Rock-solid dividend growth stock Air Products on Monday missed fiscal first-quarter estimates and slashed full-year earnings guidance on Asia weakness, particularly China. APD stock dived to a new 52-week low, Monday's worst performer on the S&P 500 by far.
Air Products Flags China Slowdown, Grows Dividend
The industrial gases and chemicals company reported fiscal first-quarter earnings per share EPS of $2.82 and revenue of $2.997 billion. Year over year, APD earnings rose nearly 7%, but marked the third consecutive quarter of decelerating growth. Revenue fell 6%, dropping for the third straight quarter, FactSet shows.
Both came in modestly below analyst estimates.
APD said the Q1 earnings miss was "mainly due to a slowdown in manufacturing in Asia, particularly in China" and lower helium demand. China accounts for 15% of APD's revenue.
The Allentown, Pa.-based industrial giant now expects full-year fiscal 2024 EPS of $12.20-$12.50, down from prior guidance for $12.80 to $13.10. The revised guidance was primarily driven by weaker Q1 results and "continued softness in Asia" coupled with lower helium demand, APD said in an earnings presentation posted online.
However, the updated outlook still implies another year of earnings growth: up 6%-9%. That should give Air Products room to keep growing its payouts to shareholders.
In January, APD increased its quarterly dividend to $1.77 per share, the 42nd consecutive year of increases, the earnings release noted on Monday.
Industrial Companies Eye China Slowdown
For multi-industry companies at large, guidance this earnings season "has generally been in-line to a bit softer," RBC Capital Markets analyst Deane Dray said in note to clients on Sunday.
He added that an uptick in the ISM manufacturing new orders index to 52.5 from the neutral 50 level could signal a sentiment boost in the sector. But several companies have flagged weak economic growth in China as a concern, Dray said.
"For most companies, the slowdown should be manageable, except for Johnson Controls, which cited China weakness 14 times," he added.
APD Stock, GE Stock
Shares plunged 15.5% to 218.06 in big volume on the stock market today. APD stock fell as low as 217.03, the lowest since March 2022.
Air Products easily was the S&P 500's worst performer on Monday as the indexes pulled back modestly from record highs as rates spiked.
Johnson Controls stock fell 2%, stuck below all its moving averages. General Electric edged up 0.9%, hitting a fresh six-year best. GE stock cleared a three-weeks-tight 132.50 buy point in late January despite lackluster guidance.
After its latest dividend hike, APD stock yields 3.19%.
