Air Products and Chemicals looks for its profits to expand like the gases it sells. The company provides gases such as argon, hydrogen, nitrogen, and oxygen to manufacturers, health care facilities, and other industries. Air Products' largest segment is Merchant Gases, which manufactures atmospheric, process, and specialty gases delivered from tanker, truck, trailer, or on-site. The company's Tonnage Gases segment serves the global refining and chemical industries, while its Electronics and Performance Materials unit serves electronics and other manufacturing companies. Air Products also makes gas containers and equipment that separates air, purifies hydrogen, and liquefies gas.
Air Products does just under half of its business in North America, but it also operates in more than 40 countries. Overseas, the company focuses on health care gases in Europe and industrial gases for makers of electronics and performance materials in Asia, its fastest-growing market.
Asia has been a key focus of the company's strategy for growth, and it is aggressively pursuing new contracts in energy-hungry China, including a contract to supply tonnage oxygen and nitrogen to a coal to syngas plant in Nanjing and one for the startup of a tonnage oxygen plant in Hebei province. Air Products is also growing its Electronics business in leading markets of Korea and Taiwan, as well as in the US. It is building the first onsite, large-scale specialty gases plant to supply ammonia in China. At home the company has been busy integrating its operations, including building a new 600-mile pipeline to connect its Texas and Louisiana hydrogen pipeline systems and improve supply reliability.
The company's revenues in 2011 reflected its success in managing its diverse portfolio. Air Products' sales gained 12% in 2011 over the previous year, due to strong volume growth, to reach $10.08 billion. The increase was led by higher sales volumes in its Electronics and Performance Materials, Tonnage Gases, and Merchant Gases segments. Net income increased 19% over that of 2010, even though the company realized a net loss related to its Airgas transaction in 2011, when it acquired stock in advance of a failed takeover bid for its rival.
The move for Airgas also marked a big change in Air Products' acquisitions plan. In the latter half of the past decade, the company had made a strategic move into Europe. It also divested its chemicals and US health care gases businesses, continuing a trend toward building up the company's international business. Had Air Products acquired Airgas, it would have benefitted from Airgas' position in the US packaged gases business.
In addition to growing organically, the company has been divesting operations to focus on its higher growth operations and to pursue strategic acquisitions.
By early 2012 the company began divesting units to focus on more profitable operations. It sold its homecare business in continental Europe (which supplied oxygen and infusion treatments in Belgium, France, Germany, Portugal, and Spain) to Germany's Linde for $750 million. The company also began evaluating its homecare assets in Argentina, Brazil, Ireland, and the UK.
With more money in its coffers from divestments, that year the company acquired Germany-based ROVI Cosmetics International, which develops delivery systems for the personal care industry in Europe. ROVI Cosmetics' product lines complement Air Products lines that include various polymers used in such brands as Intelimer, Deposilk, and Hybridu. The unit is now part of the company's Performance Materials division.
It also acquired DuPont's stake in their 50-50 joint venture, DuPont Air Products NanoMaterials. The venture, known as DA NanoMaterials, operates in Arizona and Taiwan and serves the global semiconductor and wafer polishing industries. The acquisition expands the company's electronics materials assets.
As demand for its products steadily increases, the company has been expanding its production capacity by investing in plants, mostly through joint ventures. In 2011 Air Products formed a joint venture with Linde Products to process and package high-purity anhydrous hydrochloric acid for use by semiconductor makers to clean reactors and chambers. The venture, called Hydrochlor, is being built in Freeport, Texas, to package acid supplied by a nearby Dow Chemical plant. Hydrochlor's startup was scheduled for the second quarter of 2012.
Through a joint venture with Technip, Air Products is building a hydrogen production facility in Sichuan, China, for PetroChina Company, marking the first time a state-owned refinery in China has outsourced its hydrogen production. The joint venture had previously built an air separation unit in China to supply oxygen and nitrogen to PetroChina. To expand its presence in the Middle East, Air Products formed a joint venture in 2010 with First Abu Dhabi Management Services; it holds a 49% stake in the venture, Air Products Gulf Gas.
In 2010 Air Products planned to build four plants through its INOX Air Products joint venture in India. The new plants, set to come online in 2012, will produce liquid oxygen, liquid nitrogen, and liquid argon in three Indian states, as well as supply nitrogen and hydrogen to Saint Gobain Glass India. – less