Putting Some Fresh Gas into Air Products – A Proposed All-Star Leadership Team

Daily Chemical Reaction

Putting Some Fresh Gas into Air Products – A Proposed All-Star Leadership Team

Key Findings

• General Thoughts: With Dennis Reilley and Eduardo Menezes at the helm, Air Products could look like an industrial gas company again. We view this development as the best way forward for a company that has lost its direction.
• Supply Chain/Commodities: Some activist investors push for near-term change at companies to the detriment of long-term shareholders, but efforts at Air Products look different. We also discuss European sector restructuring.
• Energy/Upstream: We highlight global crude oil refinery margins reflecting significantly lower levels YoY at the close of 3Q24, and we discuss the global push to spur integrated chemical production from crude oil and refineries.
• Sustainability/Energy Transition: We think electricity demand will likely outpace supply in coming periods, and we discuss the supply views of technology/data centers with material/industrial companies shown in PPA trends.
• Downstream/Other Chemicals: Europe continues to face a difficult economic setting, and we discuss German survey data that shows harsher lender terms to industry along with falling EU chemical export market strength.

Exhibit 1: In the 2014-2020 period, Air Products outperformed Linde but has significantly underperformed it since – Mantle Ridge efforts to install a proven management team at Air Products and shift its strategy is likely for the best.

Source: Bloomberg, C-MACC Analysis, October 2024

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