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Praxair Inc. Reports Operating Results (10-Q)

July 25, 2012 | About:
10qk

10qk

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Praxair Inc. (PX) filed Quarterly Report for the period ended 2012-06-30.

Praxair, Inc. has a market cap of $32.12 billion; its shares were traded at around $102.96 with a P/E ratio of 19.5 and P/S ratio of 2.9. The dividend yield of Praxair, Inc. stocks is 2.1%. Praxair, Inc. had an annual average earning growth of 11.2% over the past 10 years. GuruFocus rated Praxair, Inc. the business predictability rank of 4.5-star.

Highlight of Business Operations:

Sales declined $47 million, or 2%, for the second quarter and increased $91 million, or 2%, for the six months ended June 30, 2012 versus the respective 2011 periods. For both the quarter and year-to-date periods, sales increased due to higher volumes and higher overall pricing. Volume growth was 2% in the quarter and 3% in the year-to-date period, attributable primarily to growth in North America and Asia, including new plant start-ups. Higher overall pricing increased sales by 2% in both the quarter and six month period. Acquisitions increased sales by 2% for both the quarter and six month periods, primarily due to the consolidation of an industrial gas business in Scandinavia in the fourth quarter of 2011. Weaker foreign currencies relative to the US Dollar reduced sales by 6% and 4% for the quarter and year-to-date periods, respectively, as compared to the same periods in 2011, and lower cost pass-through due to lower natural gas prices reduced sales by 2% in the quarter and 1% for the six month period. By customer end-market, organic sales growth to energy, metals, and manufacturing customers was strongest compared with the prior year. A further discussion of sales by segment is included in the segment discussion that follows.

Segment sales growth in the quarter and six month periods came from higher volumes and higher pricing, partially offset by negative currency effects and lower cost pass-through, primarily lower natural gas prices passed through to hydrogen customers. In the quarter, sales grew $32 million, or 8%, excluding currency and cost pass-through. Volumes increased 4% and pricing increased 2%. Acquisitions of packaged gas distributors increased sales by 2%. The effects of currency and cost pass-through reduced sales by 6%. For the six month period, sales increased $105 million, or 9%, excluding currency and cost pass-through. Volumes, pricing and acquisitions increased sales by 6%, 2% and 1%, respectively, and were partially offset by the effects of currency and cost pass-through which reduced sales by 5%.

Operating profit decreased by $4 million, or 6%, for the second quarter and $4 million, or 3% for the six months ended June 30, 2012 versus the respective 2011 periods. Excluding the Yara Praxair acquisition and the negative currency impact, underlying operating profit decreased primarily driven by lower volumes. Volumes decreased operating profit by 9% for the second quarter and 8% for the six month period, partially offset by higher pricing. Operating margins were below the prior-year period. Excluding the impact of currency, depreciation increased $5 million and $11 million for the quarter and six-months period ended June 30, 2012, respectively, due primarily to the acquisition of Yara Praxair and the start up of a plant in Germany.

Sales decreased $91 million, or 15%, in the second quarter and $87 million, or 7%, for the six-months ended June 30, 2012 versus the respective 2011 periods. Underlying sales grew 1% for the quarter and 2% for the six-months, primarily due to improved pricing in both periods partially offset by lower volumes versus 2011. Negative currency impacts, primarily the weakening of the Brazilian Real against the US Dollar, reduced sales by 16% in the quarter and 10% for the six months versus 2011. Higher volumes from new on-site production facilities were more than offset by lower volumes to merchant and packaged gas customers largely attributable to the lower industrial production rates in Brazil. By end-market, year-over-year sales increased to metals, healthcare and energy customers, and were lower to manufacturing customers.

Segment sales are comparable to prior year for the second quarter and increased $17 million, or 3%, for the six-months ended June 30, 2012 versus the respective 2011 periods. Volume growth increased sales 3% for the second quarter and 4% for the six-month periods primarily from higher on-site sales from new plant start-ups in China and India. Overall volume growth was mitigated by lower demand from the electronics end-market including semiconductor, flat panel display, and solar customers. Lower merchant pricing, primarily due to the electronics end-market, reduced sales by 1% for both the quarter and six-month period as compared to the prior year. Negative currency impacts, primarily the weakening of the Indian Rupee against the US Dollar, reduced sales by 3% in the quarter and 2% for the six months versus 2011. By end-market, sales increased to metals and chemicals customers, and decreased to electronics customers for both periods. Cost pass-through increased sales by 1% for the quarter and 2% for the six-month period and relates to the contractual pass through of precious metals and power costs fluctuations, with minimal impact on operating profit.

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