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Praxair Management Discusses Q1 2012 Results - Earnings Call Transcript

Our long-term growth plans remains strong and we're maintaining our capital spending forecast of $2.1 billion to $2.4 billion against the backlog of $2.7 billion of projects under construction with committed customer contracts. As these projects start up over the next 2 to 3 years, the contributions to sales and earnings growth should accelerate. At the same time, we are in negotiation on a record amount of new contracts, mostly on the emerging markets which should extend our growth horizons significantly. The production of cleaner energy is the largest growth driver in our portfolio. Within the next 18 months, we'll start up 3 world-scale steam methane reformers, which will increase our hydrogen production capacity by 35%. Additionally, our backlog of projects in China where we're currently sold out, should increase our sales there by more than 40%. And now, I'll let Kelcey explain in more detail, our first quarter results.

Kelcey E. Hoyt

Thanks, Jim. Now please turn to Slide 3 for our consolidated first quarter results. Praxair's first quarter results reflect solid growth and continuing operating leverage, with sales growth of 5%, operating profit growth of 6% and EPS growth of 7%. Consolidated sales in the first quarter were $2.8 billion, up 5% versus the prior-year quarter. Foreign currency translation negatively impacted sales 2%, as foreign currencies weakened against the U.S. dollar from the prior-year quarter. The most significant impact to sales came from the Brazilian real, Mexican peso and euro. Underlying sales grew 8% excluding currency and the impact of cost pass-through from lower natural gas prices pass through to hydrogen customers. Higher volumes contributed 4% growth and price contributed 2%. Underlying sales grew in all geographic segments with the exception of Europe. Growth was strongest in North America, driven by strong sales to metals, energy and manufacturing markets. Sales growth continued in South America and Asia from new projects and higher volumes from applications for industrial gases. In Europe, sales were higher than the prior year due to the consolidation of our industrial gas business in Scandinavia. Excluding this acquisition and negative currency effects, sales in Europe were below prior year due to the weak economic environment, particularly in southern Europe.

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