Air Products & Chemicals, Inc. : 24 January 2012 Air Products Reports Fiscal Q1 EPS Up One Percent to $1.36*

January 24, 2012

Quarter Summary

• Underlying sales increased 1%
• Tonnage gases sales up on new projects
• New China project is the largest on-site ASU order
• Announced intention to divest Continental Europe Homecare business

Air Products (NYSE:APD) today reported net income of $292 million*, or diluted earnings per share (EPS) of $1.36*, for its fiscal first quarter ended December 31, 2011, versus $296 million* and $1.35* for the first quarter of fiscal 2011.

The discussion of first quarter results and guidance in this release is based on non-GAAP comparisons. A reconciliation can be found at the end of this release.*

First quarter revenues of $2,423 million increased one percent versus the prior year on higher prices in Merchant Gases and Performance Materials. Higher volumes from new plants in Tonnage Gases were offset by lower Equipment sales and lower volumes in Performance Materials and Merchant Gases.

Sequentially, sales declined seven percent due to seasonality in Electronics and Performance Materials and Merchant Gases, plus currency effects. Operating income of $385 million was down five percent and margin of 15.9% was down 100 basis points from last year driven by lower Equipment sales and weaker Merchant Gases volumes.

John McGlade, chairman, president and chief executive officer, said, "As we expected, economic growth continued to slow this quarter, depressing volumes and limiting earnings growth. In spite of these economic headwinds, we did improve our operating performance, while lowering costs and winning significant new tonnage contracts."

First Quarter Segment Performance

• Merchant Gases sales of $989 million were unchanged versus prior year as lower volumes were offset by higher pricing in U.S./Canada and Europe Liquid Bulk and Packaged Gases. Operating income of $192 million decreased four percent from the prior year, due principally to weaker volumes. Sequentially, sales decreased five percent, driven by lower volumes and currency effects. Operating income was flat and margin was up 100 basis points sequentially on improved operating performance and productivity.
• Tonnage Gases sales of $810 million were up six percent on improved volumes from new plants. Operating income of $111 million decreased four percent from the prior year due to higher maintenance costs from outages. Sequentially, sales were down eight percent due to lower volumes and lower energy pass-through. Sequential operating income decreased 27% on higher maintenance costs, favorable gases contract modifications in the prior quarter and an unfavorable polyurethane intermediates contract modification in the current quarter.
• Electronics and Performance Materials sales of $535 million increased two percent on higher volumes and pricing. Electronics sales were up four percent while Performance Materials sales decreased one percent versus last year. Operating income of $78 million increased 13 percent from the prior year primarily due to improved cost performance. Sequential sales were down nine percent due to seasonal volume declines in both Electronics and Performance Materials. Operating income was down 15 percent sequentially on the lower volumes.
• Equipment and Energy sales of $89 million and operating income of $7 million were down 21 percent and 64 percent respectively versus prior year, driven by lower ASU and LNG project activity. Sequential sales decreased seven percent. The sales backlog versus prior year is up 48 percent.

Outlook

Looking ahead, McGlade said, "We expect second quarter economic activity to remain slow. We are forecasting Asia and North America growth to accelerate in the second half of our fiscal year. Coupled with our improved operating performance and new plant on-streams, this should lead to stronger sales and earnings growth in the last half of our year. Our recent orders, strong project backlog and robust bidding activity position us well to achieve our 2015 goals for growth, margin and returns."

Air Products is maintaining its guidance for fiscal 2012 of $5.90 to $6.30 per share. The company expects second quarter EPS to be between $1.37 and $1.43 per share.

Annual Meeting of Shareholders

Air Products (NYSE:APD) serves customers in industrial, energy and technology markets worldwide with a unique portfolio of atmospheric gases, process and specialty gases, performance materials, and equipment and services. Founded in 1940, Air Products has built leading positions in key growth markets such as semiconductor materials, refinery hydrogen, home healthcare services, natural gas liquefaction, and advanced coatings and adhesives. The company is recognized for its innovative culture, operational excellence and commitment to safety and the environment. In fiscal 2011, Air Products had revenues of $10.1 billion, operations in over 40 countries, and 18,900 employees around the globe. For more information, visit .

Note: This release contains "forward-looking statements" within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including earnings guidance, projections, targets and business outlook. 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, without limitation, slowing of global economic recovery; renewed deterioration in global or regional economic and business conditions; weakening demand for the Company's products; future financial and operating performance of major customers and industries served by the Company; unanticipated contract terminations or customer cancellations or postponement of projects and sales; the success of commercial negotiations; asset impairments due to economic conditions or specific product or customer events; the impact of competitive products and pricing; interruption in ordinary sources of supply of raw materials; the ability to recover unanticipated increased energy and raw material costs from customers; costs and outcomes of litigation or regulatory activities; successful development and market acceptance of new products and applications; the ability to attract, hire and retain qualified personnel in all regions of the world where the Company operates; the success of productivity programs; the success and impact of restructuring and cost reduction initiatives; achieving anticipated acquisition synergies; the timing, impact, and other uncertainties of future acquisitions or divestitures; significant fluctuations in interest rates and foreign currencies from that currently anticipated; the continued availability of capital funding sources in all of the Company's foreign operations; the impact of environmental, healthcare, tax or other legislation and regulations in jurisdictions in which the Company and its affiliates operate; the impact of new or changed financial accounting guidance; the impact on the effective tax rate of changes in the mix of earnings among our U.S. and international operations; and other risk factors described in the Company's Form 10K for its fiscal year ended September 30, 2011. The Company disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained in this document to reflect any change in the Company's assumptions, beliefs or expectations or any change in events, conditions, or circumstances upon which any such forward-looking statements are based.

*The presentation of non-GAAP measures is intended to enhance the usefulness of financial information by providing measures which our management uses internally to evaluate our baseline performance on a comparable basis. Presented below are reconciliations of the reported GAAP results to non-GAAP measures. Net income and diluted EPS data are attributable to Air Products.

Consolidated Results
	Operating Income		Operating Margin	Net Income		Diluted EPS
2012 GAAP	$	384.7	15.9%	$	248.1	$	1.16
2011 GAAP		360.6	15.1%		268.6		1.23
Change GAAP	$	24.1	80bp	$	(20.5)	$	(.07)
% Change GAAP		7%			(8)%		(6)%
2012 GAAP	$	384.7	15.9%	$	248.1	$	1.16
Spanish tax settlement		-	-		43.8		.20
2012 Non-GAAP Measure	$	384.7	15.9%	$	291.9	$	1.36
2011 GAAP	$	360.6	15.1%	$	268.6	$	1.23
Net loss on Airgas transaction (tax impact $16.3) (a)		43.5	1.8%		27.2		.12
2011 Non-GAAP Measure	$	404.1	16.9%	$	295.8	$	1.35
Change Non-GAAP Measure	$	(19.4)	(100bp)	$	(3.9)	$	.01
% Change Non-GAAP Measure		(5)%			(1)%		1%

	YTD 2012
2012 Guidance(b)	$5.90-$6.30
(a) Based on average statutory tax rate of 37.44%
(b)