Air Products Announces Acceleration of Actions to Lower Its Cost Structure
LEHIGH VALLEY, Pa. – Air Products (NYSE:APD) today announced that it will take a restructuring charge to earnings in its fiscal 2009 first quarter to move to a lower cost structure and better align its businesses to reflect rapidly declining economic conditions around the world. The company also announced that it is revising its earnings outlook for its fiscal 2009 first quarter.
The pre-tax charge to earnings in the first quarter is expected to be in the range of $140 to $160 million, or approximately $0.43 to $0.50 per share. About three-quarters of this restructuring charge is for severance costs related to the elimination of approximately 1,300 positions, or about seven percent of Air Products’ global workforce. The reductions are targeted at reducing overhead and infrastructure costs, reducing and refocusing elements of the company’s technology and business development spending, and lowering its plant operating costs. The remainder of the restructuring charge is for business exits and asset management actions.
The restructuring charge is expected to reduce fixed costs by approximately $50 million in fiscal 2009, with savings expected to exceed $110 million in fiscal 2010 and beyond.
Chairman, President and Chief Executive Officer John McGlade said, “These cost-reduction actions are necessary to reach our margin improvement goals. They are also in response to declining business conditions around the world. This is clearly one of the weakest business environments we have seen across our end-markets. However, our financial position remains strong, and with a significant portion of our business under medium- and long-term supply contracts, we expect to continue generating strong cash flow.”
The company also posted its quarter-to-date sales through November on its websiteat www.airproducts.com/Invest/financialnews/current.htm. Sales were down six percent, principally due to a falloff in consumer demand for semiconductors and liquid crystal displays impacting demand in Air Products’ Electronics business, and a negative currency impact, as the dollar has strengthened.
Based on current financial data, fiscal 2009 first quarter diluted earnings per share (EPS) from continuing operations is now expected to be in the range of $0.95 to $1.00, excluding the restructuring charge.
Air Products plans to provide full fiscal 2009 first quarter financial results on Wednesday, January 21, 2009 and will issue a press release later this month with the teleconference details.
Air Products (NYSE: APD) serves customers in industrial, energy, technology and healthcare markets worldwide with a unique portfolio of atmospheric gases, process and specialty gases, performance materials, and equipment and services. Founded in 1940, Air Products has built leading positions in key growth markets such as semiconductor materials, refinery hydrogen, home healthcare services, natural gas liquefaction, and advanced coatings and adhesives. The company is recognized for its innovative culture, operational excellence and commitment to safety and the environment. Air Products has annual revenues of over $10 billion, operations in more than 40 countries, and 21,000 employees around the globe. For more information, visit http://www.airproducts.com.
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