Mike Hilton
Senior VP and GM, Electronics
and Performance Materials
Bank of America
BASics / Industrials Conference
May 7,...
Forward-Looking Statements
    NOTE: This document contains “forward-looking statements” within the safe harbor provisions...
Air Products
    At a glance
      $10B company
      Diverse markets and geographies
      Positioned for continued long-...
Air Products Value Proposition
    Profitable Growth
     Stability
      – Long term contracts
      – Consistent and pre...
Supply Modes
    Durable Business Models


      10, 15 and 20-year contracts
              Take-or-pay
    Contractual en...
Transforming Air Products



            More            Less
          focused          cyclical
                   The A...
A Healthy Report Card
    Four consecutive years
                                                           FY07
         ...
Consolidated ’08 YTD Financials:
    Delivering Leverage
                                Q2 YTD   Q2 YTD
                 ...
Outlook for Industrial Gases
    Continued Strength
     Global outlook for gases tracking on forecast

     Future demand...
Electronics & Performance Materials:
     A natural extension of what
     Air Products does best
      $2B+ segment under...
Electronics
     Continued Strong Growth
      Global leader, double-digit top-line growth
      ~$1.3 billion bulk gas, s...
Performance Materials
     Growth through Differentiation
      A global platform with >$700MM in sales
      #1 or #2 pos...
Electronics & Performance Materials
      Performance Metrics
     $MM                                                   $...
2008 and Beyond
     Sustainable Double-Digit Growth
     at Superior Returns
       Targeting sustainable double-digit EP...
Thank you




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www.airproducts.com
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air products & chemicals 7 May 2008 Bankof America BASics

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air products & chemicals 7 May 2008 Bankof America BASics

  1. 1. Mike Hilton Senior VP and GM, Electronics and Performance Materials Bank of America BASics / Industrials Conference May 7, 2008
  2. 2. Forward-Looking Statements NOTE: This document contains “forward-looking statements” within the safe harbor provisions of the Private Securities Litigation 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, overall economic and business conditions different than those currently anticipated; future financial and operating performance of major customers and industries served by the Company; 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 a natural disaster; the ability to attract, hire and retain qualified personnel in all regions of the world where the company operates; charges related to portfolio management, goodwill recoverability, business restructuring and cost reduction actions; the success of implementing cost reduction programs; the timing, impact, and other uncertainties of future acquisitions or divestitures; unanticipated contract terminations or customer cancellation or postponement of projects or sales; 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. 2
  3. 3. Air Products At a glance $10B company Diverse markets and geographies Positioned for continued long-term value creation FY07 Geographic Sales FY07 Segment Sales ROW (2%) Asia (17%) Merchant Tonnage Gases Gases (34%) (31%) United States (44%) Equipment & Europe Healthcare Energy (32%) (7%) (6%) Electronics & Canada/Latin Performance Materials America (5%) (22%) 3
  4. 4. Air Products Value Proposition Profitable Growth Stability – Long term contracts – Consistent and predictable cash flows – Strong balance sheet Growth – Solid project backlog – High bidding activity – Energy opportunities Improving returns – Margin improvement – Productivity – Increasing dividends – Share buyback 4
  5. 5. Supply Modes Durable Business Models 10, 15 and 20-year contracts Take-or-pay Contractual energy pass-through Formula escalation Equipment & Onsite/Pipeline Services 18% 36% 3-5 year contracts Package Gases & Liquid/Bulk Regional business Specialty Materials 21% Cost pass-through/surcharges 25% 5
  6. 6. Transforming Air Products More Less focused cyclical The APD The APD Transformation Transformation Higher Higher growth return 6 6
  7. 7. A Healthy Report Card Four consecutive years FY07 FY04 FY05 FY06 $7.1 $9.4 $6.4 $8.2 Sales ($B)……………… EPS ($/share)……....... $3.35 $2.45 $4.20 $2.80 ORONA (%) ………….. 9.6% 12.4% 9.9% 11.3% ROCE (%)…………….. 9.6% 10.1% 12.3% 11.2% SG&A / Sales (%)…… 12.8% 14.7% 14.2% 12.2% “A” rating Balance Sheet…………. Dividend increase & Shareholder Value……. share repurchase 7 * Comparisons are non-GAAP.
  8. 8. Consolidated ’08 YTD Financials: Delivering Leverage Q2 YTD Q2 YTD FY07 FY08 Change Sales ($B) $4.8 $5.1 11% SG&A as a % of Sales 12.2% 12.0% (20bp) Operating Margin 13.7% 14.5% 80bp Diluted EPS ($/share) $1.96 $2.39 22% ROCE (%) 11.7% 12.4% 70bp Comparisons are non-GAAP 8
  9. 9. Outlook for Industrial Gases Continued Strength Global outlook for gases tracking on forecast Future demand drivers are strong – High energy costs efficiencies – High capital costs debottlenecking – Environmental pressures new applications Well positioned globally with market leadership – Hydrogen for clean fuels – Oxygen for gasification – Electronics 9
  10. 10. Electronics & Performance Materials: A natural extension of what Air Products does best $2B+ segment under-pinned by technology, innovation Franchise positions / global leadership Strategic positions with leading customers Operationally excellent global supply chain Global process engineering capability Leading edge applied technology 10
  11. 11. Electronics Continued Strong Growth Global leader, double-digit top-line growth ~$1.3 billion bulk gas, specialty material and equipment business Driven principally by: – Semiconductor (~85%) – LCD (~10%) Board markets: Silicon and compound semiconductors, flat panel displays, photovoltaic devices Business trends: – New materials for 45nm – Asia growth – Product simplification & controlling the value chain 11
  12. 12. Performance Materials Growth through Differentiation A global platform with >$700MM in sales #1 or #2 positions in targeted markets – Performance-based sale 3 key product lines + new initiative platforms – Epoxy curing agents – Specialty surfactants – Polyurethane additives ~50% of sales outside of North America Formulated products that drive leadership positions Global supply chain, R&D, applied technology infrastructure 12
  13. 13. Electronics & Performance Materials Performance Metrics $MM $MM Operating Income & Margin Sales 250 15.0% 2500 11% CAGR 200 12.0% 2000 150 9.0% 1500 100 6.0% 1000 50 3.0% 500 0 0.0% 0 2004 2005 2006 2007 2004 2005 2006 2007 • Strong top line growth over the past four Revenue by region ($, FY07) years • Excellent profit and return improvement Asia (40%) • Near term focus on further improvement: North America (40%) Electronics Performance Materials - Continued strong hit rate - Mix improvement Latin America - Portfolio restructuring - Growth in adjacent (2%) Europe markets (18%) 13
  14. 14. 2008 and Beyond Sustainable Double-Digit Growth at Superior Returns Targeting sustainable double-digit EPS growth – 15% to 19% EPS growth in FY 08 ● Targeting 300bp margin improvement over 3 years – Cost reduction and SG&A improvement – Accelerated productivity – 100 basis points in FY’08 Targeting a ROCE 3% to 5% above our cost of capital More Focused, Less Cyclical, Higher Growth, Higher Returns 14
  15. 15. Thank you tell me more www.airproducts.com

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