LEHIGH VALLEY, Pa.,
April 4, 2016 /PRNewswire/
-- Air Products (NYSE: APD) has announced that the Company
will exit its Energy-from-Waste (EfW) business. As a result,
the EfW business segment will be accounted for as a discontinued
operation effective in the Company's second fiscal quarter.
Also in the second quarter, Air Products expects to record a
pre-tax charge in the range of $900 million
to $1.0 billion in discontinued operations, primarily to
write down assets associated with the EfW business to their
realizable value.
In previous public comments, Air Products' management has
communicated the challenges with the Tees Valley, UK
projects. Testing and analysis completed during the Company's
fiscal second quarter indicated that additional design and
operational challenges would require significant time and cost to
rectify. Consequently, the Board of Directors has decided
that it is no longer in the best interest of the Company and its
shareholders to continue the Tees Valley projects. Air
Products will work to optimize the cash value of its
investments. Exiting the EfW business will allow the Company
to direct its resources to its core business of Industrial
Gases.
The Board of Director's decision to exit EfW is expected to have
the following impacts on the Company's financial reporting and
metrics:
- On a historical basis, the impact of moving the EfW segment to
discontinued operations will increase EPS from continuing
operations by about 3 to 4 cents for
FY14 and FY15, as there was a small operating loss reported in the
EfW segment.
- The EfW asset write-down is expected to result in an increase
in the Company's Return on Capital Employed (ROCE) from continuing
operations by approximately 80 basis points, driven by removing the
asset value from the denominator in this calculation.
- A modest future cash tax benefit is expected from the
write-off.
- Additional details on these financial impacts will be available
with the Company's fiscal Q2FY16 earnings announcement on
April 28.
"Air Products is focused on our core Industrial Gas
business. We pushed very hard to make this new EfW technology
work and I would like to thank the team who worked so
diligently. We appreciate the hard work of our employees and
contractors at the site, and certainly understand their
disappointment in this decision. We are also disappointed
with the outcome," said Seifi
Ghasemi, chairman, president and CEO of Air Products.
About Air Products
Air Products (NYSE:APD) is a world-leading Industrial Gases
company celebrating 75 years of operation. The company's core
Industrial Gases business provides atmospheric and process gases
and related equipment to manufacturing markets, including refining
and petrochemical, metals, electronics, and food and beverage. Air
Products is also the world's leading supplier of liquefied natural
gas process technology and equipment. The Company's Materials
Technologies business serves the semiconductor, polyurethanes,
cleaning and coatings, and adhesives industries.
The Company had fiscal 2015 sales of $9.9
billion and was ranked number 284 on the Fortune 500 annual
list of public companies. Approximately 20,000 employees in 50
countries strive to make Air Products the world's safest and best
performing Industrial Gases company, providing sustainable
offerings and excellent service to all customers. For more
information, visit www.airproducts.com.
NOTE: This release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995
concerning the expected amount and timing of charges and cash
expenditures. These forward-looking statements are based on
management's reasonable expectations and assumptions as of the date
of this release. Actual performance and financial results may
differ materially from projections and estimates expressed in the
forward-looking statements because of many factors not anticipated
by management, including the risk that the charges or cash
expenditures may be in excess of the estimated amounts or may occur
in different fiscal periods than expected, the Company's inability
to complete actions to exit the EfW business within the time
periods anticipated, and other risk factors including those
described in the Company's Form 10K for its fiscal year ended
September 30, 2015.
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SOURCE Air Products