Strong industrial gas demand from solar panel and semiconductor makers lifted Air Products and Chemicals Inc's quarterly profit above expectations and prompted the company to boost its fiscal 2011 forecast.
Both the results and outlook from Air Products, which is seeking to buy rival Airgas Inc , show that demand for the oxygen, argon and other gases needed for manufacturing and construction remains brisk, a positive sign for the global economy.
We are well on our way to achieving double-digit earnings growth, improved return on capital and 17 percent operating margins in 2011, Air Products Chief Executive Officer John McGlade said in a statement.
Net income for the first quarter ended December 31 rose to $269 million, or $1.23 per share, from $252 million, or $1.16 per share, a year earlier.
Excluding a $27 million charge from the offer to buy Airgas, earnings per share were $1.35, slightly above the $1.34 that analysts had forecast, according to Thomson Reuters I/B/E/S.
I thought it was a strong quarter, Monness, Crespi, Hardt & Co analyst Christopher Shaw said. To see the continued strength is definitely a positive.
Revenue rose 10 percent to $2.39 billion. Analysts expected $2.35 billion.
Sales rose in all of the company's units. In the electronics and performance materials unit, which supplies parts to make semiconductors, solar panels and other electronic gadgets, sales increased 21 percent and operating income rose 42 percent.
Air Products raised the lower end of its fiscal 2011 profit forecast by 5 cents per share to a range of $5.55 to $5.70 per share. Analysts expect $5.65.
The increased guidance is a good sign because currency has moved against them in the past, Shaw said.
The company forecast second-quarter profit of $1.36 to $1.40 per share. The analysts' average estimate is $1.34.
(Reporting by Ernest Scheyder and Matt Daily; Editing by Derek Caney and Lisa Von Ahn)