Dear Shareholders,
I am extremely proud that the people of Air Products again exceeded our financial goals in fiscal 2022, delivering impressive results despite the challenging macroeconomic and geopolitical environment. I would like to thank each of our talented, dedicated and motivated employees for their exceptional efforts toward this strong performance. I am honored every day to be working alongside the team, as they continue to focus on delivering near-term results while executing on our long-term growth strategy.
There are two pillars to our growth strategy at Air Products, and sustainability is the foundation. Through our core industrial gases business, we supply customers in dozens of industries with critical products and expertise that lower emissions and increase efficiency and productivity. Through our blue and green hydrogen megaprojects, we will commit more than $15 billion by 2027 to deliver clean hydrogen at scale, helping to drive the energy transition and move humanity forward.
These two pillars, which support and rely upon each other for success, put us at the heart of solving the world’s needs for clean, sustainable energy and environmental solutions. As you know, this is our higher purpose as a Company. We continue to devote significant attention to corporate governance to support this growth. We also are continuing to build a diverse and inclusive culture where our more than 21,000 people feel they belong and matter and are motivated to achieve our goals.
For fiscal year 2022, our people delivered strong adjusted earnings per share* (“EPS”) of $10.41, an increase of 15 percent compared to last year. Since 2014, our goal has been to deliver an average adjusted EPS* growth rate of 10 percent per year. In the last eight years, we have exceeded this goal, delivering 11 percent for this time period, regardless of the macroeconomic conditions.
We also remain committed to creating shareholder value and are very proud that we have consistently increased the dividend for 40 consecutive years. Our dividend has grown 10 percent per year on average during the past eight years, mirroring our adjusted EPS* growth rate. In calendar 2022, we returned more than $1.4 billion to our shareholders and still have significant cash flow to support our many growth opportunities.
Making Our Dream a Reality
Our dream of the future is for Air Products to be the leader in providing solutions to the world’s environmental challenges through innovative processes and facilities to provide green and blue hydrogen on a world-scale. This requires expertise and technologies in the production of green hydrogen and carbon capture technologies to enable the production of blue hydrogen.
Our dream of the future is to be a company that has a higher purpose beyond just creating value for shareholders through improved financial performance . . . a company where people from all walks of life and nationalities come together, work together, and feel that they belong and that their contributions matter and are appreciated . . . a company that is focused on innovation to solve the substantial environmental issues facing all humanity . . . a company that is compassionate and contributes to the well-being of all the communities in which we operate around the globe . . . a global company that brings people from all over the world together, to collaborate, improve understanding and prevent conflicts that arise from misunderstanding.
Fiscal 2022 Performance
Our fiscal 2022 financial performance is detailed in the accompanying Annual Report on Form 10-K, and I also encourage you to review the investor slides on our website, which detail our accomplishments this year and our strategic path forward.
Safety is our #1 priority at Air Products. We are focused on improving our safety performance through intentional actions to engage everyone and ensure we follow procedures. Overall, we have seen a 63 percent improvement in the employee lost-time injury rate and a 40 percent improvement in the employee recordable injury rate since fiscal 2014. We are focused on ensuring the safety and well-being of all of our employees. Our ultimate goal will always be zero incidents and accidents.
I am proud to say that we have continued to create and win projects that help customers and countries meet their growing needs for cleaner energy and environmental solutions. In doing so, we are making our dream a reality.
Making Our Dream a Reality
This year, we took another significant step forward toward a clean hydrogen future, announcing our investment of about $500 million in a new green hydrogen project in Massena, New York, located on the banks of the St. Lawrence River. The facility will produce about 35 metric tons of green liquid hydrogen using almost 100 megawatts of hydro-electric power provided by the New York Power Authority. This project broadens our renewable energy sources beyond solar and wind energy to now include hydropower.
We also announced our sustainable aviation fuel (SAF) project with World Energy. This now $2.5 billion major expansion project will produce SAF at World Energy’s Paramount, California location – the world’s first and North America’s only commercial-scale SAF production facility. Air Products will supply SAF to World Energy under a long-term on-site contract. We also extended our hydrogen pipeline network to further increase supply reliability for all of our Southern California hydrogen pipeline customers.
We expect the landmark U.S. Inflation Reduction Act to create additional opportunities for clean hydrogen and carbon sequestration projects in the future.
With our net-zero hydrogen energy complex in Edmonton, Alberta, Canada, we marked two significant milestones. First, we signed a long-term supply agreement for about half of the facility’s output to supply Imperial Oil’s Strathcona renewable diesel complex. Second, at a ceremony in Edmonton, federal and provincial government representatives announced approximately 475 million (CAD) in project funding for our energy complex, reflecting their confidence in our ability to operate one of the most competitive and lowest-carbon-intensity hydrogen networks in the world.
We also closed Phase I of the Jazan gasification and power project, which delivered a significant contribution in fiscal 2022. In addition, we signed two major on-site agreements this year, together valued at $1.3 billion, to supply industrial gases to major semiconductor manufacturers.
Also, we continued to make progress on the NEOM green hydrogen project in Saudi Arabia, finalizing the design and moving forward with the project execution, as well as the world-scale clean energy complex in Louisiana to produce blue hydrogen for local and global markets expected to come onstream in 2026.
We are seeing the manifestation of the major project strategy that we embarked on a few years ago, and that is going to drive a significant amount of growth as these major projects come onstream. This backdrop of the major projects for hydrogen and the energy transition, combined with our strong focus on the base business, makes this an exciting time for all of us to be working together and winning together.
In closing, as I do each year, I want to sincerely thank those who have supported us and helped us achieve our success.
To our customers . . . In innovating alongside you, we serve our higher purpose – supplying products that benefit the environment and help you be more efficient and sustainable. Thank you for your continued confidence and trust in us.
To our employees . . . Through your dedication and commitment, you continue to play a critical role and make a difference to the world every day, and especially during these challenging times.
To our shareholders . . . As always, thank you for your confidence and trust in Air Products. Our priority remains creating superior value for you.
I believe Air Products is uniquely positioned to help the world transition to a cleaner and better future. It is a better future we believe in and in which we are totally vested.
Sincerely,
Seifi Ghasemi
Chairman, President and Chief Executive Officer of Air Products
Read the original letter here.
