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Air Products and Chemicals, Inc. is a world-leading industrial gases company which has been in operation for nearly 80 years. The Company provides essential industrial gases, related equipment and applications expertise to customers in many industries, including refining, chemical, metals, electronics, manufacturing, and food and beverage. Air Products is also the global leader in the supply of liquefied natural gas ("LNG") process technology and equipment. The Company also develops, engineers, builds, owns and operates some of the world's largest industrial gas projects, including gasification projects that sustainably convert abundant natural resources into syngas for the production of high-value power, fuels and chemicals. Air Products operates in 51 countries outside the United States and has approximately 17,700 employees worldwide.

The Company manages its operations under five reporting segments: Industrial Gases – Americas (400 production and distribution facilities); Industrial Gases – EMEA (Europe, Middle East and Africa – 180 production and distribution facilities); Industrial Gases – Asia (170 production and distribution facilities); Industrial Gases – Global; and Corporate and other.

According to the Company´s Annual Financial Report in 2019, Air Products had sales of $8.9 billion, and remained at the same sales level as in 2018. Sales of $8.9 billion were flat as favourable pricing of 3% and higher volumes of 2% were offset by negative currency impacts of 3% and the negative impact of a contract modification to a tolling arrangement in India of 2%.The pricing improvement was primarily attributable to merchant business across the regional segments. Volumes were higher from new projects, mainly the Lu'An project in Asia, and positive base business growth. These drivers were partially offset by lower Jazan sale of equipment activity, which negatively impacted volumes by 2%. Unfavourable currency impacts were driven by the Chinese Renminbi, Euro, and British Pound Sterling.

In 2019 Air Products delivered an operating margin of 24%, compared to 22.0% in 2018. Operating income of $2,144.4 million in 2019 increased by 9% or by $178.8 million, compared to $1,965.6 million in 2018, as positive pricing, net of power and fuel costs, of $220 million, favourable volumes of $110 million, and a gain on the exchange of two 50%-owned equity affiliates of $29 million were partially offset by unfavourable currency impacts of $55 million, higher net operating costs of $46 million, a charge for a facility closure of $29 million, and a charge for cost reduction actions of $26 million. Its operating margin of 24.0% increased by 200 bp, due primarily to positive pricing and favourable volume mix, partially offset by unfavourable net operating costs. Net income of $1,809.4 million increased by 18%, or $276.5 million, due primarily to impacts from the U.S. Tax Cuts and Jobs Act, positive pricing, and favourable volumes. Net income margin of 20.3% increased by 310 bp.

Adjusted EBITDA (as income from continuing operations excluding certain disclosed items) of $3,468 million increased by 11%, or by $352.5 million, compared to adjusted EBITDA of $3,115.5 million in 2018 and $2,799.2 million in 2017. Adjusted EBITDA of $3,468.0 increased, primarily due to positive pricing and higher volumes, partially offset by unfavourable currency. Adjusted EBITDA margin of 38.9% increased by 400 bp, compared to adjusted EBITDA margin of 34.9% in 2018, due primarily to higher volumes, positive pricing, and the India contract modification. The India contract modification contributed 80 bp.

Diluted EPS of $7.94 increased by 20%, or by $1.35 per share, compared to $6.59 in 2018 and $1.43 in 2017. Adjusted diluted EPS of $8.21 increased by 10%, or by $0.76 per share. The Company increased quarterly dividends by 5% from $1.10 to $1.16 per share, or $4.64 per share annually. This is the 37th consecutive year that Air Products has increased dividend payments.

Research and development expenditure of $72.9 million increased by 13%, or by $8.4 million, compared to $64.5 million in 2018 and $57.6 million in 2017. Research and development expenditure as a percent of sales increased to 8% in 2019, from 7% in 2018.
Segmentally, Industrial Gases (Americas) recorded sales of $3,873.5 million and increased by 3% or $114.7 million compared to $3,758.8 million in 2018 as positive pricing of 3% and higher volumes of 1% were partially offset by a negative impact from currency of 1%. Operating income of $997.7 million increased by 8%, or by $69.8 million, as higher pricing, net of power and fuel costs, of $85 million and favourable volumes of $34 million were partially offset by higher costs of $44 million and unfavourable currency impacts of $5 million. The higher costs were primarily driven by distribution costs. Its operating margin of 25.8% increased by 110 bp as positive pricing and higher volumes were partially offset by unfavourable costs.

Industrial Gases (EMEA) segment sales amounted to $2,002.5 million in 2019 and decreased by 9%, or by $190.8 million, compared to $2,193.3 million in 2018, as the negative impact from the India contract modification of 9% and unfavourable currency impacts of 5% were partially offset by positive pricing of 3% and higher volumes of 2%. The negative currency impact was mainly driven by the Euro and British Pound Sterling. Operating income of the segment amounted to $472.4 million and increased by 6%, or by $26.6 million, compared to $445.8 million 2108, due to higher pricing, net of power and fuel costs of $60 million, partially offset by unfavourable currency impacts of $25 million and higher costs of $10 million. Its operating margin of 23.6% increased by 330 bp due to favourable pricing and the impact of the India tolling arrangement.

Industrial Gases (Asia) segment sales reached $2,663.6 million and increased by 8%, compared to $2,458.0 million in 2018, driven by higher volumes of 9% and positive pricing of 3%. The volume increase was primarily driven by new plants onstream, mainly the Lu'An gasification project. Operating income of $864.2 million increased by 25%, or by $174.3 million, compared to $689.9 million in 2018 and $532 million in 2017, due to favourable pricing, net of power and fuel costs, and lower net operating costs.

Industrial Gases (Global) segment sales of $261.0 million in 2019 decreased by 40%, or $175.1 million, compared to $436.1 million in 2018 and $722.9 million in 2017. The decrease in sales was primarily driven by lower sale of equipment activity of the multiple air separation units that serve Saudi Aramco’s Jazan oil refinery and power plant in Saudi Arabia. Operating loss of $11.7 million decreased by $65.6 million from operating income of $53.9 in 2018, primarily due to the lower sale of equipment activity.

The sales of $118.3 million within the Corporate and Other segment increased by 41%, or $34.3 million compared to $84 million in 2018, primarily due to higher turbo machinery activity. Operating loss of $152.8 million decreased by 13%, or by $23.2 million, compared to $176.0 million in 2018, primarily due to income generated from turbo machinery and lower corporate costs.

In fiscal year 2020, Air Products intends to grow earnings by continuing to improve base businesses and execute against capital deployment strategy. The Company will continue to invest in key growth projects, including large gasification projects that are consistent with the Company´s onsite business model.