DANBURY, Conn., January 29, 2003 — Praxair, Inc. (NYSE: PX) reported fourth-quarter 2002 net income of $140 million and diluted earnings per share of 85 cents, up from $118 million and 72 cents per share in the prior-year quarter. Earnings per share grew 18% on a reported basis, and 10% excluding the favorable effect of a change in goodwill accounting.
Sales for the quarter were $1,297 million versus $1,238 million in 2001. Sales grew 5% on a reported basis, and 7% excluding the impact of currency and natural gas price changes. Operating profit for the period was $227 million, versus $208 million in the 2001 quarter.
For the full year 2002, Praxair reported net income of $548 million, or diluted earnings per share of $3.33, before the effect of adopting a change in goodwill accounting. In the prior year, net income was $432 million, including the effect of special charges. On a comparable basis, excluding the effects of this charge and changes in accounting for goodwill, net income and earnings per share grew by 5% and 4%, respectively. Full-year sales were $5,128 million versus $5,158 million in 2001. Excluding the impact of fluctuating currencies and natural gas prices, sales were 3% higher. Full-year operating profit was $923 million, reflecting growth on a comparable basis of 2%.
Commenting on the results, Dennis H. Reilley, chairman and chief executive officer, said, "Weak global economic conditions posed challenges for all of our businesses throughout the year. However, we achieved record operating results in 2002 due to our intense customer focus, which allowed us to gain new business in many markets, while continuing to drive productivity and maintaining our capital discipline."
In the fourth quarter, overall sales in North America were up 7% from the prior year (5% excluding natural gas), reflecting higher levels of product volume sold to customers in our traditional business, and additional growth from healthcare and refinery hydrogen. Segment operating profit rose 10% (6% excluding the change in goodwill accounting).
In Europe, sales grew 18% and operating profit 26%, due to strong volume growth, productivity, and a stronger Euro. In Asia, sales and operating profit were both higher than the year-ago quarter due to new business and the consolidation of a joint venture in China. Sales in South America declined 19% as a result of currency devaluation, which more than offset higher volumes. Operating profit was slightly higher, due to cost controls, pricing initiatives, and the change in goodwill accounting, which more than offset the currency decline.
Cash flow from operations for the quarter and full year was $338 million and $1,001 million, respectively. Capital expenditures were $158 million for the quarter, and $498 million for the full-year 2002. The company reduced debt by $245 million during the year, and the ended the year with a debt-to-capital ratio of 52.3%. Return on capital for the full year was 13.4%, up from 12.7% in 2001 on a comparable basis.
Looking ahead, Reilley said, "We remain cautious about the pace of economic recovery. In particular, the first quarter may be starting off on a weaker note, as a result of political uncertainty and higher energy prices which may exacerbate weak demand in electronics and general manufacturing in the United States."
For the first quarter of 2003, Praxair expects sales and operating profit similar to the first quarter of 2002, with diluted earnings per share of 76 cents to 80 cents. This reflects an effective tax rate of about 24%, somewhat higher than last year’s effective rate.
For the full-year 2003, Praxair anticipates sales and operating profit growth of 2% to 4%. Full-year 2003 diluted earnings per share are estimated to be in the range of $3.40 to $3.60, reflecting an effective tax rate of about 24%. Interest expense should decline versus 2002. Full-year capital expenditures are expected to be in the range of $600 million, including the costs associated with the new Gulf Coast hydrogen plants previously announced.
"We are committed to continuing to grow earnings, without much help from the economy," continued Reilley. "Our focus in the short term will be to drive our growth programs in healthcare, refinery hydrogen, electronics, technology licensing and China. These programs, combined with our relentless focus on productivity and capital discipline, will deliver superior results in 2003."
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.
|Praxair 4Q02 Earnings Release Tables (43 KB)||Statement of Income, Balance sheet, Cash Flow Statement and Segment Information.|
|Praxair 4Q02 Teleconference Presentation (110 KB)||Teleconference presentation on Praxair's 4Q02 results.|
Additional information regarding the fourth-quarter 2002 financial results and forward-looking financial guidance can be found on our web site and in Praxair's filings with the Securities and Exchange Commission.
A teleconference on Praxair’s fourth-quarter and full-year 2002 results is being held this morning, January 29, at 10:00 am Eastern Standard Time. The number is (203) 748-8964. The call also is available as a web cast.Materials to be used in the teleconference are also available.
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.