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Air Products and Chemicals, Inc. APD benefits from its project investments, productivity actions and new business deals amid the softness in China and Europe.
Bạn đang xem: Here’s Why You Should Retain Air Products Stock in Your Portfolio
The company’s shares have gained 4.8% over a year compared with the Zacks Chemicals Diversified industry’s 11.2% decline.
Image Source: Zacks Investment Research
Let’s find out why APD stock is worth retaining at the moment.
Air Products is well-placed 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 growth projects. These projects are expected to be accretive to earnings and cash flows.
APD is realizing the benefits of the completion of the second phase of the Jazan project in Saudi Arabia. Air Products’ carbon-free green hydrogen joint venture (JV) project in Saudi Arabia with NEOM and ACWA Power is also on track. The JV is building the world’s largest green hydrogen facility to produce green ammonia at scale. Roughly 60% of construction work is complete and the project is expected to come on stream in end-2026.
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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.
APD also remains committed to maximizing returns to shareholders leveraging strong balance sheet and cash flows. Air Products’ board, in early 2024, increased its quarterly dividend to $1.77 per share. This marked the 42nd straight year of dividend increase. APD expects to return roughly $1.6 billion to shareholders through dividends for 2024.
The slowdown in China and Europe may affect Air Products’ business in these regions. The sluggish China economy remains a headwind over the near term. A slower economic recovery in China and the softness in electronics may affect volumes. APD has provided a conservative forecast for the first quarter of fiscal 2025 factoring in the concerns about economic activities in China.
Air Products is also seeing weak demand for merchant products in Europe. Its volumes in Europe were flat in the fiscal fourth quarter as the contribution of the new assets in Uzbekistan offset weaker merchant volumes. The lack of growth in industrial output in Europe is a concern for the near term.
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