Air Products & Chemicals Inc., the Allentown company that supplies oxygen and other gases to the industrial and medical sectors, said today that it is cutting about 7 percent of its work force because of weak business conditions worldwide.
The company will slash 1,300 jobs and take a fiscal first-quarter charge of $140 million to $160 million, or 43 cents to 50 cents per share, mostly for severance payments.
The company said the moves could reduce costs in fiscal 2009 by about $50 million, with savings of $110 million in fiscal 2010 and beyond. In morning trading, shares rose $1, or 2 percent, to $49.54 on light volume.
Air Products now expects profit from continuing operations between 95 cents and $1 per share for the quarter ending Dec. 31, down from prior guidance of $1.15 to $1.21 per share. Analysts polled by Thomson Reuters expect profit of $1.08 per share, on average.
"These cost-reduction actions are necessary to reach our margin improvement goals," said chairman, president and chief executive John McGlade, in a statement. "This is clearly one of the weakest business environments we have seen across our end-markets."
With about 20 percent of its sales generated by supplying materials to the suffering electronics industry, Air Products is exposed to the significant downturn in tech inventory trends.
Still, McGlade said the company's financial position remains strong, noting that a significant portion of its business is under medium- and long-term supply contracts, which aren't affected.
Air Products is slated to release its fiscal first-quarter results Jan. 21. The company's labor actions follow those of fellow chemicals makers Dow Chemical Co. and DuPont, who also are struggling to rein in costs amid the recession.
Dow Chemical has said it will slash 5,000 full-time jobs, or about 11 percent of its total work force, close 20 plants and sell several businesses. Rival DuPont said earlier this month it would cut 2,500 jobs and warned it won't turn a profit in the fourth quarter due to a slowdown in the automotive and construction markets.