The Good News: Praxair Boosts Dividend

Shareholders of industrial gas company Praxair (PX Quote) were happy with their investment Wednesday, as the company didn't miss profit estimates, didn't issue unsettling guidance and didn't threaten to slash its dividend.

In fact, quite the opposite. Fourth-quarter earnings were better than expected, the forecast was in line and Praxair said it will actually increase its quarterly payout. For that, the stock was rewarded with a 7.8% rally to $64.

The move higher came after the company reported net income of $200 million, or 64 cents a share, for the quarter. Excluding a charge, Praxair earned $314 million, or $1.01 a share, vs. $316 million and 98 cents a share in the prior-year quarter. Analysts were expecting a profit of 96 cents a share in the quarter, according to a poll by Thomson Reuters.

Sales did decline to $2.40 billion from $2.52 billion a year ago, but excluding the negative effect of foreign currency translation, sales were 2% above the prior year. Wall Street was looking for revenue of $2.43 billion. For the full year, adjusted earnings were up 14% from 2007, and sales rose 15%, in line with estimates.

"Our outlook for 2009 is cautious as we expect the global economy to remain weak. We moved quickly in the fourth quarter to reduce our cost structure and we will continue to drive our costs lower in 2009 by accelerating our productivity initiatives."

As a result, for the first quarter, Praxair expects diluted earnings of 90 cents to 95 cents, compared with forecasts of 91 cents. The outlook assumes a sequential slowdown in volumes and a negative currency impact of about 8% vs. the first quarter of 2008.

Looking to the full year, Praxair said it expects earnings in a range of $3.80 to $4.20 a share on sales between $9.5 billion and $10 billion. Analysts currently expect full-year earnings of $4.07 a share on sales of $10.59 billion, according to Thomson Reuters.