ARKAY Arkema (PK)

Praxair Inc. (PX) reported its financial results for the fourth quarter 2012 with adjusted earnings per share coming in at $1.38; 2 cents above the year-ago earnings of $1.36 and in line with the Zacks Consensus Estimate.

For 2012, adjusted earnings per share were recorded at $5.57, way above the year-ago earnings of $5.43 but in line with the Zacks Consensus Estimate. Including certain non-GAAP items, GAAP earnings for the year were $5.61 per share.

Earnings for both the quarter and the year were within management’s predicted range of $1.35-$1.40 and $5.54-$5.59, respectively.

Revenue: Total revenue in the fourth quarter was $2,799 million, up 0.1% year over year as favorable price and acquisition impacts were offset by negative foreign currency translation.

During the quarter, healthy performance at manufacturing, energy, and metals markets helped push North American revenue by 2% to $1,416 million. Revenue in Europe declined 5% to $363 million with the fall largely triggered by a negative foreign currency impact.

Revenue in South America decreased 9% to $484 million while that in Asia was up 12% to $374 million, driven by a volume growth in India, China and Korea. Surface Technologies revenue was $162 million in the quarter versus $160 million in the year-ago quarter.

For 2012, total revenue was $11,224 million, compared with $11,252 million in 2011.

Margins: Cost of sales in the quarter plummeted 0.9% year over year and represented 56.6% of the total revenue. Operating profit was down slightly to $616 million while operating margin stood at 22.0% versus 22.1% in the year-ago quarter.
    
Balance Sheet: Exiting the fourth quarter, Praxair’s cash and cash equivalents increased 45.4% sequentially to $157 million while long-term debt balance also shot up 4.6% to $6,685.0 million.

Cash Flow: Cash flow generated from operating activities in the fourth quarter amounted to $879 million, up from $791 million in the year-ago quarter. Capital spending shot up 2.4% to $586 million, with a major portion being invested for a new production plant setting.

Share Repurchases/Dividends: Praxair pursues a consistent strategy of returning cash to shareholders through dividend payments and share repurchases. During the fourth quarter 2012, the company paid $163 million in dividends and repurchased shares worth $185 million, net of issuances.

Along with the quarterly results, the company’s Board of Directors declared a 9% increase in its quarterly dividend rate that rose from 55 cents to 60 cents per share. The revised dividend will be paid on March 15, to shareholders of record on March 7.

Outlook: For the first quarter of 2013, management projects earnings per share to be within $1.35-$1.40 per share range.

For 2013, earnings per share are expected to be within $5.85-$6.10, reflecting a 5%-10% increase from the 2012 level. Sales are expected to be roughly $12 billion; project backlog remains strong at $2.6 billion range; anticipated to contribute 4%-6% growth in the year.

Capital spending is expected to be in the range of $1.8-$2.0 billion and effective tax rate guidance is projected to be 28%.

Praxair Inc. is the largest industrial gas producer and supplier in the Americas and one of the leading gas producing companies worldwide. The stock currently carries a Zacks Rank #4 (Sell).

The company’s prime competition Air Products & Chemicals Inc. (APD), with a Zacks Rank #2 (Buy), also came out with its fiscal first quarter 2013 (ended December 31, 2012) results today. Earnings per share posted were $1.30, up from $1.26 reported in the year-ago quarter and a cent above the Zacks Consensus Estimate of $1.29. Other stocks in the industry worth mentioning are Arkema S.A. (ARKAY) and BASF SE (BASFY). These stocks carry a Zacks Rank #1 (Strong Buy) and Zacks Rank #2 (Buy), respectively.
 

 
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