Air Products and Chemicals, Inc. APD is benefiting from investments in high-return projects, new business deals, acquisitions and productivity initiatives amid headwinds from weak helium prices.
Air Products, which is among the prominent players in the chemical space along with Dow Inc. DOW, Eastman Chemical Company EMN and Celanese Corporation CE, is well-positioned to gain from its investments in high-return industrial gas projects and productivity measures. It remains focused on its gasification strategy and is executing its key growth projects. These projects are expected to be accretive to earnings and cash flows.
The company has an industrial gas backlog of roughly $3 billion in projects, mainly supporting electronics customers. It plans to invest about $1.5 billion annually in traditional industrial gas projects.
Air Products is currently pursuing the NEOM green hydrogen project in Saudi Arabia. The project is expected to supply up to 1.2 million tons per year of renewable ammonia. Air Products and Yara International have finalized a marketing and distribution agreement for renewable ammonia from the project. Under the deal, Yara will transport and market green ammonia not sold by Air Products as renewable hydrogen.
Air Products is also driving productivity to improve its cost structure. It is seeing the positive impacts of its productivity actions. Benefits from additional productivity and cost improvement programs are likely to support its margins moving ahead.
The company also remains focused on improving pricing amid an inflationary environment. Air Products is also taking action to right-size the organization through headcount reductions and expects these reductions to result in $250 million in annual cost savings once completed. It has already realized roughly $75 million in savings from headcount reductions, as divulged in its fiscal third-quarter earnings call.
Despite improving volumes, Air Products faces headwinds from lower helium prices. It saw pressure on helium pricing in the most recent quarter. Helium-related headwinds on earnings in the fiscal third quarter were roughly 2%. Air Products sees roughly 2% and 3% headwinds for the fiscal fourth quarter and fiscal 2026, respectively. Lower helium pricing is expected to continue to offset some of the benefits from stronger on-site volumes, electronics demand and pricing initiatives.
Air Products, on its fiscal third quarter call, raised its fiscal 2026 adjusted earnings guidance to $13.39-$13.49 per share from the prior range of $13.00-$13.25. For the fourth quarter of fiscal 2026, Air Products expects adjusted earnings of $3.55-$3.65 per share.
Another prominent chemical maker, Dow expects approximately $200 million in additional benefits from Transform to Outperform during 2026. This raises the company’s expected total in-year benefits from self-help initiatives to more than $1.3 billion. For the second half of 2026, DOW plans to focus on growth and innovation in attractive end markets, investments to strengthen the portfolio and balanced capital allocation. Dow expects the growth and productivity benefits from Transform to Outperform to accelerate through the remainder of 2026 and into 2027.
Eastman Chemical, on its second-quarter call, said that it expects 2026 earnings to improve significantly from 2025. EMN remains on track to deliver cost reductions of $125 million to $150 million, net of inflation, and continues to project capital expenditures of approximately $400 million. Operating cash flow is now expected to approach $900 million, modestly below the prior expectation of approaching the 2025 level.
Celanese projects third-quarter adjusted earnings in the range of $1.35-$1.75 per share. For 2026, CE continues to expect adjusted earnings of approximately $6 per share. Celanese also maintained its full-year free cash flow guidance of $700-$800 million.
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