Commenting on the results, Air Products' Chairman, President and Chief Executive Officer Seifi Ghasemi said, "Our growth strategy is evident in the results that our hard working and committed team again delivered. Our people around the world provided excellent service to our core industrial gas customers across dozens of industries while continuing to execute our first-mover clean hydrogen megaprojects to decarbonize the heavy-duty transportation and industrial sectors of our global economy. Working together, we continue to demonstrate the stability and resilience of our business despite challenging economic conditions. As we invest strategically for growth, we have also continued to increase the dividend, paying out approximately $1.5 billion to our shareholders during the year."
Fiscal 2023 Fourth Quarter Results by Business Segment
- Americas sales of $1.4 billion were down 12 percent versus the prior year, as four percent higher pricing and three percent higher volumes were more than offset by 19 percent lower energy cost pass-through. Operating income of $398 million increased 20 percent and adjusted EBITDA of $601 million increased 17 percent, in each case due to higher pricing and higher volumes, partially offset by higher costs. Operating margin of 29.4 percent increased 780 basis points and adjusted EBITDA margin of 44.5 percent increased 1,110 basis points. The operating margin and adjusted EBITDA margin improvements included positive impacts from lower energy cost pass-through of approximately 450 basis points and 750 basis points, respectively.
- Asia sales of $802 million decreased seven percent over the prior year, as two percent higher pricing and two percent higher energy cost pass-through were more than offset by seven percent lower volumes and four percent unfavorable currency. Operating income of $197 million decreased 25 percent and adjusted EBITDA of $318 million decreased 15 percent, primarily due to unfavorable volume. Operating margin of 24.6 percent decreased 600 basis points and adjusted EBITDA margin of 39.6 percent decreased 370 basis points.
- Europe sales of $712 million decreased 18 percent from the prior year, as seven percent favorable currency and flat volumes were more than offset by 24 percent lower energy cost pass-through and one percent lower pricing. Operating income of $168 million increased 12 percent and adjusted EBITDA of $250 million increased 15 percent, primarily driven by lower variable costs. Operating margin of 23.6 percent increased 620 basis points and adjusted EBITDA margin of 35.1 percent increased 1,000 basis points. The operating margin and adjusted EBITDA margin improvements included positive impacts from lower energy cost pass-through of approximately 400 basis points and 600 basis points, respectively.
- Middle East and India equity affiliates' income of $91 million increased 44 percent compared to the prior year, primarily due to the completion of the second phase of the Jazan project in January 2023.
- Corporate and other sales of $290 million increased 11 percent compared to the prior year, driven by higher LNG sale of equipment activity.
OutlookAir Products expects full-year fiscal 2024 adjusted EPS guidance* of $12.80 to $13.10, up 13 percent at the midpoint over prior year adjusted EPS. For the fiscal 2024 first quarter, Air Products' adjusted EPS guidance* is $2.90 to $3.05, up 13 percent at the midpoint over fiscal 2023 first quarter adjusted EPS.
Air Products expects capital expenditures* of $5.0 billion to $5.5 billion for full-year fiscal 2024.
*Management is unable to reconcile, without unreasonable effort, the Company’s forecasted range of adjusted EPS or capital expenditures to a comparable GAAP range. Air Products provides adjusted EPS guidance on a continuing operations basis, excluding the impact of certain items that management believes are not representative of the Company's underlying business performance, such as the incurrence of costs for cost reduction actions and impairment charges, or the recognition of gains or losses on certain disclosed items. It is not possible, without unreasonable efforts, to predict the timing or occurrence of these events or the potential for other transactions that may impact future GAAP EPS. Similarly, it is not possible, without unreasonable efforts, to reconcile forecasted capital expenditures to future cash used for investing activities because management is not able to identify the timing or occurrence of future investment activity, which is driven by management's assessment of competing opportunities at the time the Company enters into transactions. Furthermore, it is not possible to identify the potential significance of these events in advance, but any of these events, if they were to occur, could have a significant effect on the Company's future GAAP results.
Access the fiscal 2023 fourth quarter earnings teleconference scheduled for 8:30 a.m. Eastern Time on November 7, 2023 by calling 323-794-2551 and entering passcode 2770249 or by accessing the Event Details page on Air Products’ Investor Relations website.