Stronger dollar clouds Praxair outlook
(Reuters) - Praxair Inc (PX.N), the largest industrial gas supplier in North America, forecast a lower-than-expected profit for the current quarter and cut its full-year outlook as a stronger dollar weighed on revenue from Europe and South America.
Economic weakness in Europe, slowing growth in China and a stronger dollar have prompted many industrial companies, including rival Air Products and Chemicals Inc (APD.N), to forecast weak profits for the current quarter.
Another competitor Airgas Inc (ARG.N) also forecast a weak profit for the current quarter, citing helium supply constraints.
"Volumes everywhere outside of North America are falling short of expectations, and we are not anticipating macroeconomic conditions to improve in the second half," Chief Financial Officer James Sawyer said on a call with analysts.
The company, which sells oxygen, argon and related materials to industries, said sales in North America rose on demand from energy companies and manufacturers.
However, to offset falling sales in Europe, which accounted for 13 percent of Praxair's 2011 revenue, the company is looking to cut costs, said Kelcey Hoyt, the company's director of investor relations.
Praxair's operating profit in Europe fell 6 percent in the second quarter, while it dipped 21 percent in South America. North America, which accounts for half of the company's sales, saw an increase of 11 percent.
Praxair expects third-quarter profit to be between $1.35 per share and $1.40 per share, below analysts' expectations $1.49 per share, according to Thomson Reuters I/B/E/S.
The company cut its full-year earnings outlook to a range of $5.60 per share to $5.70 per share, from between $5.75 per share and $5.90 per share.
It cut its sales forecast to between $11.2 billion and $11.5 billion from $11.6 billion to $11.9 billion.
"The guidance cut is not a surprise given similar moves by other industrial companies and earlier Praxair comments about growing foreign exchange headwinds," said Don Carson, an analyst at Susquehanna Financial Group.
Second-quarter net income rose 1 percent to $429 million, or $1.42 per share — in line with analysts estimates.
Revenue dipped 2 percent to $2.81 billion, falling below estimates of $2.93 billion.
Praxair shares, which have fallen 2 percent so far this year, were down 2 percent at $102.56 in afternoon trading on Wednesday on the New York Stock Exchange.
(Reporting by Swetha Gopinath in Bangalore; Editing by Sreejiraj Eluvangal; Editing by Saumyadeb Chakrabarty)
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