Praxair Q1 Profit Meets View, But Sales Miss; Boosts 2014 Outlook

(RTTNews) - Industrial gas producer Praxair, Inc. (PX) reported Wednesday a profit for the first quarter that grew eight percent from last year, reflecting strong operating margin and sales growth. Earnings per share matched analysts' expectations, while quarterly sales missed their estimates.

The company also provided earnings guidance for the second quarter, below Street view, and raised its earnings and sales forecast for the full-year 2014.

"Praxair delivered solid results in the first quarter with sales growth of 9% and operating profit growth of 12%, excluding the impact of currency headwinds. Organic growth of 6% reflected contributions from new projects in North America and Asia, as well as modest volume growth in our South America, Europe and Surface Technologies operating segments," Chairman and CEO Steve Angel said in a statement.

The Danbury, Connecticut-based company posted net income of $448 million or $1.51 per share for the first quarter, higher than $391 million or $1.30 per share in the prior-year quarter, which included a charge of $0.08 per share related to the Venezuela currency devaluation.

On average, 22 analysts polled by Thomson Reuters expected the company to report earnings of $1.51 per share for the quarter. Analysts' estimates typically exclude special items.

Sales for the quarter grew 5 percent to $3.03 billion from $2.89 billion in the same quarter last year, but missed seventeen Wall Street analysts' consensus estimate of $3.06 billion by a whisker.

Excluding foreign currency impact, sales grew 9 percent. Organic sales grew 6 percent, excluding a 2 percent contribution from acquisitions. Sales were driven by higher on-site volumes from new project start-ups primarily in North America and Asia.

Sales in North America were $1.58 billion, up 8 percent from last year, and sales in Europe grew 7 percent year-on-year to $397 million.

In South America, sales increased 7 percent to $488 million from the prior-year quarter, and sales grew also 7 percent in Asia to $392 million from last year. Praxair Surface Technologies had first-quarter sales of $169 million, up 4 percent from last year.

Praxair noted that its focus on achieving productivity benefits and higher price to offset cost inflation produced strong operating leverage and an operating margin of 22.3 percent.

The company said it completed U.S. packaged gas acquisitions in Texas, Oklahoma and Michigan, and acquired full ownership of mid-Atlantic joint venture. The company also made density and efficiency improvements with acquisition of industrial gas business in Italy and divestiture in France.

In a separate communiqué, the company declared a quarterly dividend of $0.65 per share, payable on June 16 to shareholders of record on June 6, 2014.

Looking ahead to the second quarter, Praxair expects earnings in a range of $1.55 to $1.60 per share, while analysts expect earnings of $1.62 per share.

For fiscal 2014, Praxair said it currently expects earnings in a range of $6.30 to $6.50 per share, on projected sales between $12.4 billion and $12.8 billion, compared to the prior forecast for earnings in the range of $6.25 to $6.55 per share and sales between $12.3 billion and $12.8 billion.

Street is currently are looking for full-year 2014 earnings of $6.47 per share on annual revenues of $12.63 billion.

"We expect base volumes for the remainder of 2014 to continue to reflect modest growth in-line with the current macro-economic environment. Through continued operational excellence, project execution and financial discipline, we expect to continue to deliver increasing cash flow and earnings per share. We expect contribution from new projects and acquisitions to increase return on capital in the second half of the year," Angel added.

In Wednesday's regular trading session, PX is currently trading at $130.99, down $0.98 or 0.74% on a volume of 0.39 million shares.