Analysis of World Gas Company’s financial figures for the first quarter of 2016

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This post was last edited by reading_wyc on 2016-7-6 07:22. I recently reviewed the financial reports of global chemical giants for the first quarter of 2016, and I was quite impressed by them. In fact, the first-quarter reports of the four major gas companies (AP’s report covers the second quarter) have also been released. Based on these reports, I created the following charts to provide a clearer overview of the revenue, expenses, and operating conditions of each of these gas companies. Firstly, in terms of revenue, Linde Group remains at the top, with other companies following closely behind. Linde Group’s performance in 2015 was not very good, especially as its stock price dropped significantly. With this in mind, Linde Group set a goal of achieving 5% growth in 2016; however, given the economic downturn and the sluggish conditions in the energy and manufacturing sectors, this goal seems quite difficult to achieve. Regarding the revenue growth of the four major companies, all of them mentioned certain negative factors that caused their growth rates to turn negative, and the financial figures shown were quite poor. However, Air Products did experience significant growth compared to the same period in the previous year, thanks to the commissioning of new facilities as well as the construction and operation of large-scale air separation units in many parts of the world, particularly in coal chemical industries in Asia and oil refining projects in the Middle East. It is truly commendable to achieve such good results in an economic environment that is highly uncertain. Liquefied Air did not find any relevant data regarding operating profits; therefore, only comparisons with the other three companies are possible. However, in terms of overall scale, Linde still has a certain advantage, leading far ahead of the other two. Moreover, Linde also has a higher operating profit margin than the other two companies, which indicates that Linde performs well in terms of operations, showing good ability in controlling production costs and improving operational efficiency. In terms of regional sales, Air Liquide holds a clear advantage in Europe, but its performance is lower in the Americas and Asia-Pacific compared to Europe. Linde Group performs relatively evenly across all regions. The two American companies dominate the U.S. market completely, with sales there being far higher than in any other region. The gas industry is a capital-intensive sector with a relatively long payback period; therefore, quarterly financial reports can provide some insight into the state of the economy. However, with the ongoing downturn in the manufacturing, refining, petrochemical, and energy sectors, gas companies must begin to take certain measures to address these challenges. Many companies have begun to promote their application technologies on a large scale, shifting from large-scale industrial applications to those used in small-scale industries and civilian sectors. Although these sectors are smaller in scale, they generate significant revenue and profits, and therefore cannot be ignored. As for domestic gas companies, their scale and performance are still far behind those of these companies; they have a long way to go. It’s not just a technical issue, but also a market-related one. Hangyang’s annual report showed that its annual revenue is around $1 billion, which is less than what one of these companies earns in just one quarter. We must not only be aware of the gap between us and international corporations and recognize our shortcomings, but also maintain confidence and improve our products, services, and technologies – especially innovative products – in order to be able to compete with those international companies on the global stage. Praxair: Praxair released its financial results for the first quarter of 2016; sales revenue declined by 9% compared to the same period last year, amounting to $2.5 billion. Praxair attributed this to negative currency fluctuations and low cost pass-through. These two factors reduce revenue by 7% and 1%, respectively. Additionally, with the launch of new devices, revenue in the healthcare and food and beverage sectors increased, but this was offset by sluggish performance in the energy, metals, and manufacturing markets, particularly in North America. Air Products of the United States: Air Products and Chemicals Inc. released its financial results for the second quarter of fiscal year 2016. Sales for the quarter were $2.271 billion, compared to $2.415 billion in the same period last year. The net profit from continuing operations for the quarter under GAAP was $380 million, compared to $292 million in the same period of the previous year. Linde Group: Linde Group’s financial results for the first quarter show that the group’s total revenue decreased by 3.1% to 4.3 billion euros (4.9 billion dollars) compared to the same period last year; the company attributes this to unfavorable exchange rate effects. Operating profit also dropped by 1.9% to 991 million euros (1.1 billion dollars), primarily due to unfavorable exchange rate effects and poor performance in its engineering division; excluding the impact of exchange rates, the group’s revenue declined by 0.3% compared to before. Furthermore, thanks to the group’s acquisition of a health-related company in the United States, the initial negative impact of lower prices in North America was mitigated; coupled with the effects of natural gas prices there, the North American business achieved growth of 5.6%. However, in the Asia-Pacific region, revenue declined by 2.5% to 969 million euros (1 billion dollars), but on a comparable basis it actually increased by 3.5%. Overall, there is significant growth in the Asian region, but the South Pacific region has been affected negatively by a continuous economic downturn. The company is taking measures such as downsizing and restructuring to address these issues. In Europe, the Middle East, and Central Asia, revenue declined by 4% to 1.4 billion euros (1.6 billion dollars); growth, or rather the lack of growth, was affected by the bankruptcies of UK clients that were reported earlier. Nevertheless, Linde’s operating profit increased by 0.6%, while its operating margin rose by 0.03%. Cash flow was also strong, increasing by 19.3% to reach 883 million euros (1 billion dollars), thanks to the timely payments from customers in the construction sector. Regarding future stability, Linde Gas saw its revenue decline by 1.4% to 3.6 billion euros (4.1 billion dollars), while the revenue of Linde Engineering dropped by 15% to 568 million euros (644 million dollars). Linde is aiming for business growth in fiscal year 2016, with an expected growth rate of 5% after adjusting for exchange rates.