DANBURY, Conn., October 27, 2004 — Praxair, Inc. (NYSE: PX) reported record net income of $177 million and diluted earnings per share of 53 cents for the third quarter of 2004, an increase of 18% compared to $150 million and 45 cents, respectively, in 2003. Growth in net income was due to higher sales and higher operating profit, partially offset by a higher effective tax rate compared to the year-ago quarter.
Sales for the quarter were $1,674 million, 18% above $1,414 million in 2003. Operating profit of $280 million grew 17% from $240 million in 2003, and reflected an operating margin of 16.7%. Sales and operating profit were higher in every geographic region. The strongest sales growth came from energy, healthcare, electronics, metals and manufacturing markets.
"Our record results reflect strong performance from our base business, combined with accelerating sales and earnings contribution from our growth initiatives," said Dennis H. Reilley, chairman and chief executive officer.
In North America, sales of $1,085 million rose 18%, from $918 million in the year-ago quarter. Growth came from higher sales of on-site, merchant and packaged gases, and from higher healthcare sales due in part to a North American home healthcare acquisition. Operating profit of $157 million grew 11%, principally due to strong volumes and ongoing productivity initiatives.
In Europe, sales grew 18% to $198 million. Excluding the effect of a stronger Euro and the consolidation of a joint venture, sales grew 7% from higher pricing and higher volumes, particularly to metals and healthcare markets. Operating profit grew 23% to $54 million from $44 million in the year-ago period.
In South America, sales of $219 million grew 17%, and 18% excluding currency effects. Sales increased from higher pricing and higher volumes, benefiting from a strengthening economic environment. Operating profit rose to $40 million from $29 million in 2003, and reflected a strong operating margin of 18.3%.
Sales in Asia grew 19% to $123 million, from higher sales in China, India, and Korea to electronics and metals markets. Operating profit of $20 million grew 18% from $17 million in the prior period.
Praxair Surface Technologies’ sales for the quarter were $109 million, 10% above the prior year due to improved business conditions in industrial and aviation coatings markets and a stronger Euro. Operating profit was $9 million, comparable to the prior-year period.
Cash flow from operations for the quarter was $382 million. Capital expenditures were $161 million, and debt reduction was $147 million. The company’s debt-to-capital ratio* decreased to 44.7%. After-tax-return-on-capital* was 13.2%.
In the fourth quarter of 2004, diluted earnings per share are expected to be between 52 cents and 54 cents. For the full year of 2004, Praxair expects sales growth of about 16% and operating profit growth of 18% to 19%. Diluted earnings per share are expected to be in the range of $2.07 to $2.09. Full-year capital expenditures are expected to be in the area of $675 million. This guidance excludes any impact from the announced acquisition of industrial gas business in Germany, which is expected to close later this year.
Commenting on the future outlook, Reilley said, "Business conditions remain strong in most of our major markets. However, I expect higher energy prices to moderate economic growth in the near term. Nonetheless, we have a significant number of new projects in the pipeline, which will go on-stream in 2005 and 2006, and we expect to continue to win new business in hydrogen, healthcare, electronics and in China. We are accelerating our productivity programs which will result in more cost savings. We recently announced a significant acquisition of industrial gas business in Germany, which strengthens our presence in Western Europe and which will contribute to earnings growth in 2005 and beyond."
Praxair is the largest industrial gases company in North and South America, and one of the largest worldwide, with 2003 sales of $5.6 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 measure: See Quarterly Financial Summary and Appendix: Non-GAAP Measures
|Praxair 3Q04 Earnings Release Tables (53 KB)||Statements of Income, Balance Sheets, Statements of Cash Flows, Segment Information, Quarterly Financial Summary and Appendix: Non-GAAP Measures|
|Praxair 3Q04 Teleconference Presentation (98 KB)||Teleconference presentation on Praxair's 3Q04 results.|
A teleconference on Praxair’s third-quarter results is being held this morning, October 27, at 9:00 am Eastern Time. The number is (617) 614-4910 — Passcode: 41463247. The call also is available as a web cast at www.praxair.com/investors as well as materials to be used in the teleconference.
The forward-looking statements contained in this announcement concerning demand for products and services, the expected macroeconomic environment, sales, margins, earnings growth rates, 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, the impact of tax and other legislation, litigation, government regulation and the effectiveness and speed of integrating new acquisitions into the business.
Susan Szita Gore