Bob Dixon
Senior VP and GM
Global Merchant Gases
JPMorgan
3rd Annual Basics and Industrials
Conference
June 3, 2008
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...
Transforming Air Products
    Creating Shareholder Value

                                                            FY07...
Supply Modes
    Durable Business Models


      10, 15 and 20-year contracts
              Take-or-pay
    Contractual en...
Equity Affiliate Income $114M
    FY07 Revenues 100% basis $2B



              Italy

              $480M


             ...
Tonnage Gases
     High Growth Segment
    $MM                                                        $MM
                ...
Strong Hydrogen Pipeline Positions
                                                                                       ...
Electronics & Performance Materials
      Continuing Margin Improvement
       $MM                                        ...
Merchant Gases
        Solid Performance Continues
        $MM                                            $MM
            ...
Merchant Gases
      Drive a Local Business on a Global Chassis

        Liquid/Bulk, cylinder and small onsite
        ga...
Merchant Gases
      Growth via Innovation
       New offerings including:
         – Safer packaged gases
         – Lead...
Air Products Cleanfire® Burner
      Superior Oxy-Fuel Performance!




 14
14
Margin Improvement Focus

                                          17%
                  14%




                        ...
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 dem...
2008 and Beyond
     Sustainable Double-Digit Growth
     at Superior Returns
       Targeting sustainable double-digit EP...
Thank you




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air products & chemicals 2008 June3 JPMorgan

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air products & chemicals 2008 June3 JPMorgan

  1. 1. Bob Dixon Senior VP and GM Global Merchant Gases JPMorgan 3rd Annual Basics and Industrials Conference June 3, 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%) Healthcare Europe Electronics & (7%) (32%) Performance Materials Equipment & (22%) Canada/Latin Energy America (5%) (6%) 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. Transforming Air Products Creating Shareholder Value FY07 Sales FY00 Sales $9.4B $5.7B Merchant Tonnage Tonnage Merchant Electronics & Perf Mat’ls Healthcare Equipment Chemicals Healthcare & Energy Electronics & Performance Equipment Materials & Energy 5
  6. 6. 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% 6
  7. 7. Equity Affiliate Income $114M FY07 Revenues 100% basis $2B Italy $480M India Mexico $90M Thailand $550M $85M South Africa $135M 7
  8. 8. Tonnage Gases High Growth Segment $MM $MM Operating Income & Margin Sales 450 20.0% 3500 16% CAGR 400 3000 18.0% 350 2500 300 16.0% 2000 250 200 1500 14.0% 150 1000 100 12.0% 500 50 10.0% 0 0 2004 2005 2006 2007 2004 2005 2006 2007 Investment by Region • Significant profit growth and North America improvement in returns on capital while bringing on new investments • Significant large plant bidding opportunities (both H2 & O2) continue Europe & Middle East Asia • Anticipate continued 10%-15% H2 growth 8
  9. 9. Strong Hydrogen Pipeline Positions Sarnia Canada 40 Baton Rouge 40 Edmonton, Suncor Louisiana IL RA Canada Plaquemine CN Air Products Canada 40 Geismar Shell Refinery Geismar 16 16 10 Lake ST. 16 Cosmar 16 Pontchartrain CLAIR RIVER Petro-Canada Convent Imperial Oil Nola New Orleans Taft Sherwood Corunna Park 21 21 14 14 630 630 Chalmette Rotterdam 14 14 Europoort Pernis Dominguez Southern SF Bay Channel Refineries 91 California 405 Zwijndrecht Botlek Tarragona 190th Refinery St. 710 To Moerdijk Carson H2 Long 110 VAN NESS Beach Lake Charles AVE. Arpt. Beaumont BP Sepulveda Texas Blvd Carson Mont Belvieu 405 69 APD HyCO facilities 10 Shell City of Houston Battleground Conoco Phillips 73 Wilmington H2 pipeline Carson 1 Port Arthur 10 CO pipeline Anaheim Valero Baytown 2 Street 610 Wilmington Syngas pipeline Conoco Phillips Wilmington Wilmington H2 225 110 45 LaPorte Pasadena Bayport Clear Lake Texas City 9 9
  10. 10. Electronics & Performance Materials Continuing Margin Improvement $MM $MM Operating Income & Margin Sales 250 15.0% 2500 11% CAGR 200 12.0% 2000 150 9.0% 1500 100 6.0% 1000 50 3.0% 500 0 0.0% 0 2004 2005 2006 2007 2004 2005 2006 2007 Revenue by region ($, FY07) Strong top line growth over the past four years Asia (40%) Excellent profit and return improvement North America (40%) Near term focus on further Latin America margin improvement to achieve (2%) Europe our goal of 15% (18%) 10 10
  11. 11. Merchant Gases Solid Performance Continues $MM $MM Operating Income & Margin Sales 700 20.0% 3500 12% CAGR 600 3000 18.0% 500 2500 16.0% 400 2000 300 1500 14.0% 200 1000 12.0% 100 500 0 10.0% 0 2004 2005 2006 2007 2004 2005 2006 2007 Revenue by region ($, FY07) Continue delivering double-digit Europe LB growth - Strong growth in Asia Europe PG North America - Expanding in Eastern/Central Europe Asia - New offerings success Equipment ROW Achieve 20% operating margins 11 11
  12. 12. Merchant Gases Drive a Local Business on a Global Chassis Liquid/Bulk, cylinder and small onsite gases to diverse industrial markets Global business model – Marketing Local Business – Application Development – Supply Chain Regional Global Roles/Global Differentiators Local execution Collaboration – Logistics – Sales and Pricing Margin – Customer Service Improvement & Growth Great opportunities – Continued margins improvement – Emerging markets and geographies 12 12
  13. 13. Merchant Gases Growth via Innovation New offerings including: – Safer packaged gases – Leading edge burner technology Applications and supporting technology – Glass – Food – Water 13 13
  14. 14. Air Products Cleanfire® Burner Superior Oxy-Fuel Performance! 14 14
  15. 15. Margin Improvement Focus 17% 14% 2010 2007 300 basis point operating margin improvement from … Cost Plant Improved reduction efficiency mix 200bp 50bp 50bp 15 15
  16. 16. 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 $2.80 ORONA (%) ………….. 9.6% 12.4% 9.9% 11.3% ROCE (%)…………….. 9.6% 10.1% 12.3% 11.2% SG&A / Sales (%)…… 12.8% 14.7% 14.2% 12.2% “A” rating Balance Sheet…………. Dividend increase & Shareholder Value……. share repurchase 16 * Comparisons are non-GAAP.
  17. 17. Consolidated ’08 YTD Financials: Delivering Leverage Q2 YTD Q2 YTD FY07 FY08 Change Sales ($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 17
  18. 18. 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 18
  19. 19. 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 19
  20. 20. Thank you tell me more www.airproducts.com

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