Our goal is to be the safest, most diverse, and most profitable industrial gas company in the world, while providing excellent service to our customers.
At the same time, Air Products continues to demonstrate its higher purpose by bringing people together to collaborate and innovate solutions to the world’s pressing energy and environmental challenges.
Our priorities
Air Products continues to pursue sustainable, long-term growth opportunities that deliver value to our shareholders, customers, and employees – as well as to communities around the world. In line with this pursuit, the Company is executing on its two-pillar growth strategy:
1.
Grow our core industrial gas business and related technology and equipment
2.
Deliver clean hydrogen at scale to decarbonize industrial and transport sectors
Delivering on our Growth Strategy
Highlights
- Continues to achieve industry-leading profitability based on adjusted EBITDA margin by generating strong, steady cash flows to help fuel strategic capital expenditures and increases in dividend.
- Ongoing optimization for maximum efficiency, with growth exceeding GDP or industrial production levels.
- The on-site business pioneered by Air Products 80+ years ago accounts for approximately half of our revenue today – enhancing the stability of our business with contractual pass-through and take-or-pay provisions.
- We continue to focus on our core industrial gas business, which accounts for more than 50% of our total fiscal ’23 to fiscal ’25 Capex.
Highlights
- Leverages 65+ years of experience in end-to-end hydrogen supply to deliver clean hydrogen at scale as a first mover.
- In June, we announced the signing of a 15-year agreement to supply 70,000 tons of green hydrogen annually to TotalEnergies, which will be used to help decarbonize TotalEnergies’ Northern European refineries and avoid approximately 700,000 tons of CO₂ each year. Its take-or-pay structure will drive stability in our growing clean hydrogen business, and emphasizes the significant demand today for green hydrogen.
- In September, we announced the completion of the sale of the liquefied natural gas process technology and equipment business for $1.81 billion in cash.
- Throughout the year, we announced plans to build networks of permanent, commercial-scale, multi-modal hydrogen refueling stations for heavy-duty and long-range vehicles from Northern to Southern California; between Edmonton and Calgary, Alberta, Canada; and along the Trans-European Transport Network.
- Current energy transition projects include NEOM Green Hydrogen Project, Canada Net-Zeo Hydrogen Energy Project, Louisiana Clean Energy Complex; World Energy SAF put on hold awaiting permits and Texas Green Hydrogen JV is no longer being pursued.
- Consistent with our traditional hydrogen business, clean hydrogen offtake will follow the on-site business model, and we anticipate these projects will provide attractive returns. Our strategic first-mover actions are creating the opportunity for us to become the world’s largest clean hydrogen supplier.
Disciplined Capital Allocation
We are committed to efficiently running and growing our core industrial gas business while pursuing strategic, high-growth, and high-return opportunities in clean hydrogen. We are pursuing this strategy prudently, only approving new projects after securing anchor customers and loading at least 75% of the output of our existing clean hydrogen projects.
Another top priority for us is to consistently return cash to our shareholders. Our sustained growth has enabled us to achieve a 9% annual growth rate in our dividend since 2014, and we plan to return ~$1.6 billion of cash to our shareholders via dividends this year. We are proud of our record of increasing our quarterly dividends for 42 consecutive years.
Key Aspects of Air Products’ Long-term Strategy
Disciplined investment approach for long-term value creation
- Capital allocation remains paramount
- Most profitable industrial gas business in the world based on adjusted EBITDA margin – fully attributable to core industrial gas business
- GDP or industrial production growth in core industrial gas business
- Leveraging 65+ years of experience in hydrogen
- Clean hydrogen demand exists today, and it is expected to be a >$600B market by 2030*
- Capture a small portion of the high-growth global clean hydrogen market
- Leverage and load existing clean hydrogen projects before taking on new ones
- Significant new projects will have anchor customers consistent with traditional industrial gas business model
- Projects anticipated to be at or above traditional gas returns
Our long-term growth strategy is driven by real demand for clean hydrogen that we are seeing play out today, as well as significant future demand in hard-to-abate sectors. We are uniquely positioned to lead in clean hydrogen, which is expected to be a more than $600 billion market opportunity by 2030 and a more than $1 trillion market opportunity by 2050.
At the same time, our core industrial gases business continues to perform and drive industry-leading profitability, enabling us to prudently invest back into our core industrial gases business and in our clean hydrogen business, while returning significant capital to shareholders.
