As part of a review initiated by Air Products' newly-elected Board of Directors and Chief Executive Officer, the company announced its decision to exit three projects in the U.S.
As a result, Air Products expects to record a pre-tax charge not to exceed $3.1 billion in its fiscal 2025 second quarter, primarily to write down assets and terminate contractual commitments. The estimated charge, which will not impact adjusted earnings per share for fiscal 2025, relates to the following projects:
- World Energy: Air Products has terminated the agreement with World Energy for the Sustainable Aviation Fuel expansion project in Paramount, California, and is managing its overall exit from the site. The decision to exit reflects challenging commercial aspects surrounding the expansion project and current operations.
- Massena: Air Products has cancelled its plans to construct a 35 metric ton per day facility to produce green liquid hydrogen in Massena, New York, and related liquid hydrogen distribution and dispensing operations. The decision to cancel this project is based on recent regulatory developments rendering existing hydroelectric power supply ineligible for the Clean Hydrogen Production Tax Credit (45V) as well as slower than expected development of a hydrogen mobility market in the region.
- Carbon monoxide project in Texas: Air Products has terminated a project in Texas for the production of carbon monoxide due to unfavorable project economics.
"The decision to exit these three projects will streamline our backlog and focus company resources on projects that drive value for Air Products' shareholders," said Eduardo Menezes, CEO of Air Products.
Estimated contract cancellation and other project cancellation costs are subject to further refinement and may ultimately differ from actual costs recorded in the company's fiscal second quarter and beyond. Additional information, including revisions to the company's capital expenditures forecast for fiscal 2025, will be provided in Air Products' fiscal second quarter earnings release.
Air Products will continue to evaluate all projects in its backlog but does not currently expect any additional material cancellations going forward. The company will provide an update on major projects during its next earnings call, but specific to Air Products' two largest projects under execution:
- The NEOM green hydrogen project in Saudi Arabia is approaching 80 percent completion, with green ammonia production expected to commence at the end of 2026.
- The Louisiana Clean Energy Complex is also progressing, with startup expected in 2028. Air Products is in active discussions with potential equity partners to participate in the ammonia loop and carbon dioxide sequestration to reduce capital outlay for this project.
