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  • 1. Paul Huck SVP and CFO 19th Annual Citi Chemicals Conference December 2, 2008 ,
  • 2. Forward- Forward-Looking Statements Forward-Looking Statements This presentation contains “for ard looking statements” within the safe harbor pro isions of the Pri ate Securities Litigation “forward-looking ithin provisions Private Sec rities Reform Act of 1995. These forward-looking statements are based on management’s reasonable expectations and assumptions as of the date of this document regarding important risk factors. Actual performance and financial results may differ materially from projections and estimates expressed in the forward-looking statements because of many factors, including, without limitation, limitation continuing deterioration in economic and business conditions; weakening demand for the company's products future products, 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; 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; consequences of acts of war or terrorism impacting the United States’ and other markets; the effects of a pandemic or epidemic or a natural disaster; charges related to current portfolio management and cost reduction actions; the success of implementing cost reduction programs and achieving anticipated acquisition synergies; the timing, impact, timing impact and other uncertainties of future acquisitions or divestitures; the ability to attract hire and retain qualified attract, personnel in all regions of the world where the Company operates; 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 new or changed 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 standards; and the timing and rate at which tax credits can be utilized. 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 based. 2
  • 3. Air Products At a glance l  $10.4B company  Diverse markets and geographies P ii Positioned for continued long-term value df i dl l creation Geographic Sales Business Segment Sales ROW (2%) Asia Merchant Tonnage (18%) ( (40%)) (35%) United States (41%) Europe (34%) Electronics & Equipment Canada/Latin Performance &E Energy America (5%) Materials (4%) (21%) 3
  • 4. Air Products Value Proposition Profitable G P fit bl Growth th  Stability – Long term contracts – Consistent and predictable cash flows – Strong balance sheet  Growth – Project backlog –EEnergy opportunities t iti  Improving returns –MMargin improvement ii t – Productivity – Increasing dividends – Share buyback 4
  • 5. Supply Modes Durable B i D bl Business M d l Models 10, 10 15 and 20-year contracts Take-or-pay minimum volumes Contractual energy pass-through Equipment & Formula escalation Onsite/Pipeline Services 13% 40% Package Gases 3 5 year contracts 3-5 yea co t acts & Specialty Regional business Materials Liquid/Bulk 25% 22% Cost pass-through/surcharges 5
  • 6. APD Transformation Creating Shareholder V l C ti Sh h ld Value FY08 Sales FY00 Sales $10.4B $5.7B Merchant Tonnage (40%) Tonnage (35%) Merchant Chemicals Equipment & Energy Electronics Electronics & El t i & P f M t’l Perf Mat’ls Equipment Performance & Energy Materials (4%) (21%) 6
  • 7. Fiscal Year 2008: Fifth Y Year of D bl -Di it Growth* f Double Digit G Double- th* Continuing Operations gp Growth vs PY vs. FY07 FY08 $∆ %∆ ($Millions) Sales $9,148 $10,415 $1,267 14% Operating Income 1,358 1,522 164 12% Operating Margin 14 8% 14 6% 14.8% 14.6% (20bp) Equity Affiliates Inc. 114 145 31 27% Net Income 953 1,107 1 107 154 16% EPS ($/share) 4.27 5.05 0.78 18% ROCE (%) 12.5% 12 5% 13.0% 13 0% 50bp 50b $787MM in shares repurchased, $650MM authorization remaining   C ti Continued to improve the portfolio, sold E l i dt i th tf li ld Emulsions & HPPC, selling U S HPPC lli U.S. Healthcare business 7 * Comparison is non-GAAP, see appendix for reconciliation
  • 8. Equity Affiliate Income $145M FY08 R Revenues 100% basis ~$2B bi $2B Italy $580M India Mexico $105M Thailand $630M $100M South Africa $150M 8
  • 9. Merchant Gases Solid G S lid Growth & P f th Performance $MM $MM Operating Income & Margin Sales 900 20% 14% CAGR 4500 18% 800 4000 16% 700 3500 14% 600 3000 12% 500 2500 10% 400 2000 8% 1500 300 6% 1000 200 4% 500 100 2% 0 0 0% 2004 2005 2006 2007 2008 2004 2005 2006 2007 2008 Revenue by region ($, FY08)  C ti Continue d li delivering double-digit growth i d bl di it th Europe LB – Growth in Asia Europe PG – Expanding in Eastern/Central Europe No. Amer. LB Europe HC – New offerings success Asia  Achieve 20% operating margins Equipment ROW 9
  • 10. Merchant Gases Growth through I G th th h Innovation ti Cleanfire® HRi™ Efficient oxygen burner plant design A winning combination! 10
  • 11. Electronics & Performance Materials Margin Improvement F M iI t Focus $MM $MM Operating Income & Margin Sales 300 15% 2500 10% CAGR % 250 12% 2000 200 9% 1500 150 6% 1000 100 3% 500 50 0 0% 0 2004 2005 2006 2007 2008 2004 2005 2006 2007 2008 Revenue by region ($, FY07)  Solid profit and return improvement driven by both Electronics and di b b th El t i d Performance Materials Asia (40%)  Targeting double-digit growth North America (40%)  Achieve 15% operating margins Latin America (2%) Europe ( (18%) ) 11
  • 12. Electronics Thin- Thin Fil Solar Thi -Film S l – a growth opportunity th t it The value and differentiation we bring . . . – Global leader in key products – Comprehensive offerings and turnkey solutions – Technical expertise in thin f films A 1 GW facility can generate $150MM in annual revenue Equip/Services Bulk Dopants Onsites NF3 Silane 12
  • 13. Tonnage Gases High Growth S Hi h G th Segment t $MM $MM Operating Income & Margin Sales 600 20% 4000 18% CAGR 18% 3500 500 16% 3000 14% 400 2500 12% 300 10% 2000 8% 1500 200 6% 1000 4% 100 500 2% 0 0% 0 2004 2005 2006 2007 2008 2004 2005 2006 2007 2008 Investment by Region  Significant profit growth and g p g improvement in returns on capital North America while bringing on new investments  Large plant bidding opportunities (both H2 & O2) continue Europe & Middle East  Anticipate continued 10%-15% H2 Asia growth 13
  • 14. Tonnage Gases Growth from profitable new i G th f fit bl investments t t Recent announcements: R t t Superior returns:  Tangshan O2 Continuous  Nanjing O2 improvement  Petaling O2 Operating  Weihe O2 bonuses  Isle of Grain N2 Additional  Abu Dhabi O2 products  Garyville H2 Franchise  Baton Rouge H2 g positions  Exxon Baytown H2 Base take  Port Arthur H2 or pay  Nanticoke O2 14
  • 15. Refinery Hydrogen and Energy Driving Hydrogen G Di i Hd Growth th  Transport fuels growth 15%  More heavy, sour crude 15% 45%  Clean fuels legislation  Increased outsourcing trend 25% Conversion Crude Clean Fuels Outsourcing 15
  • 16. Major Hydrogen Pipeline Positions – US / Canada / Europe Sarnia Canada 40 Baton Rouge Edmonton, 40 Suncor Louisiana Canada Air Products Plaquemine Canada 40 Geismar Shell Refinery Geismar 16 Lake 10 ST. Pontchartrain Cosmar 16 CLAIR RIVER Convent Petro-Canada Imperial Oil Nola New Orleans Taft Sherwood Corunna Park 21 14 Chalmette Rotterdam 14 Europoort Pernis Dominguez Southern Channel 91 California 405 Zwijndrecht Botlek 190th St. 710 To Moerdijk Carson H2 Van Ness Long 110 Ave. Beach Arpt. Texas BP Lake Charles Sepulveda Beaumont Blvd Carson 405 APD HyCO facilities Shell Mont Belvieu 69 10 Wilmington Conoco Phillips City of Houston H2 pipeline Battleground 73 Carson 1 CO pipeline Port Arthur 10 Anaheim Street Valero Wilmington Baytown 2 Syngas pipeline Conoco Phillips 610 Wilmington Wilmington H2 110 225 45 LaPorte Pasadena Bayport Clear Lake Texas City 16
  • 17. Margin Improvement Goal 17% in 2010 i 17% in 2010 Margin Overhead Maint&Distr Costs Plant Costs Efficiency Price / Raw Materials M il Volume $150MM Contribution to Operating Profit in 2010 17
  • 18. 2009 and Beyond Profitable Growth and Margin Expansion  Near term actions: – Cost reduction – Productivity – Margin improvement  Long term focus: –LLeverage new opportunities for growth t iti f th – Sustainable double-digit EPS growth – ROCE 3% - 5% above our cost of capital b tf it l 18
  • 19. Thank you y www.airproducts.com p
  • 20. Appendix Full Y F ll Year FY2008 Comparisons C i FY08 FY07 Operating Operating Cont Ops Operating Operating Cont Ops Sales Income Margin Income EPS Sales Income Margin Income EPS GAAP Measure $10,414.5 $1,495.8 14.4% $1,090.5 $4.97 $9,148.2 $1,375.6 15.0% $1,019.6 $4.57 Gain G i on contract settlement t t ttl t ($36.8) ($36 8) ($23.6) ($23 6) ($0.11) ($0 11) Global cost reduction plan $13.7 $8.8 $0.04 Pension Settlement $26.3 $16.5 $0.08 $10.3 $6.4 $0.03 Donation/sale of cost investment ($5.0) ($19.8) ($0.09) Tax Audit Settlements/Adjusts. (Q407) ($11.3) ($0.05) Tax Audit Settlements/Adjusts. (Q307) ($27.5) ($0.12) Non GAAP Measure $10,414.5 $1,522.1 14.6% $1,107.0 $5.05 $9,148.2 $1,357.8 14.8% $952.6 $4.27 Q408 vs. Q407 Gaap GAAP Measure 14% 9% (60 bp) 7% 9% Non GAAP Measure 14% 12% (20 bp) 16% 18% 20
  • 21. Appendix: ROCE $ Millions Quarter Ended Q406 Q107 Q207 Q307 Q407 Q108 Q208 Q308 Q408 Numerator Operating Income Reported 321.6 313.6 360.0 380.4 380.4 348.6 393.7 373.1 Equity Affiliate Income 27.3 27.5 29.5 30.1 25.3 42.4 46.5 30.8 Earnings before tax as reported 348.9 341.1 389.5 410.5 405.7 391.0 440.2 403.9 Global Cost Reduction Plan 0.0 00 0.0 00 0.0 00 13.7 13 7 0.0 00 0.0 00 0.0 00 0.0 00 Gain on Contract Termination 0.0 0.0 0.0 (36.8) 0.0 0.0 0.0 0.0 Pension Settlement Charge 0.0 0.0 0.0 10.3 0.0 26.3 0.0 0.0 Donation/Sale of Cost Investment 0.0 0.0 0.0 (5.0) 0.0 0.0 0.0 0.0 U.S. Healthcare Impairment 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Earnings before tax ex items 348.9 348 9 341.1 341 1 389.5 389 5 392.7 392 7 405.7 405 7 417.3 417 3 440.2 440 2 403.9 403 9 Effective tax rate as reported 26.6% 26.5% 17.6% 18.4% 26.9% 25.3% 25.0% 23.3% Earnings after tax as reported 256.1 250.7 320.9 335.0 296.6 292.1 330.2 309.8 Effective tax rate ex items 26.6% 26.5% 25.7% 25.6% 26.9% 26.1% 25.0% 23.3% Earnings after tax ex items 256.1 250.7 289.4 292.2 296.6 308.4 330.2 309.8 4 Qtr trailing AT earnings (numerator) - as reported 1,162.7 1,203.2 1,244.6 1,253.9 1,228.7 4 Qtr trailing AT Earnings (numerator) - ex items 1,088.4 1,128.9 1,186.6 1,227.4 1,245.0 Denominator Total Debt 2,846.1 3,146.8 3,305.3 3,772.5 3,667.8 3,972.5 4,383.9 4,027.3 3,966.8 Equity 4,924.0 4 924 0 5,111.5 5 111 5 5,276.5 5 276 5 5,456.3 5 456 3 5,495.6 5 495 6 5,603.0 5 603 0 5,524.3 5 524 3 5,568.7 5 568 7 5,030.7 5 030 7 Minority Interest in subsidiary cos. 88.6 96.5 83.5 88.6 92.9 99.3 117.4 115.5 136.2 Total Capital 7,858.7 8,354.8 8,665.3 9,317.4 9,256.3 9,674.8 10,025.6 9,711.5 9,133.7 5 Qtr Average Capital (denominator) 8,690.5 9,053.7 9,387.9 9,597.1 9,560.4 13.4% 13.3% 13.3% 13.1% 12.9% ROCE as rptd (4 Qtr trail AT earnings / 5 pt avg capital) 12.5% 12.5% 12.6% 12.8% 13.0% ROCE ex items (4 Qtr trail AT earnings/ 5 pt avg capital) 21