Air Products' Spin-off Headquarters in Tempe
Air Products and Chemicals APD has taken another step towards the separation of its Materials Technologies' Electronic Materials Division (“EMD”), which will become Versum Materials. The company announced that the standalone company, Versum Materials, will be headquartered at Tempe, AZ.
Co-locating Versum Materials’ headquarters near its customer companies is in accordance with Air Products’ strategy of getting closer to the consumer market through the spin-off. The company already has a manufacturing and research and development facility as well as a workforce in Tempe for the Electronic Materials Division. Considering growth in Asia, where over 70% of the market exists, the company also intends to maintain better connectivity with the Asian team and customers, which is likely to improve from the new location.
Although Air Products has decided to move the headquarters for Versum Materials’, the administrative work will continue to be carried out from Allentown, PA – the company’s current headquarter. Management intends to fully utilize the experience and knowledge of the existing employees in the administrative departments. Thus, the new company will have a significant presence at both locations.
Air Products looks forward to complete the spin off by Sep 2016 and has made several other announcements regarding the new company. The research and development units for the company will be located at Tempe, Taiwan, Korea and Hometown, PA.
The EMD already has manufacturing units in Korea and Taiwan, along with the U.S. Versum Materials intends to be a global business providing innovative specialty solutions to niche markets. The company is expected to have roughly 3,200 employees spread over 12 countries.
AIR PRODS & CHE Price | AIR PRODS & CHE Quote
Shares of Air Products rose around 1.5% in the trading session on Tuesday, before closing the day around 1.4% higher at $136.72.
Air Products saw higher profits in second-quarter fiscal 2016 (ended Mar 31, 2016), backed by restructuring and self-help measures. Adjusted earnings of $1.82 per share for the quarter beat the Zacks Consensus Estimate, while revenues of $2,271.2 million missed the same. The company reported double-digit EPS growth for the seventh consecutive quarter.
Revenues for the Electronics Materials segment of the company stood at $234 million, down 10% year over year due to lower delivery systems volumes. However, operating margin and EBITDA for the segment in the quarter were higher year over year. The increase was driven by favorable pricing and mix along with the benefits of restructuring actions undertaken.
Air Products expects earnings from continuing operations in third-quarter fiscal 2016 to be higher than the prior-year quarter by 13%–16%. Management raised its earnings guidance for fiscal 2016 from $7.25−$7.50 to $7.40−$7.55 per share. However, it lowered its capital expenditure guidance by $0.1 billion to $1.2 billion.
Air Products currently has a Zacks Rank #3 (Hold).
Better-ranked companies in the chemicals industry include Innophos Holdings Inc IPHS, Innospec Inc. IOSP and Asahi Kasei Corp. AHKSY, all sporting a Zacks Rank #1 (Strong Buy).
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