Air Products and Chemicals Inc.

Company Overview

Business Model: AIR PRODUCTS AND CHEMICALS, INC. is a world-leading industrial gases company focused on serving energy, environmental, and emerging markets. The Company provides essential industrial gases, related equipment, and applications expertise to a broad range of industries including refining, chemicals, metals, electronics, manufacturing, medical, and food. It also develops, engineers, builds, owns, and operates large-scale clean hydrogen projects for low- and zero-carbon energy, particularly in industrial applications and heavy-duty transportation. Additionally, its sale of equipment businesses offer specialized products such as turbomachinery, membrane systems, and cryogenic containers. Revenue is primarily generated through on-site and merchant supply modes for industrial gases, with on-site arrangements typically governed by long-term contracts (15-20 years) that often include fixed monthly charges, minimum purchase requirements, and price escalation provisions for energy costs.

Market Position: AIR PRODUCTS AND CHEMICALS, INC. is a global leader in industrial gases, competing against three other global industrial gas companies: Air Liquide S.A., Linde plc, and Messer Group GmbH, as well as regional competitors. Competition is primarily based on price, supply reliability, and the development of industrial gas applications. The Company leverages pipeline networks for competitive advantage, enabling reliable and economic product supply to larger customers. It is also the world’s leading supplier of hydrogen.

Recent Strategic Developments: Fiscal year 2025 was a transitional year marked by a renewed focus on the core industrial gas business. The Company initiated a project review, leading to the cancellation and descoping of several large energy transition projects, primarily related to clean energy generation and distribution, to focus resources on opportunities delivering greater shareholder value. This included exiting a green liquid hydrogen project in the U.S. due to regulatory changes and impairing two coal gasification plants in China. Concurrently, the Company completed the sale of its liquefied natural gas process technology and equipment business to Honeywell International Inc. in September 2024 for approximately $1.8 billion, recognizing a pre-tax gain of $1.6 billion. It also acquired Ijsfabriek Strombeek, an independent industrial gases company in Belgium, in April 2025. The Company continues to pursue focused investments in scalable, economically viable clean energy solutions, with significant progress on projects like the NEOM Green Hydrogen Project, expected to deliver green ammonia in 2027.

Geographic Footprint: AIR PRODUCTS AND CHEMICALS, INC. conducts business in approximately 50 countries and regions outside the United States. In fiscal year 2025, approximately 60% of its sales were derived from customers outside the United States.

• Primary Operational Regions: Americas (North and South America), Asia (primarily China, South Korea, Taiwan), Europe and Africa (primarily Netherlands, United Kingdom, Spain), and Middle East (primarily Saudi Arabia) and India.
• Key Markets: United States (39.0% of total revenue), China (16.1% of total revenue), and other foreign operations (44.9% of total revenue).
• International Exposure: Extensive international operations are subject to risks including foreign currency fluctuations, tariffs, trade sanctions, and political and regulatory policies.

Financial Performance

Revenue Analysis

Profitability Metrics:

• Gross Margin: 31.4% (FY25), 32.5% (FY24)
• Operating Margin: -7.3% (FY25), 36.9% (FY24)
• Net Margin: -2.9% (FY25), 31.9% (FY24)

Investment in Growth:

• R&D Expenditure: $96.3 million (0.8% of revenue)
• Capital Expenditures: $5.1 billion
• Strategic Investments:
  • NEOM Green Hydrogen Project: Approximately $3.0 billion in additions to plant and equipment in FY25.
  • Blue Hydrogen Industrial Gases Company (BHIG): Approximately $238 million investment in and advances to unconsolidated affiliates in FY25.
  • Jazan Integrated Gasification and Power Company (JIGPC): Approximately $115 million final investment in FY25.
  • Uzbekistan natural gas-to-syngas processing facility: $61.9 million investment in financing receivables in FY25.
  • Acquisition of Ijsfabriek Strombeek: $59.9 million cash paid for acquisition in FY25.

Note: ** Change versus prior period is not meaningful due to charges for business and asset actions recorded in fiscal year 2025.

Business Segment Analysis

Americas

Financial Performance:

• Revenue: $5.1 billion (+2% YoY)
• Operating Income: $1.5 billion (-3% YoY)
• Operating Margin: 29.6%
• Key Growth Drivers: Higher energy cost pass-through to customers (+4%) and higher pricing (+2%) for non-helium merchant products.
• Key Headwinds: Lower volumes (-3%) due to previously announced project exits, a one-time asset sale in the prior year, and lower global helium demand. Unfavorable currency impact (-1%). Higher costs driven by depreciation, maintenance, and fixed-cost inflation.

Product Portfolio: Industrial gases including atmospheric gases (oxygen, nitrogen, argon) and process gases (hydrogen, helium, carbon dioxide, carbon monoxide, syngas), and specialty gases.

Market Dynamics: Serves refining, chemicals, metals, electronics, manufacturing, medical, and food industries. Competition based on price, reliability, and application development.

Asia

Financial Performance:

• Revenue: $3.3 billion (+1% YoY)
• Operating Income: $851.1 million (-1% YoY)
• Operating Margin: 26.0%
• Key Growth Drivers: Higher energy cost pass-through to customers (+2%). Growth in on-site volumes.
• Key Headwinds: Lower pricing (-1%) primarily due to lower helium pricing. Lower demand for helium. Unfavorable business mix. Higher costs related to incentive compensation and fixed-cost inflation, partially offset by productivity and lower maintenance.

Product Portfolio: Industrial gases including atmospheric gases (oxygen, nitrogen, argon) and process gases (hydrogen, helium, carbon dioxide, carbon monoxide, syngas), and specialty gases.

Market Dynamics: Serves refining, chemicals, metals, electronics, manufacturing, medical, and food industries. Competition based on price, reliability, and application development.

Europe

Financial Performance:

• Revenue: $3.0 billion (+6% YoY)
• Operating Income: $844.7 million (+4% YoY)
• Operating Margin: 28.3%
• Key Growth Drivers: Higher pricing (+2%) driven by non-helium merchant products. Favorable currency impact (+2%). Higher volumes (+1%) supported by on-site activity. Higher energy cost pass-through to customers (+1%).
• Key Headwinds: Unfavorable business mix. Higher costs for depreciation and fixed-cost inflation, partially offset by productivity improvements. Lower helium demand.

Product Portfolio: Industrial gases including atmospheric gases (oxygen, nitrogen, argon) and process gases (hydrogen, helium, carbon dioxide, carbon monoxide, syngas), and specialty gases.

Market Dynamics: Serves refining, chemicals, metals, electronics, manufacturing, medical, and food industries. Competition based on price, reliability, and application development.

Middle East and India

Financial Performance:

• Revenue: $135.9 million (+1% YoY)
• Operating Income: $9.6 million (+63% YoY)
• Operating Margin: 7.1%
• Key Growth Drivers: Higher volumes. Lower costs following the deconsolidation of Blue Hydrogen Industrial Gases Company in Q2 FY25, and productivity improvements.
• Key Headwinds: Lower income from equity affiliates, particularly Jazan Integrated Gasification and Power Company.

Product Portfolio: Industrial gases including atmospheric gases (oxygen, nitrogen, argon) and process gases (hydrogen, helium, carbon dioxide, carbon monoxide, syngas), and specialty gases.

Market Dynamics: Serves refining, chemicals, metals, electronics, manufacturing, medical, and food industries. Competition based on price, reliability, and application development.

Corporate and other

Financial Performance:

• Revenue: $520.0 million (-41% YoY)
• Operating Loss: ($367.3) million (-25% YoY increase in loss)
• Key Headwinds: Primarily due to the divestiture of the liquefied natural gas business in September 2024, which contributed approximately $135 million in operating income in the prior year. Lower contributions from an affiliate in Algeria.
• Key Growth Drivers: Partially offset by lower changes to sale of equipment project estimates and productivity improvements, net of fixed-cost inflation.

Product Portfolio: Design and manufacture of equipment for air separation, hydrocarbon recovery and purification, and liquid helium and liquid hydrogen transport and storage. Includes Rotoflow business (turboexpanders and precision rotating equipment) and Gardner Cryogenics business (helium and hydrogen transport and storage containers).

Market Dynamics: Equipment business competition based on plant efficiency, technological performance, service, technical know-how, price, schedule, and plant performance guarantees.

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: No shares repurchased since fiscal year 2013. $485.3 million in share repurchase authorization remained available as of 30 September 2025.
• Dividend Payments: $1.6 billion in fiscal year 2025.
• Future Capital Return Commitments: Increased quarterly dividend for 43 consecutive years. Committed to continuing dividend growth as part of long-term capital allocation strategy.

Balance Sheet Position:

• Cash and Equivalents: $1.9 billion
• Total Debt: $17.7 billion
• Net Cash Position: ($15.8) billion (Net Debt)
• Credit Rating: Not explicitly disclosed, but the Company maintains a minimum credit rating for certain derivative instruments and states its current credit rating is above pre-established thresholds.
• Debt Maturity Profile: Principal maturities of long-term debt (including current portion and related party debt) are $716.6 million in FY26, $906.5 million in FY27, $1,405.3 million in FY28, $1,114.0 million in FY29, $1,141.2 million in FY30, and $12,712.4 million thereafter.

Cash Flow Generation:

• Operating Cash Flow: $3.3 billion
• Cash Conversion Metrics: Working capital accounts resulted in a net use of cash of $851.6 million in fiscal year 2025, including $562.6 million of other working capital driven by accrued income taxes and $224.0 million from payables and accrued liabilities due to contract terminations and severance payments.

Operational Excellence

Production & Service Model:

• Industrial Gases: Gases are generally produced at or near the point of use. Atmospheric gases are produced through air separation (primarily cryogenic distillation). Process gases (hydrogen, carbon monoxide, syngas) are produced using steam methane reformers (natural gas as primary raw material) or gasifiers (liquid and solid hydrocarbons). The Company is advancing projects for low-carbon ("blue") and carbon-free ("green") hydrogen.
• Supply Modes:
  • On-site Gases: Large facilities constructed on or near customer sites or pipeline systems from centralized production for large, consistent volumes (15-20 year contracts).
  • Merchant Gases: Liquid bulk delivered via tanker/tube trailer, stored in Company-designed equipment at customer sites; packaged gases delivered in cylinders/dewars for smaller quantities (generally 5 years or less contracts).
• Equipment Manufacturing: Designs and manufactures equipment for air separation, hydrocarbon recovery and purification, and liquid helium/hydrogen transport and storage. Produced at Company manufacturing sites with components from subcontractors.

Supply Chain Architecture: Key Suppliers & Partners:

• Raw Materials: Electricity (largest cost for atmospheric gases), natural gas (primary for hydrogen, carbon monoxide, syngas), liquid and solid hydrocarbons (for gasifiers). Steel, aluminum, and capital equipment subcomponents (e.g., compressors) for equipment manufacturing.
• Helium Sourcing: Dependent on natural gas production by crude helium suppliers globally. Maintains inventory in ISO containers and underground storage facilities (Amarillo, Texas; Beaumont, Texas).
• Mitigation: Contractual pricing formulas, surcharges, cost pass-through provisions, and tolling arrangements mitigate electricity, natural gas, and hydrocarbon price fluctuations.

Facility Network:

• Manufacturing: Equipment manufactured in Missouri (United States), Shanghai (China), and Johor (Malaysia). Gardner Cryogenics operates in Pennsylvania and Kansas (United States). Rotoflow operates in Texas and Pennsylvania (United States).
• Research & Development: Laboratories in the United States (Allentown, Pennsylvania), United Kingdom (Basingstoke and Carrington), Spain (Barcelona), China (Shanghai), and Saudi Arabia (Dhahran).
• Distribution: Approximately 445 production and distribution facilities in Americas, 300 in Asia, 245 in Europe, and 20 in Middle East and India. Pipeline systems in U.S. Gulf Coast, California, Arizona, Alberta, Ontario (Canada), China, South Korea, Taiwan, Malaysia, Indonesia, Netherlands, United Kingdom, Belgium, and France. Global helium distribution network via transfill sites.

Operational Metrics:

• Safety: Global Environment, Health and Safety policy, goals for employee, contractor, and transportation safety, Global EHS Management System (supports ISO 45001), employee training, risk assessment processes, compliance audits, and performance reviews by Board of Directors. Goal is zero accidents and incidents.

Market Access & Customer Relationships

Go-to-Market Strategy: Distribution Channels:

• On-site Supply: Direct supply through facilities built on or near customer sites, or via pipeline systems.
• Merchant Supply: Liquid bulk delivered via tanker/tube trailer; packaged gases delivered in cylinders/dewars.
• Equipment Sales: Direct sales to customers worldwide.

Customer Portfolio:

• Customer Concentration: No single customer accounts for more than 10% of consolidated sales. Concentrations exist in specific industries: refining, chemicals, and electronics, with several large-volume customers under long-term contracts.
• Strategic Partnerships: Joint ventures and equity affiliates with partners like ACWA Power, NEOM Company, Saudi Aramco Power Company, and Uzbekneftegaz JSC for large-scale projects (e.g., NEOM Green Hydrogen Project, Jazan Integrated Gasification and Power Company, Uzbekistan natural gas-to-syngas processing facility).

Geographic Revenue Distribution:

• United States: 39.0% of total revenue
• China: 16.1% of total revenue
• Other foreign operations: 44.9% of total revenue

Competitive Intelligence

Market Structure & Dynamics

Industry Characteristics: The industrial gases market involves the production and sale of atmospheric and process gases, related equipment, and application expertise. It is characterized by large capital investments, long-term customer contracts (especially for on-site supply), and a focus on reliability, price, and technological applications. The clean energy sector, particularly clean hydrogen, is an emerging market with significant growth potential, though market development has been slower than previously anticipated. Electricity and natural gas are major cost components, often mitigated by contractual pass-through provisions.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors:

• Air Liquide S.A.: Global industrial gas company, competitive overlap across regional segments.
• Linde plc: Global industrial gas company, competitive overlap across regional segments.
• Messer Group GmbH: Global industrial gas company, competitive overlap across regional segments.
• Regional Competitors: Various smaller regional players in each geographic segment.

Emerging Competitive Threats: Not explicitly detailed beyond general industry competition and the evolving clean energy market dynamics.

Competitive Response Strategy: Focus on core industrial gas business, disciplined capital allocation, operational excellence, targeted productivity initiatives, and strategic investments in scalable, economically viable clean energy solutions. Leveraging pipeline networks and application expertise to maintain competitive advantage.

Risk Assessment Framework

Strategic & Market Risks

Market Dynamics:

• Economic Conditions: Unfavorable global or regional economic conditions, or changing supply/demand balances, can decrease demand, impact revenues, margins, and cash flows. Weak conditions can lead to customer defaults, contract terminations, project delays, or asset impairments.
• Clean Energy Demand: Demand for clean hydrogen projects is based on expected demand for climate change mitigation technologies. Reduced focus on carbon emissions could negatively impact demand for these solutions.
• Technology Obsolescence: Risk that new technologies may become obsolete or not gain commercial acceptance.
• Competitive Pressures: Introduction of new technologies, competing products, or additional capacity by competitors could weaken demand or impact pricing.

Operational & Execution Risks

Project Execution:

• Large-Scale Projects: Clean hydrogen, carbon capture, gasification, and other large-scale projects involve challenging engineering, permitting, procurement, and construction, lasting several years and requiring billions in investment. Risks include delays, scope changes, cost escalations, contract terminations, customer cancellations, and difficulties in developing/operating complex technologies.
• Offtake Agreements: Large-scale clean hydrogen projects are built before finalization of substantial offtake agreements, creating uncertainty regarding future demand, pricing, and commercial terms.
• Operational Hazards: Inherent hazards in operating facilities, pipelines, and delivery systems (leaks, ruptures, explosions, toxic releases, mechanical failures, cyber incidents) can result in loss of life, environmental damage, production loss, and negative financial impact.
• Aging Assets: Dependence on continued operation of production facilities and ability to meet customer requirements, which relies on proper maintenance and replacement of aging assets.

Supply Chain Vulnerabilities:

• Raw Material/Energy Supply: Disruptions in raw material (hydrocarbons, helium) or energy (electricity, natural gas) supply can prevent meeting contractual commitments.
• Helium Supply: Largely dependent on natural gas production by crude helium suppliers; price fluctuations, operating issues, or changes in global supply can affect pricing and results.
• Cost Recovery: Inability to recover increases in energy and raw material costs from customers due to competitive pressures or inability to raise prices quickly.

Information Technology Systems:

• Cybersecurity Incidents: Dependence on IT systems for operations, customer interface, internal controls, and financial reporting. Vulnerability to cyber-attacks, viruses, unauthorized access, or system failures can disrupt operations, lead to data loss, intellectual property theft, reputational damage, legal liability, and increased costs.

Financial & Regulatory Risks

Market & Financial Risks:

• Financing Availability/Cost: Volatility in credit, capital, and money markets can increase financing costs or make it difficult to obtain funding.
• Pension Obligations: Significant financial obligations with uncertainties in estimating future payments and asset returns. Changes in actuarial assumptions, interest/inflation rates, and capital market volatility can impact liabilities and contributions.
• Foreign Exchange: Exposure to fluctuations in foreign currency exchange rates, particularly Chinese Renminbi and Euro, impacting reported sales, net earnings, cash flows, and fair values.

Regulatory & Compliance Risks:

• Government Regulation: Extensive government regulation in ~50 countries, including import/export restrictions, anti-bribery, anti-corruption, and taxes. Non-compliance can lead to penalties, sanctions, and reputational damage.
• Environmental Regulations: Subject to various environmental laws (CERCLA, RCRA, GHG emissions regulations). Compliance can result in higher capital expenditures and operating costs. Increased public concern about climate change may lead to more stringent regulations.
• Tax Law Changes: Changes in tax laws, regulations, or international tax treaties in key jurisdictions could materially increase tax expense.
• Legal Proceedings: Routine litigation (commercial, competition, environmental, intellectual property, product liability) can result in large monetary awards or regulatory fines.

Geopolitical & External Risks

Geopolitical Exposure:

• International Operations: Operations in foreign jurisdictions (e.g., China, India, Middle East, Uzbekistan) are subject to political risks, unanticipated government actions, infrastructure issues, undeveloped legal systems, and security concerns (civil unrest, acts of war, terrorism).
• Trade Relations: Tariffs, economic sanctions, and trade policy changes can cause demand fluctuations, price volatility, supply disruptions, or loss of property.
• Catastrophic Events: Operations can be impacted by natural disasters, extreme weather, epidemics, pandemics, acts of war (e.g., Russia's invasion of Ukraine, Middle East conflicts), or terrorism, disrupting production, distribution, and exposing to third-party liability.

Innovation & Technology Leadership

Research & Development Focus: Core Technology Areas:

• Industrial Gases: New and improved processes and equipment for the production and delivery of industrial gases.
• Applications: New or improved applications for industrial gas products.
• Clean Energy: Development of technologies to help facilities and customers lower energy consumption, improve efficiency, and lower emissions, including low-carbon and carbon-free hydrogen production. Innovation Pipeline: Continuously developing and implementing new technologies and product offerings, including green hydrogen.

Intellectual Property Portfolio:

• Patent Strategy: Owns approximately 560 United States patents and 2,650 foreign patents. Also a licensee under certain patents owned by others. Business is not materially dependent on any particular patent or group of patents.
• IP Litigation: Involved in intellectual property legal proceedings in the normal course of business.

Technology Partnerships: Funds and cooperates in R&D programs with major universities and undertakes research funded by others, including the United States government.

Leadership & Governance

Executive Leadership Team

Leadership Continuity: New CEO appointed in February 2025. The Company is focused on attracting, developing, and retaining a highly-skilled workforce.

Board Composition: The Board of Directors has oversight responsibility for cybersecurity risks and receives quarterly updates from the CIO and CISO. The Audit and Finance Committee, composed entirely of independent directors, receives quarterly reports on the ERM program and top risks.

Human Capital Strategy

Workforce Composition:

• Total Employees: Approximately 21,300 employees as of 30 September 2025.
• Geographic Distribution: Approximately 75% of employees are based outside the United States.
• Skill Mix: Focused on attracting, developing, and retaining a highly-skilled workforce.

Talent Management: Acquisition & Retention:

• Hiring Strategy: Recruitment approach targets key talent markets.
• Retention Metrics: Workforce reduction actions taken since FY24, with headcount expected to stabilize at approximately 20,000 by end of FY26.
• Employee Value Proposition: Offers competitive pay and benefits benchmarked to local markets. Compensation programs include base pay, annual variable pay, and long-term incentives (stock awards).

Diversity & Development:

• Development Programs: Offers various opportunities for employees to develop capabilities, talents, and careers, with investments in new learning platforms.
• Culture & Engagement: Strives to create a workforce reflecting customers and communities, nurturing a culture of respect and collaboration. Committed to ethical pay practices regardless of personal characteristics.

Environmental & Social Impact

Environmental Commitments: Climate Strategy:

• Emissions Targets: Subject to regulatory regimes governing GHG emissions in jurisdictions like the EU, California, China, South Korea, and the Netherlands. Taiwan's carbon fee framework starts in 2026 for 2025 emissions.
• Carbon Neutrality: Pursues opportunities to improve energy efficiency and lower emissions across operations.
• Renewable Energy: Mitigates electricity costs through renewable electricity use. Supply Chain Sustainability:
• Supplier Engagement: Not explicitly detailed in the provided text.
• Responsible Sourcing: Not explicitly detailed in the provided text.

Social Impact Initiatives:

• Community Investment: Not explicitly detailed in the provided text.
• Product Impact: Offerings (gases, equipment, technologies) enable customers to improve sustainability performance by avoiding GHG emissions, improving efficiency, using by-product gases, and recycling resources.

Business Cyclicality & Seasonality

Demand Patterns:

• Seasonal Trends: Seasonality does not materially affect long-term performance but may result in variability in quarterly financial results.
• Economic Sensitivity: Demand for products and services depends in part on general economic conditions in regions and markets served.
• Industry Cycles: Certain customer markets within segments can experience uncertain or deteriorating economic conditions.

Planning & Forecasting: Demand forecasting approach, inventory management, and capacity planning are not explicitly detailed in the provided text.

Regulatory Environment & Compliance

Regulatory Framework: Industry-Specific Regulations:

• Environmental Laws: Subject to federal, state, local, and foreign environmental and safety laws (e.g., CERCLA, RCRA) concerning emissions, discharges, and hazardous waste.
• GHG Regulations: Operations in jurisdictions with GHG regulatory regimes (e.g., EU ETS, California Cap-and-Trade, China ETS, South Korea ETS, Netherlands CO2 tax, Alberta TIER, Ontario GHG Emissions Performance Standards, Taiwan Climate Change Response Act).
• Climate-Related Disclosures: Monitoring developments regarding SEC's climate-related disclosure rules (currently stayed). Trade & Export Controls:
• Export Restrictions: Subject to import/export restrictions, tariffs, trade sanctions, and other economic/political policies.
• Sanctions Compliance: Subject to laws and sanctions imposed by the U.S. and other jurisdictions that may prohibit or restrict business in certain countries or with certain customers. Legal Proceedings:
• Material Litigation: Involved in various legal proceedings (commercial, competition, environmental, intellectual property, regulatory, product liability, insurance). No currently believed material impact on financial condition, results, or cash flows.
• Antitrust: Brazilian Administrative Council for Economic Defense (CADE) decision against Air Products Brasil Ltda. for alleged anticompetitive activities was annulled by the Supreme Court of Brazil in October 2025, dismissing a R$179.2 million fine.

Tax Strategy & Considerations

Tax Profile:

• Effective Tax Rate: 21.4% (FY25), 19.6% (FY24).
• Geographic Tax Planning: Multinational business subjects it to taxation in the U.S. and numerous foreign jurisdictions. Benefits from tax holidays in certain jurisdictions, which decreased foreign taxes by $30.3 million in FY25.
• Tax Reform Impact: U.S. Tax Cuts and Jobs Act (FY18) resulted in a deemed repatriation tax liability ($60.8 million outstanding as of 30 September 2025). H.R.1 (One Big Beautiful Bill Act) enacted July 2025, expected to primarily affect future fiscal years, including extending/modifying Tax Cuts and Jobs Act provisions and expanding/accelerating phase-out of Inflation Reduction Act incentives. Anticipates future benefits from tax credits related to clean hydrogen production projects.

Insurance & Risk Transfer

Risk Management Framework:

• Insurance Coverage: Maintains workers' compensation insurance.
• Risk Transfer Mechanisms: Addresses financial exposures through a controlled program of risk management, including derivative financial instruments (interest rate swaps, cross currency interest rate swaps, foreign exchange-forward contracts). Mitigates adverse energy price impacts through cost pass-through contracts and price increases.
• Counterparty Credit Risk: Established counterparty credit guidelines, generally transacting with investment-grade financial institutions to minimize credit loss risk.

Business Cyclicality & Seasonality

Demand Patterns:

• Seasonal Trends: Seasonality does not materially affect long-term performance, but may result in variability in quarterly financial results.
• Economic Sensitivity: Demand for products and services depends in part on general economic conditions affecting the regions and markets in which the Company does business.
• Industry Cycles: Operating results in one or more segments can be affected by uncertain or deteriorating economic conditions for particular customer markets within a segment.

Planning & Forecasting: Not explicitly detailed in the provided text.

Regulatory Environment & Compliance

Regulatory Framework: Industry-Specific Regulations:

• Environmental Laws: Subject to extensive federal, state, local, and foreign environmental and safety laws and regulations concerning emissions, discharges, and hazardous waste. Compliance often results in higher capital expenditures and costs.
• GHG Regulations: Operations are within jurisdictions that have or are developing regulatory regimes governing greenhouse gas (GHG) emissions, including CO2 (e.g., European Union Emission Trading System, California Cap-and-Trade Program, China’s Emission Trading Scheme, South Korea’s Emission Trading Scheme, Netherlands CO2 emissions tax, Alberta’s Technology Innovation and Emission Reduction System, Ontario’s GHG Emissions Performance Standards program, Taiwan’s Climate Change Response Act).
• Climate-Related Disclosures: Monitoring developments regarding the SEC's climate-related disclosure rules (Release No. 33-11275), which are currently stayed pending judicial review. Trade & Export Controls:
• Export Restrictions: Subject to import and trade restrictions, tariffs, trade sanctions, and other economic, political, and regulatory policies of local governments.
• Sanctions Compliance: Subject to laws and sanctions imposed by the U.S. and other jurisdictions that may prohibit or restrict business in certain countries or with certain customers. Legal Proceedings:
• Material Litigation: Involved in various legal proceedings, including commercial, competition, environmental, intellectual property, regulatory, product liability, and insurance matters. The Company does not currently believe any legal proceedings, individually or in the aggregate, are reasonably possible to have a material impact on its financial condition, results of operations, or cash flows.
• Antitrust: The Brazilian Administrative Council for Economic Defense (CADE) decision against Air Products Brasil Ltda. for alleged anticompetitive activities was annulled by the Supreme Court of Brazil in October 2025, dismissing a civil fine of R$179.2 million.

Tax Strategy & Considerations

Tax Profile:

• Effective Tax Rate: 21.4% for fiscal year 2025, 19.6% for fiscal year 2024.
• Geographic Tax Planning: Multinational nature of the business subjects it to taxation in the United States and numerous foreign jurisdictions. The effective tax rate is affected by the mix of earnings in countries with differing statutory tax rates. Benefits from tax holidays in certain jurisdictions (e.g., through fiscal years 2030 and 2033), which decreased foreign taxes by $30.3 million in fiscal year 2025.
• Tax Reform Impact: The U.S. Tax Cuts and Jobs Act (fiscal year 2018) resulted in a deemed repatriation tax on unremitted foreign earnings, with an outstanding liability of $60.8 million as of 30 September 2025. H.R.1 (One Big Beautiful Bill Act), enacted in July 2025, is expected to primarily affect future fiscal years, including extending and modifying certain U.S. Tax Cuts and Jobs Act provisions and expanding/accelerating the phase-out of Inflation Reduction Act incentives. The Company anticipates future benefits from tax credits related to certain clean hydrogen production projects.

Insurance & Risk Transfer

Risk Management Framework:

• Insurance Coverage: Maintains workers' compensation insurance.
• Risk Transfer Mechanisms: Addresses financial exposures through a controlled program of risk management that includes the use of derivative financial instruments (interest rate swaps, cross currency interest rate swaps, and foreign exchange-forward contracts). The Company's policy is to minimize cash flow exposure to adverse changes in currency exchange rates and manage financial risks inherent in debt funding. Adverse energy price impacts are mitigated through cost pass-through contracts with customers and price increases.
• Counterparty Credit Risk: Established counterparty credit guidelines and generally enters into transactions with financial institutions of investment grade or better, minimizing the risk of credit loss.
• Performance Guarantees: Issued performance guarantees of up to approximately $0.8 billion as a condition of project financing for the NEOM Green Hydrogen Project, declining over time until expiring in November 2028. Also provided bank guarantees of up to $244.5 million to the Jazan Integrated Gasification and Power Company joint venture to support performance under an EPC contract.