Air Products Bags ASU Contract - Analyst Blog
25 Février 2013 - 12:10PM
Zacks
Specialty chemical company Air Products & Chemicals
Inc. (APD) announced that it has entered into a long-term
deal with Shanxi Lu'An Mining (Group) Co., Ltd. wherein the former
will build, own and operate four air separation units (ASUs)
producing oxygen, nitrogen, compressed instrument air and steam.
The units will supply Lu'An's multiple process trains at its coal
gasification facility to be built in Changzhi City, Shanxi
Province, China.
The coals supplied to the liquid projects at Lu'An's Changzhi
City facility will produce diesel fuel and derivatives. The aim of
the ASU trains is to minimize operating costs through energy
efficiency. The facility, which is ranked eighth in the Chinese
coal industry, will include a number of ASU trains and produce
12,000 tons per day (TPD) of oxygen as well as significant tonnage
volumes of nitrogen and compressed dry air for a coal chemical
plant. The facility is expected to come online in 2014.
It is the second-largest ASU onsite order ever awarded to Air
Products for a single project. All the combined four units will
produce over 10,000 TPD of oxygen, more than 6,000 TPD of nitrogen,
and over 700 TPD of instrument air. The first ASU is expected to
become operational by Jul 2015 with the final one scheduled in Oct
2015.
The contract is consistent with Air Products’ strategy to win
large ASU projects in the high growth China coal gasification
market as China has significant coal reserves to produce syngas
from the coal and then convert the syngas into fuel, chemicals, and
fertilizers.
Air Products benefits from a diverse customer base, sustained
pricing power and cost-reduction measure. Few days ago, Air Product
came out with its first-quarter fiscal 2013 (ended Dec 31, 2012)
results. The results were impressive as both revenues and adjusted
earnings outpaced the Zacks Consensus Estimates. The company’s
adjusted earnings from continued operations of $1.30 a share beat
the Zacks Consensus Estimate by a penny. Consolidated net income
from continuing operation increased 22.6% year over year to $276.9
million.
Revenues rose 10.4% year over year to $2,562.4 million, beating
the Zacks Consensus Estimate of $2,471 million. Sales were aided by
higher volumes in the Tonnage Gases, Equipment and Energy divisions
and acquisitions.
For fiscal 2013, Air Products plans to take a number of steps
including cost control measures, restructuring actions, price
improvements and volume growth. The company expects that its recent
strategic moves will position it for future growth and
profitability despite the modest economic backdrop.
Air Products retains a short-term (1 to 3 months) Zacks Rank #2
(Buy). Other companies in the chemical industry worth considering
are Akzo Nobel NV (AKZOY), Arkema
S.A. (ARKAY), and PertoLogistics LP
(PDH). All these companies retain a Zacks Rank #1 (Strong Buy).
AKZO NOBEL NV (AKZOY): Free Stock Analysis Report
AIR PRODS & CHE (APD): Free Stock Analysis Report
ARKEMA-ADR (ARKAY): Get Free Report
PETROLOGISTICS (PDH): Free Stock Analysis Report
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