Air Products Announces Exit from Three Major Projects in the U.S. to Streamline Operations

Air Products Decides to Exit Three U.S.-Based Projects

In a significant move aimed at streamlining operations, Air Products (NYSE: APD) has announced its decision to withdraw from three major projects in the United States. This strategy was rolled out following a comprehensive review initiated by the newly-elected Board of Directors and the Chief Executive Officer, Eduardo Menezes.

The company, known for being a leader in the industrial gases sector, stated that these decisions are aligned with their strategic focus on enhancing shareholder value. The exit from these projects will lead to an expected pre-tax charge of up to $3.1 billion during the second quarter of fiscal 2025, primarily due to asset write-downs and the termination of various contractual commitments. Notably, this charge is not anticipated to impact the adjusted earnings per share for the fiscal year.

Details of the Exited Projects

1. Sustainable Aviation Fuel Project

Air Products has decided to terminate its agreement with World Energy concerning the Sustainable Aviation Fuel (SAF) expansion project in Paramount, California. The company cited challenging commercial dynamics surrounding the project as a determining factor in this decision. Amidst a growing focus on sustainable fuel sources, the complexity of this particular undertaking proved too great to justify continued involvement.

2. Green Liquid Hydrogen Production Facility

In a similar vein, Air Products has canceled its plans to develop a facility in Massena, New York, designed to produce 35 metric tons of green liquid hydrogen daily. This decision was influenced by recent regulatory changes that disqualified the existing hydroelectric power supply from benefiting under the Clean Hydrogen Production Tax Credit, coupled with the slower-than-expected progress in the hydrogen mobility market in that region.

3. Carbon Monoxide Production Project

Additionally, Air Products is exiting a project in Texas related to the production of carbon monoxide, again due to unfavorable economic conditions tied to the project.

Strategic Refocusing and Future Outlook

Eduardo Menezes stated, “The decision to exit these three projects will streamline our backlog and allow us to focus our resources on initiatives that deliver substantial value for our shareholders.” While this exit marks a significant shift, Air Products will continue to assess all projects within its backlog. However, no further major cancellations are currently anticipated in the near future.

Looking ahead, Air Products is making considerable progress on its two largest projects currently under execution: the NEOM green hydrogen project in Saudi Arabia and the Louisiana Clean Energy Complex. The NEOM project is nearing 80% completion, with the green ammonia production phase expected to launch by the end of 2026. Meanwhile, the Louisiana project is progressing well, with plans for startup set for 2028. The company is actively seeking equity partners for the ammonia loop and carbon dioxide sequestration aspects of this endeavor, aiming to diminish capital requirements significantly.

Air Products has a rich history spanning over 80 years, focusing on industrial gases tailored to meet the needs across various sectors, including refining, chemicals, metals, and medical domains. With fiscal 2024 sales reported at $12.1 billion, the company's operational reach extends across nearly 50 countries and boasts a current market capitalization exceeding $65 billion. With a dedicated workforce of around 23,000 committed employees, Air Products aims to innovate solutions that not only benefit the environment but also enhance sustainability efforts.

In conclusion, Air Products’ recent withdrawals from these projects reflect an adaptive approach to the evolving market landscape, facilitating a more concentrated effort on profitable and strategic operations that support the company's long-term vision for growth and contribution to a cleaner future. For more details, visit Air Products' official website or follow them on social media platforms like LinkedIn, X, Facebook, and Instagram.