Air Products (NYSE:APD) has launched a new business unit, Hydrogen Services Business, to help customers increase productivity and reliability at their own hydrogen plants. The company has been delivering operational excellence for years. It has addressed the demand set forth by customers and formalized the provision of this service by launching this new business.
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Hydrogen plants across the globe face problems related to operations, costs and efficiencies. Air Products is packaging all of its skill and technical expertise to aid the turnaround of these plants. The new Hydrogen Services Business will be lending its expertise in a number of areas, including the quantity of hydrogen to be produced from steam methane reformers (SMR), devising SMR turnarounds, increasing fuel efficiency, feedstock flexibility and mechanical integrity improvements, to name a few.
Air Products operates more than 100 hydrogen plants, producing nearly 3 billion standard cubic feet of hydrogen daily. The company has gained enough experience with its own plants, solving various issues, which it can now apply with modifications in other plants. To highlight some of its successful turnarounds, the company de-bottlenecked its California plant for additional production, regenerated its Texas plant to generate higher capacity despite impurities, and updated a plant after productivity assessment without capital expenditure and minimum expenses for technical hours.
Air Products has also provided similar services to its customers in the past. A North American refiner approached the company for a SMR turnaround to boost energy efficiency and increase production. Air Products completed a detailed assessment of the plant as well as a performance test, increasing production capacity by 20% and efficiency by over 10%.
The company has shown its expertise globally. It helped a South Asian firm, constrained in terms of time and budget, produce additional 50% hydrogen. Air Products expanded the company’s plant, de-bottlenecking and integrating the reforming capacity and purification sections of the plant, ahead of schedule at a much lower cost. In Europe, the company did wonders for a refiner by turning down the plant’s operations, as requested, and converted the hydrogen plant feedstock from expensive butane to a much more pocket-friendly natural gas. The feedstock conversion required minimal retrofit equipment, being simple and cost effective.
Air Products saw higher profits in the second quarter of fiscal 2016 (ended Mar 31, 2016), backed by restructuring and self-help measures. Adjusted earnings of $1.82 per share for the quarter beat the Zacks Consensus Estimate, while revenues of $2,271.2 million missed the same. The company reported double-digit EPS growth for the seventh consecutive quarter.
Air Products expects earnings from continuing operations in the third quarter of fiscal 2016 to be higher than the prior-year quarter by 13–16%. The company raised the earnings guidance for fiscal 2016 from $7.25−$7.50 to $7.40−$7.55 per share. However, the company lowered its capital expenditure guidance by $0.1 billion to $1.2 billion.
Air Products currently has a Zacks Rank #3 (Hold).
Some better-ranked companies in the chemical space include Innophos Holdings Inc (NASDAQ:IPHS) , Innospec Inc. (NASDAQ:IOSP) and BASF SE (OTC:BASFY) , all sporting a Zacks Rank #1 (Strong Buy).
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BASF SE (BASFY): Free Stock Analysis Report
AIR PRODS & CHE (APD): Free Stock Analysis Report
INNOPHOS HLDGS (IPHS): Free Stock Analysis Report
INNOSPEC INC (IOSP): Free Stock Analysis Report
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