Guidance and Outlook
Q: Has anything softened in the full-year outlook?
A: Management noted that while they had a strong start to the year, there is no improvement expected in the economy from current levels. Recent months have been stagnant or declining in some regions. They updated their guidance to reflect this and held it for the remainder of the year. Despite easier year-over-year comparisons in the second half, they are not forecasting an improvement and have decided to be cautious. They emphasized there are no catalysts to change the outlook at this time. If conditions improve, they will see the benefit, but for now, they are focused on mitigating any deterioration. -

EMEA Margins and Pricing
Q: How sustainable are the higher EMEA margins and what's the pricing outlook in Europe?
A: Management highlighted that EMEA margins are now ahead of the Americas, attributing this to a combination of factors including price management, cost control, and spread management. They believe these margins are sustainable and serve as a target for other segments. On pricing, they focus on product pricing rather than surcharges, translating any surcharges into product pricing to ensure sustainability. The pricing actions are reflected consistently and are expected to continue. -

Volume Growth and CapEx Plans
Q: With volumes down, why not increase CapEx instead of lowering it?
A: The company is taking productivity actions across the board in response to the current industrial environment. The reduction in CapEx is driven by optimization efforts consistent with weak industrial activity. They are pushing on growth initiatives and if high-quality projects arise, they are willing to invest. However, they are ensuring that all CapEx is justified and aligned with current market conditions. -

Electronics Market Outlook
Q: What is the outlook for the electronics business?
A: Electronics constitute just under 10% of their overall portfolio, with 30% of the backlog invested in this sector. Management expects a recovery in the electronics market in the second half of the year, driven by AI chips and data centers. They have not included this anticipated recovery in their guidance but are seeing signs of bottoming out in Asia, which points to potential momentum building up later in the year. -

Clean Energy Projects and OCI Collaboration
Q: What's the status of low-carbon hydrogen projects, particularly with OCI?
A: The momentum on clean energy projects is moderating as more effort is placed on feasibility studies to ensure diligence before reaching FID (Final Investment Decision). Only about 7% of announced projects make it to FID, indicating a focus on high-quality projects progressing, though they may take longer. Their pipeline remains solid, expecting to make investment decisions around $8-10 billion over the next few years. Regarding the OCI project, they have contracted with ExxonMobil for CO₂ sequestration and will use their carbon capture technology to capture and condition CO₂ before handing it over for sequestration. -

Americas Performance and Segment Outlook
Q: How did the Americas segment perform, and what's the outlook?
A: In the U.S., base volumes were largely flat to slightly negative. Manufacturing declined about mid-single digits year-over-year, while chemicals and energy were up mid-single digits due to planned outages last year. Packaged gas volumes were down year-over-year, mainly due to softer demand from electronics and timing in aerospace supply, but were flat sequentially. Hard goods were down mid-single digits year-over-year on lower equipment sales but also flat sequentially. Hydrogen demand remains extremely strong in the U.S. Gulf Coast, with refiners and petrochemical customers running at record levels. Looking ahead, the Americas are expected to be largely flat to slightly positive in the second quarter. -

Project Intake and Backlog
Q: Is the lower project intake due to focusing only on high-quality projects?
A: The current sale of gas backlog is about $5 billion, and they plan to start up $1.5-2 billion worth of projects this year. They expect to add back into the backlog to end the year close to the $5 billion mark, indicating higher order intake later in the year. While they do focus on high-quality projects, they maintain a healthy order intake pipeline and feel confident about their position given their leading engineering capabilities. -

APAC Price vs. Cost Environment
Q: How is the pricing environment balancing with costs in APAC?
A: In APAC, particularly China, they are experiencing deflationary conditions. Volumes are flattish, and pricing is also flattish, but costs are coming down, resulting in a positive spread. They had anticipated this and took cost actions several quarters ago. Other regions like India and Australia are following the model closely. Despite these conditions, margins are still expanding in APAC, reflecting effective management of the price-cost balance. -

Acquisition Strategy for Network Density
Q: Are there opportunities to increase network density through acquisitions?
A: The company is committed to tuck-in acquisitions globally to enhance network density, which guides their decision-making. They have a track record of successful acquisitions, such as nexAir in the U.S., and continue to pursue similar opportunities in the U.S. and other regions including Asia, Australia, China, Eastern Europe, the Middle East, and Western Europe. Regulatory considerations are taken into account, but they see ample opportunities without significant pushback. -

Decaptivation and Latin America Investments
Q: What's the impact of decaptivating assets and investing in Latin America?
A: They have decaptivated a plant from a large steel customer, which enhances reliability and efficiency by bringing assets into their network. Such opportunities must meet their investment criteria and are selectively pursued. The timing benefits are realized immediately. In Brazil, they are investing in electrolyzer projects due to the availability of competitively priced renewable energy, which makes green hydrogen economically viable. High natural gas prices in Brazil make green hydrogen an attractive option for customers seeking to decarbonize. -

Pricing Philosophy and Market Share Impact
Q: Does your pricing strategy affect market share?
A: Their pricing strategy focuses on managing the spread between price and inflation, tracking globally weighted inflation, and converting price increases into product pricing rather than relying on surcharges. This approach ensures sustainable pricing actions across merchant and packaged gases. While they did not explicitly state the impact on market share, consistent pricing actions and effective spread management could contribute to a competitive advantage.