Air Products and Chemicals (APD) Goldman Sachs Industrials and Materials Conference summary

Strategic direction and hydrogen investments

• Pursuing a two-pillar strategy: maintaining a strong, profitable base business and expanding into low-carbon hydrogen for heavy industry decarbonization.

• Major investments focus on two flagship projects: a green hydrogen plant in Saudi Arabia (NEOM) and a blue hydrogen facility in Louisiana, both designed to demonstrate large-scale viability.

• Investment approach is cautious, with project expansion contingent on proven demand and successful operation of initial plants.

• Halted a Texas project due to regulatory uncertainty around green hydrogen incentives, reflecting a disciplined investment philosophy.

• Growth strategy is supported by increasing demand from sectors like chemicals, steel, and shipping, where electrification is not feasible.

Market demand, pricing, and customer adoption

• Hydrogen demand is expected from hard-to-abate sectors, with cost premiums passed to end consumers, similar to organic or premium products.

• Examples show that green hydrogen's cost impact on end products (e.g., cars, steel, electronics) is relatively modest and absorbable by the market.

• Early contracts in Europe and strong interest from refineries indicate growing customer adoption.

• Emphasizes the need to build initial plants to catalyze broader market conversion, drawing parallels to the early electricity industry.

Project updates and financials

• NEOM project is 60% complete, fully financed, and structured to be independent of the broader NEOM City development.

• Downstream investment for NEOM depends on customer mix, with returns expected to exceed those of conventional business.

• Louisiana Blue project is advancing, with critical permits in process and $2 billion committed; project financing options are being considered.

• Canada project lost a bid to a competitor due to low returns, maintaining a focus on higher-return opportunities.

• California SAF project is delayed due to permitting issues but guarantees an 11% return once operational.