Praxair Inc. (PX), together with its Canadian subsidiary Praxair Canada Inc., announced an escalation in product prices, facility fees/monthly basic charges and other items.
Prices of nitrogen, oxygen, argon, hydrogen, and carbon dioxide were raised up to 10%, helium up to 5% and facility fees or monthly basic charges and cylinder rental rates up to 10%. The price rise, effective from September 1, 2010, will be applicable to the bulk and packaged industrial and medical gas customers in the United States and Canada.
Praxair is one of the leading companies engaged in the production and distribution of industrial gases, primarily catering to demands in North America, South America, Europe, and Asia. The company seems to have overcome the recessionary impact and now stands well positioned to leverage from the growing demand from almost all geographical regions. End markets, especially chemical, electronic and metal are expected to boost demand.
Praxair has an extensive pipeline of projects with roughly 10 new projects scheduled to be started in the second half of 2010. The project backlog that is incessantly growing is likely to reach roughly $2.5 billion in 2010 compared with $2.0 billion in 2009.
For the third quarter of fiscal 2010, management provided its EPS guidance range of roughly $1.15-$1.20. The company reiterated its full year EPS guidance of $4.60-$4.70, revenue expectation of approximately $10 billion, capital expenditure target of $1.4 billion and tax rate of about 28%.
However, Praxair’s large international presence gives rise to risks related to fluctuations in foreign currencies and geopolitical uncertainties, while volatility in energy prices also jeopardizes energy supply in adverse economic conditions. The company faces stiff competition from Air Products and Chemicals Inc. (APD); Airgas Inc. (ARG); Linde AG (LNAGF.PK); Chromalloy Gas Turbine Corporation and Bodycote (BOY.L).
We currently maintain our Neutral recommendation on the stock.
