Air Products Stumbles On The Way To Home (APD)

Air Products & Chemicals Inc. (NYSE: APD) has lowered its guidance for the quarter.  The company now sees its earnings in a range of $1.24 to $1.26 per share, below the $1.40 First Call consensus estimates. Its previous guidance was $1.37 to $1.42.  That range is also below the lower-end of the analyst range of $1.35.  Much of the issue here seems easy to justify, but as you go on this begins to sound more symptomatic more than unique cause and effect.

The main blame here is being put on one-time issues.  A fire at itsKorean nitrogen trifluoride plant affecting will trim $0.05 from the quarter’s results.  Hurricanes Ike & Gustavaffected customer demand while costs rose, which the company isnoting for another $0.05 reduction.  The strengthening dollarversus the euro and pound is expected to take out another $0.03.Slowdowns in semiconductor and LCD manufacturing is expected to takeaway another $0.03 and further European manufacturing weakness isexpected to take off another $0.03.

The company did note that a favorable tax rate due to lower taxableincome will favorably affect earnings by $0.03.  Unfortunately thatwon’t go very far.  The problems here sound far more symptomatic thanthey sound isolated.

Shares closed at $80.28 yesterday and are indicated down over 4% under$77.00.  Its 52-week trading range is $72.59 to $106.06. 

Jon C. Ogg
September 23, 2008