Air Products and Chemicals (APD) Bernstein 42nd Annual Strategic Decisions Conference summary

Macroeconomic and geopolitical impacts

• Middle East conflict has mainly affected energy prices in Europe, while the U.S. market remains stable with strong hydrogen pipeline operations and minimal direct impact from the crisis.

• European chemical industry faces challenges from higher natural gas prices, while refining is more resilient; Asia sees China mitigating LNG impacts by shifting to coal, with electronics booming and little effect from the conflict.

• Middle East projects like Jazan and NEOM are largely unaffected due to their location, while helium supply disruptions are being managed through alternative sourcing and storage strategies.

Strategic direction and operational focus

• Leadership is refocusing on core industrial gas business, moving away from large, non-core projects and emphasizing price, productivity, and operational improvements.

• The company is implementing a disciplined approach to project selection, prioritizing firm customer agreements and capital discipline.

• Productivity initiatives since 2023 have reduced headcount by over 10%, targeting $100 million in savings for 2026 and continuing through 2027, with ongoing focus on energy, supply chain, and efficiency.

Market and segment growth

• U.S. hydrogen demand remains robust, driven by refinery upgrades and renewable fuels, with stable pipeline volumes expected.

• Helium market is expected to return to surplus within 6-12 months; long-term contracts are prioritized over spot sales, with supply chain adjustments ongoing.

• Electronics segment is experiencing unprecedented CapEx and volume growth, with major projects in Korea and Taiwan, and a four-year project pipeline.

• Space business is growing with commercial launches, requiring new supply models as launch frequency and propellant volumes increase.