tech Park in Shanghai, China. The new laboratory is aimed at enhancing productivity and efficiency and also meeting the growing demand in China and other Asian markets.

The laboratory will be equipped with state-of-the-art research and development (R&D) capabilities and will cater to the markets with high growth rates (including the ones specified in China's 12th Five-Year Plan) over the next several years. Such markets will include metals processing and fabrication, electronics packaging and assembly, and industrial cryogenics.

The laboratory will also have a newly-added welding center to enhance the development of welding technologies. The welding center will host live demonstrations that will be conducted by Air Products’ fabrication applications specialists. The laboratory will also feature applications for the continuous development of China’s strategic metal fabrication market.

The newly opened facility will increase R&D capabilities across Asia and China. Air Products has been making efforts to enhance the R&D development of China’s industrial gases industry in a number of ways. These include R&D partnerships, scholarships, and recruitment programs with leading universities and institutes.

The new laboratory represents expansion to the Asia Technology Center, which is the second-largest R&D facility for Air Products in the world.

Air Products provides atmospheric, process and specialty gases; performance materials; equipment; and technology products. The company, in October 2012, released its fourth-quarter fiscal 2012 results (ended September 30, 2012). It logged adjusted earnings from continued operations of $1.42 a share for the quarter, missing the Zacks Consensus Estimate by a couple of cents.

Consolidated net income, as reported, plunged 57% year over year to $138.7 million or 65 cents a share, pummeled by hefty one-time charges. The company reported a profit of $324.8 million or $1.51 a share a year ago.

Revenues rose 4% to $2,606 million, beating the Zacks Consensus Estimate of $2,574 million. The revenue growth was attributable to higher volumes in the Tonnage Gases, Equipment and Energy, and Electronics and Performance Materials divisions as well as sales increases due to acquisitions, partly offset by the impact of unfavorable currency. The company witnessed sluggish manufacturing activity in the quarter.

For fiscal 2013, Air Products plans to take a number of steps including execution of its new Tonnage investments and sustained improvement in its Electronics and Performance Materials unit to attain better productivity. The company expects that its recent strategic moves will act favorably for future growth and profitability despite the weak macroeconomic backdrop.

Air Products, which competes with Praxair Inc. (PX), currently carries a short-term (1 to 3 months) Zacks #3 Rank (Hold). We currently have a long-term (more than 6 months) Underperform recommendation on the stock.
 

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