The group operates through two segments: regional industrial gas & Corporate and other
Air Products’ core activity is its regional Industrial Gases business, which accounts for more than 90% of total sales. Organized across four regions - Americas, Asia, Europe, and Middle East & India - the company produces atmospheric gases such as oxygen, nitrogen, and argon, as well as processed gases including hydrogen, helium, carbon dioxide, carbon monoxide, and syngas.
The industrial gases industry is a capital-intensive and highly specialized sector dominated by a small number of global leaders such as Linde, Air Liquide, mainly on price, reliability of supply, and technical expertise.
The company supplies gases through two main models. The on-site model serves large industrial customers by building and operating gas plants directly at their facilities under long-term contracts, typically 15 to 20 years, and represents about half of total revenue. The merchant model supplies smaller customers through tanker deliveries or packaged cylinders under shorter contracts. Air Products also operates a smaller equipment segment that designs cryogenic and gas-processing systems for industries such as chemicals, petrochemicals, oil and gas, and metals. This activity accounts for less than 10% of total sales, and previously included the LNG technology business sold to Honeywell in September 2024.
The global industrial gas market exceeds $100 billion and continues to grow steadily, supported by industrial production, semiconductor manufacturing, healthcare demand, and environmental technologies. Market size has increased from about $87 billion in 2020 to roughly $102 billion in 2023 and is expected to reach around $167 billion by 2030, implying solid long-term growth for the sector.
Beyond traditional industrial demand, growth is increasingly linked to the development of the hydrogen economy. Global hydrogen demand already approaches 100 million tons per year, mainly used in refining and chemical production. Future expansion could come from new applications such as heavy transportation, steelmaking, and energy storage, although this growth will depend on infrastructure development, supportive policies, and long-term offtake agreements.
Net sales declined slightly from $12.6 billion in 2023 to $12.1 billion in 2024 and $12.0 billion in 2025. EBITDA continued to improve from $4.7 billion to $5.0 billion and $5.1 billion, with EBITDA margin expanding from 37.3% in 2023 to 41.7% in 2024 and 42.2% in 2025. EBIT rose from $2.74 billion to $2.95 billion before easing to $2.86 billion in 2025. However, large restructuring charges pushed net income from $3.84 billion in 2024 to a loss of about $386 million in 2025, sending EPS from $17.24 to -$1.74 and temporarily distorting valuation metrics, with the P/E ratio turning negative. At the same time, heavy investment drove capex from $4.6 billion in 2023 to $6.8 billion in 2024 and $7.0 billion in 2025, pushing free cash flow to –$3.77 billion and increasing net debt from $8.4 billion to $15.8 billion, with leverage rising from 1.78x to 3.12x debt/EBITDA.
Looking ahead, net sales are expected to grow from $12.6 billion in 2026 to about $14.1 billion by 2028, while EBITDA could increase from $5.45 billion to $6.14 billion, maintaining margins around 43%. Net income is projected to recover to $2.89 billion in 2026 and reach roughly $3.41 billion by 2028, lifting EPS from $12.96 to about $15.29. CapEx are expected to fall sharply to about $4.0 billion in 2026 and near $3.2 billion by 2028, allowing free cash flow to turn positive and reach around $2.4 billion. P/E ratio is expected to fall from about 21.1x in 2026 to roughly 17.9x in 2028, while EV/EBITDA declines from 14.3x to about 12.7x.
During Q1 2026, Air Products reported sales of $3.1 billion, up 6% YoY, mainly driven by higher energy cost pass-through and modest pricing improvements, while overall volumes remained flat as stronger on-site demand was offset by lower helium sales. GAAP operating income rose 14% to $735 million with an operating margin of 23.7%. Adjusted operating income reached $757 million and adjusted EPS increased 10% to $3.16. Regionally, the Americas generated $1.3 billion in sales and $404 million in operating income, Asia delivered $832 million in revenue with $232 million in operating income, and Europe recorded strong growth with $782 million in sales and $224 million in operating income.
Air Products’ main risks are linked to the execution of its large hydrogen and clean energy projects, which require heavy capital investment and complex engineering. Delays, cost overruns, or difficulties securing long-term offtake agreements could reduce expected returns. In addition, although long-term contracts provide stability, parts of the merchant gas business remain sensitive to industrial cycles, manufacturing demand, and energy price fluctuations. Finally, the long-term growth of the hydrogen economy is still uncertain, as it depends on policy support, infrastructure development, and customer adoption, meaning the financial payoff from these investments could take longer than expected.
Air Products combines the stability of a traditional industrial gas business with the potential of large hydrogen and clean energy projects. Its long-term contracts and strong cash generation provide a solid foundation, while recent results reflect a transition as the company restructures assets and tightens capital discipline. Going forward, its ability to execute major hydrogen projects while maintaining financial discipline will be key to sustaining earnings growth and long-term value.
