DANBURY, Conn., April 21, 2003 — Praxair, Inc. (NYSE: PX) reported first-quarter 2003 net income of $130 million and diluted earnings per share of 79 cents, up from income before accounting changes of $127 million and 77 cents per share in the prior-year quarter.
Sales for the quarter were $1,337 million compared to $1,232 million in 2002. Sales grew 9% on a reported basis, and 6% excluding the impact of changes in natural gas prices and currency. Operating profit for the quarter was $215 million compared to $217 million in the 2002 quarter.
Commenting on business during the quarter, Dennis H. Reilley, chairman and chief executive officer, said, "We achieved record sales due to the excellent progress we have made on our growth initiatives. Earnings during the quarter were held back by anticipated plant turnaround activities, combined with the spike in energy costs and tough conditions in the chemical and aviation industries."
In North America, reported sales of $893 million rose 11% from the prior year, and 5% excluding the pass-through effect of higher natural gas prices. Growth came primarily from refinery hydrogen and healthcare. Segment operating profit fell 4% to $131 million due to the costs of plant turnarounds and higher electricity and fuel costs, which were not recovered during the quarter.
In Europe, sales grew 25% primarily due to the stronger Euro. Excluding the effect of currency and divestitures, segment sales grew 5% compared to the year-ago period. Operating profit in Europe grew 10%, excluding currency, due to positive price and volume gains combined with excellent productivity improvements. In Asia, sales grew 15% and operating profit 30% largely due to strong volume growth from new business, particularly in China. Sales in South America declined 13%, but excluding the effects of currency devaluation were up 18%, largely due to the development of new services offerings. Operating profit declined slightly as strong local sales growth and cost reductions largely offset the currency decline.
Praxair Surface Technologies was hurt by low commercial airline activity and temporarily reduced military service work, combined with plant closure costs.
Cash flow from operations for the quarter was $171 million and capital expenditures were $123 million. The company ‘s debt-to-capital ratio* was reduced to 51.0%. After-tax return on capital* was 12.6%, lower than 2002's fourth quarter due to the lower operating profit and the higher effective tax rate.
Looking ahead, Reilley said, "We expect results for the remainder of the year to improve as energy markets stabilize and our U.S. operating margins improve. However, I am cautious on the long-term picture for economic growth, but still expect Praxair to continue to grow our sales and earnings through our growth initiatives."
For the second quarter, Praxair expects sales growth in the area of 5% from last year's second quarter, and diluted earnings per share of 84 to 89 cents. For the full year, earnings guidance is unchanged at $3.40 to $3.60 per diluted share.
Praxair is the largest industrial gases company in North and South America, and one of the largest worldwide, with 2002 sales of $5.1 billion. The company produces, sells and distributes atmospheric and process gases, and high-performance surface coatings. Praxair products, services and technologies bring productivity and environmental benefits to a wide variety of industries, including aerospace, chemicals, food and beverage, electronics, energy, healthcare, manufacturing, metals and others. More information on Praxair is available on the Internet at www.praxair.com.
*Non-GAAP measures. Please refer to the Appendix--Non-GAAP Measures for definitions and calculations.
|Praxair 1Q03 Earnings Release Tables (111 KB)||Statement of Income, Balance sheet, Statement of Cash Flows, Segment Information, Quarterly Financial Summary, and Non-GAAP Measures|
|Praxair 1Q03 Teleconference Presentation (68 KB)||Teleconference presentation on Praxair's 1Q03 results.|
A teleconference on Praxair’s first-quarter results is being held this morning, April 21, at 10:00 am Eastern Time. The number is (706) 634-0777. The call also is available as a web cast.Materials to be used in the teleconference are available on www.praxair.com/investors.
Forward-Looking Statements: The forward-looking statements contained in this announcement concerning demand for products and services, the expected macroeconomic environment, sales and earnings growth, and other financial goals involve risks and uncertainties, and are subject to change based on various factors. These include the impact of changes in worldwide and national economies, the cost and availability of electric power, natural gas and other materials, development of operational efficiencies, changes in foreign currencies, changes in interest rates, the continued timely development and acceptance of new products and processes, the impact of competitive products and pricing, and the impact of tax and other legislation and regulation in the jurisdictions in which the company operates.
Susan Szita Gore