filings.toolsItem 1. Financial Statements
150K characters. Original on sec.gov · Markdown
Item 1. Financial Statements
Air Products and Chemicals, Inc. and Subsidiaries
CONSOLIDATED INCOME STATEMENTS
(Unaudited)
| Three Months Ended | Six Months Ended | ||||||||||||||||
| 31 March | 31 March | ||||||||||||||||
| (Millions of U.S. Dollars, except for share and per share data) | 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Sales | $2,916.2 | $2,930.2 | $5,847.7 | $5,927.6 | |||||||||||||
| Cost of sales | 2,053.9 | 1,991.5 | 4,070.4 | 4,058.7 | |||||||||||||
| Selling and administrative expense | 222.0 | 240.6 | 464.4 | 479.0 | |||||||||||||
| Research and development expense | 22.9 | 25.4 | 44.9 | 51.1 | |||||||||||||
| Business and asset actions | 2,927.9 | 57.0 | 2,927.9 | 57.0 | |||||||||||||
| Shareholder activism-related costs | 31.4 | — | 61.3 | — | |||||||||||||
| Other income (expense), net | 13.9 | 21.5 | 36.8 | 22.3 | |||||||||||||
| Operating Income (Loss) | (2,328.0) | 637.2 | (1,684.4) | 1,304.1 | |||||||||||||
| Equity affiliates' income | 145.5 | 143.3 | 296.1 | 301.7 | |||||||||||||
| Interest expense | 42.2 | 59.9 | 84.8 | 113.4 | |||||||||||||
| Other non-operating income (expense), net | (18.6) | (9.2) | 20.3 | (24.0) | |||||||||||||
| Income (Loss) Before Taxes | (2,243.3) | 711.4 | (1,452.8) | 1,468.4 | |||||||||||||
| Income tax expense (benefit) | (505.8) | 130.5 | (365.1) | 265.9 | |||||||||||||
| Net Income (Loss) | (1,737.5) | 580.9 | (1,087.7) | 1,202.5 | |||||||||||||
| Net income (loss) attributable to noncontrolling interests | (6.9) | 8.5 | 25.5 | 20.8 | |||||||||||||
| Net Income (Loss) Attributable to Air Products | ($1,730.6) | $572.4 | ($1,113.2) | $1,181.7 | |||||||||||||
| Per Share Data (U.S. Dollars per share) | |||||||||||||||||
| Basic earnings (loss) per share attributable to Air Products | ($7.77) | $2.57 | ($5.00) | $5.31 | |||||||||||||
| Diluted earnings (loss) per share attributable to Air Products | ($7.77) | $2.57 | ($5.00) | $5.30 | |||||||||||||
| Weighted Average Common Shares (in millions) | |||||||||||||||||
| Basic | 222.8 | 222.5 | 222.7 | 222.5 | |||||||||||||
| Diluted | 222.8 | 222.7 | 222.7 | 222.8 |
The accompanying notes are an integral part of these statements.
Air Products and Chemicals, Inc. and Subsidiaries
CONSOLIDATED COMPREHENSIVE INCOME STATEMENTS
(Unaudited)
| Three Months Ended | ||||||||||||||
| 31 March | ||||||||||||||
| (Millions of U.S. Dollars) | 2025 | 2024 | ||||||||||||
| Net Income (Loss) | ($1,737.5) | $580.9 | ||||||||||||
| Other Comprehensive Income (Loss), net of tax: | ||||||||||||||
| Translation adjustments, net of tax of ($34.3) and $16.7 | 102.3 | (223.8) | ||||||||||||
| Net gain (loss) on derivatives, net of tax of $3.9 and $0.2 | (45.0) | 82.3 | ||||||||||||
| Reclassification adjustments: | ||||||||||||||
| Currency translation adjustment | 2.5 | — | ||||||||||||
| Derivatives, net of tax of ($2.3) and $10.6 | (7.0) | 34.8 | ||||||||||||
| Pension and postretirement benefits, net of tax of $3.6 and $4.5 | 11.0 | 13.6 | ||||||||||||
| Total Other Comprehensive Income (Loss) | 63.8 | (93.1) | ||||||||||||
| Comprehensive Income (Loss) | ($1,673.7) | $487.8 | ||||||||||||
| Net Income (Loss) Attributable to Noncontrolling Interests | (6.9) | 8.5 | ||||||||||||
| Other Comprehensive Income (Loss) Attributable to Noncontrolling Interests | (44.7) | 62.5 | ||||||||||||
| Comprehensive Income (Loss) Attributable to Air Products | ($1,622.1) | $416.8 |
| Six Months Ended | ||||||||||||||
| 31 March | ||||||||||||||
| (Millions of U.S. Dollars) | 2025 | 2024 | ||||||||||||
| Net Income (Loss) | ($1,087.7) | $1,202.5 | ||||||||||||
| Other Comprehensive Income (Loss), net of tax: | ||||||||||||||
| Translation adjustments, net of tax of $11.9 and ($13.1) | (521.7) | 156.8 | ||||||||||||
| Net gain (loss) on derivatives, net of tax of ($18.1) and $5.7 | 20.7 | (78.8) | ||||||||||||
| Reclassification adjustments: | ||||||||||||||
| Currency translation adjustment | 2.5 | — | ||||||||||||
| Derivatives, net of tax of $25.5 and ($2.2) | 84.9 | (7.4) | ||||||||||||
| Pension and postretirement benefits, net of tax of $6.9 and $8.7 | 22.0 | 27.3 | ||||||||||||
| Total Other Comprehensive Income (Loss) | (391.6) | 97.9 | ||||||||||||
| Comprehensive Income (Loss) | ($1,479.3) | $1,300.4 | ||||||||||||
| Net Income Attributable to Noncontrolling Interests | 25.5 | 20.8 | ||||||||||||
| Other Comprehensive Income (Loss) Attributable to Noncontrolling Interests | 58.4 | (75.6) | ||||||||||||
| Comprehensive Income (Loss) Attributable to Air Products | ($1,563.2) | $1,355.2 |
The accompanying notes are an integral part of these statements.
Air Products and Chemicals, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Unaudited)
| 31 March | 30 September | ||||||||||
| (Millions of U.S. Dollars, except for share and per share data) | 2025 | 2024 | |||||||||
| Assets | |||||||||||
| Current Assets | |||||||||||
| Cash and cash items | $1,491.4 | $2,979.7 | |||||||||
| Short-term investments | 111.4 | 5.0 | |||||||||
| Trade receivables, net | 1,845.9 | 1,821.6 | |||||||||
| Inventories | 769.7 | 766.0 | |||||||||
| Prepaid expenses | 261.6 | 179.9 | |||||||||
| Other receivables and current assets | 707.6 | 610.8 | |||||||||
| Total Current Assets | $5,187.6 | $6,363.0 | |||||||||
| Investment in net assets of and advances to equity affiliates | 5,128.7 | 4,792.5 | |||||||||
| Plant and equipment, at cost | 40,645.8 | 39,950.9 | |||||||||
| Less: accumulated depreciation | 16,612.4 | 16,580.0 | |||||||||
| Plant and equipment, net | $24,033.4 | $23,370.9 | |||||||||
| Goodwill, net | 887.1 | 905.1 | |||||||||
| Intangible assets, net | 281.6 | 311.6 | |||||||||
| Operating lease right-of-use assets, net | 970.3 | 1,047.7 | |||||||||
| Noncurrent lease receivables | 324.2 | 392.1 | |||||||||
| Financing receivables | 965.3 | 1,220.2 | |||||||||
| Other noncurrent assets | 1,094.7 | 1,171.5 | |||||||||
| Total Noncurrent Assets | $33,685.3 | $33,211.6 | |||||||||
| Total Assets(A) | $38,872.9 | $39,574.6 | |||||||||
| Liabilities and Equity | |||||||||||
| Current Liabilities | |||||||||||
| Payables and accrued liabilities | $3,423.9 | $2,926.2 | |||||||||
| Accrued income taxes | 182.8 | 558.5 | |||||||||
| Short-term borrowings | 773.2 | 83.5 | |||||||||
| Current portion of long-term debt | 830.7 | 611.4 | |||||||||
| Total Current Liabilities | $5,210.6 | $4,179.6 | |||||||||
| Long-term debt | 14,153.1 | 13,428.6 | |||||||||
| Long-term debt – related party | 100.9 | 104.4 | |||||||||
| Noncurrent operating lease liabilities | 637.4 | 677.9 | |||||||||
| Other noncurrent liabilities | 1,320.9 | 1,350.5 | |||||||||
| Deferred income taxes | 670.4 | 1,159.9 | |||||||||
| Total Noncurrent Liabilities | $16,882.7 | $16,721.3 | |||||||||
| Total Liabilities(A) | $22,093.3 | $20,900.9 | |||||||||
| Commitments and Contingencies - See Note 12 | |||||||||||
| Air Products Shareholders’ Equity | |||||||||||
| Common stock (par value $1 per share; issued 2025 and 2024 - 249,455,584 shares) | 249.4 | 249.4 | |||||||||
| Capital in excess of par value | 1,291.4 | 1,253.2 | |||||||||
| Retained earnings | 17,637.3 | 19,545.7 | |||||||||
| Accumulated other comprehensive loss | (2,477.7) | (2,027.7) | |||||||||
| Treasury stock, at cost (2025 - 26,911,370 shares; 2024 - 27,083,166 shares) | (1,997.0) | (1,984.1) | |||||||||
| Total Air Products Shareholders’ Equity | $14,703.4 | $17,036.5 | |||||||||
| Noncontrolling Interests(A) | 2,076.2 | 1,637.2 | |||||||||
| Total Equity | $16,779.6 | $18,673.7 | |||||||||
| Total Liabilities and Equity | $38,872.9 | $39,574.6 |
(A)Includes balances associated with a consolidated variable interest entity ("VIE"), including amounts reflected in "Total Assets" that can only be used to settle obligations of the VIE of $6,225.5 and $4,393.9 as of 31 March 2025 and 30 September 2024, respectively, as well as liabilities of the VIE reflected within "Total Liabilities" for which creditors do not have recourse to the general credit of Air Products of $4,479.5 and $3,473.4 as of 31 March 2025 and 30 September 2024, respectively. Refer to Note 3, Variable Interest Entities, for additional information regarding the NEOM Green Hydrogen Company joint venture.
The accompanying notes are an integral part of these statements.
Air Products and Chemicals, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Six Months Ended | |||||||||||
| 31 March | |||||||||||
| (Millions of U.S. Dollars) | 2025 | 2024 | |||||||||
| Operating Activities | |||||||||||
| Net income (loss) | ($1,087.7) | $1,202.5 | |||||||||
| Less: Net income attributable to noncontrolling interests | 25.5 | 20.8 | |||||||||
| Net income (loss) attributable to Air Products | ($1,113.2) | $1,181.7 | |||||||||
| Adjustments to reconcile income to cash provided by operating activities: | |||||||||||
| Depreciation and amortization | $750.4 | $710.0 | |||||||||
| Deferred income taxes | (540.1) | 6.9 | |||||||||
| Tax reform repatriation | (34.9) | — | |||||||||
| Business and asset actions | 2,927.9 | 57.0 | |||||||||
| Undistributed earnings of equity method investments | (129.4) | (118.2) | |||||||||
| Gain on sale of assets and investments | (12.3) | (18.2) | |||||||||
| Share-based compensation | 54.7 | 28.5 | |||||||||
| Noncurrent lease receivables | 28.0 | 40.2 | |||||||||
| Other adjustments | (87.8) | 26.5 | |||||||||
| Working capital changes that provided (used) cash, excluding effects of acquisitions: | |||||||||||
| Trade receivables | (66.9) | 30.9 | |||||||||
| Inventories | (24.4) | (72.7) | |||||||||
| Other receivables | 6.5 | (31.6) | |||||||||
| Payables and accrued liabilities | (47.7) | (301.0) | |||||||||
| Other working capital | (571.0) | (111.7) | |||||||||
| Cash Provided by Operating Activities | $1,139.8 | $1,428.3 | |||||||||
| Investing Activities | |||||||||||
| Additions to plant and equipment, including long-term deposits | ($4,009.1) | ($3,114.9) | |||||||||
| Investment in and advances to unconsolidated affiliates | (365.4) | — | |||||||||
| Investment in financing receivables | (35.8) | (392.4) | |||||||||
| Proceeds from sale of assets and investments | 36.5 | 20.2 | |||||||||
| Purchases of investments | (117.6) | (136.4) | |||||||||
| Proceeds from investments | 11.1 | 367.4 | |||||||||
| Other investing activities | 60.9 | 30.1 | |||||||||
| Cash Used for Investing Activities | ($4,419.4) | ($3,226.0) | |||||||||
| Financing Activities | |||||||||||
| Long-term debt proceeds | $2,002.5 | $3,649.0 | |||||||||
| Payments on long-term debt | (332.3) | (64.7) | |||||||||
| Increase (Decrease) in commercial paper and short-term borrowings | 645.6 | (131.9) | |||||||||
| Dividends paid to shareholders | (787.4) | (777.9) | |||||||||
| Proceeds from stock option exercises | 1.1 | 5.7 | |||||||||
| Investments by noncontrolling interests | 355.7 | 142.6 | |||||||||
| Other financing activities | (60.1) | (110.3) | |||||||||
| Cash Provided by Financing Activities | $1,825.1 | $2,712.5 | |||||||||
| Effect of Exchange Rate Changes on Cash | (33.8) | 3.2 | |||||||||
| Increase (Decrease) in cash and cash items | ($1,488.3) | $918.0 | |||||||||
| Cash and cash items – Beginning of year | 2,979.7 | 1,617.0 | |||||||||
| Cash and Cash Items – End of Period | $1,491.4 | $2,535.0 | |||||||||
The accompanying notes are an integral part of these statements.
Air Products and Chemicals, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited)
| (Millions of U.S. Dollars, except for per share data) | |||||||||||||||||||||||||||||
| Six Months Ended 31 March 2025 | |||||||||||||||||||||||||||||
| Common Stock | Capital in Excess of Par Value | Retained Earnings | AOCL(A) | Treasury Stock | Air Products Share-holders' Equity | Non-controlling Interests | Total Equity | ||||||||||||||||||||||
| Balance as of 30 September 2024 | $249.4 | $1,253.2 | $19,545.7 | ($2,027.7) | ($1,984.1) | $17,036.5 | $1,637.2 | $18,673.7 | |||||||||||||||||||||
| Net income (loss) | — | — | (1,113.2) | — | — | (1,113.2) | 25.5 | (1,087.7) | |||||||||||||||||||||
| Other comprehensive income (loss) | — | — | — | (450.0) | — | (450.0) | 58.4 | (391.6) | |||||||||||||||||||||
| Dividends on common stock ($3.56 per share) | — | — | (792.1) | — | — | (792.1) | — | (792.1) | |||||||||||||||||||||
| Distributions to noncontrolling interests | — | — | — | — | — | — | (1.4) | (1.4) | |||||||||||||||||||||
| Share-based compensation | — | 51.0 | — | — | — | 51.0 | — | 51.0 | |||||||||||||||||||||
| Issuance of treasury shares for stock option and award plans | — | (12.8) | — | — | (12.9) | (25.7) | — | (25.7) | |||||||||||||||||||||
| Investments by noncontrolling interests | — | — | — | — | — | — | 362.4 | 362.4 | |||||||||||||||||||||
| Purchase of noncontrolling interests | — | — | — | — | — | — | (5.9) | (5.9) | |||||||||||||||||||||
| Other equity transactions | — | — | (3.1) | — | — | (3.1) | — | (3.1) | |||||||||||||||||||||
| Balance as of 31 March 2025 | $249.4 | $1,291.4 | $17,637.3 | ($2,477.7) | ($1,997.0) | $14,703.4 | $2,076.2 | $16,779.6 |
| Six Months Ended 31 March 2024 | |||||||||||||||||||||||||||||
| Common Stock | Capital in Excess of Par Value | Retained Earnings | AOCL(A) | Treasury Stock | Air Products Share-holders' Equity | Non-controlling Interests | Total Equity | ||||||||||||||||||||||
| Balance as of 30 September 2023 | $249.4 | $1,190.5 | $17,289.7 | ($2,449.4) | ($1,967.3) | $14,312.9 | $1,347.4 | $15,660.3 | |||||||||||||||||||||
| Net income | — | — | 1,181.7 | — | — | 1,181.7 | 20.8 | 1,202.5 | |||||||||||||||||||||
| Other comprehensive income (loss) | — | — | — | 173.5 | — | 173.5 | (75.6) | 97.9 | |||||||||||||||||||||
| Dividends on common stock ($3.52 per share) | — | — | (782.5) | — | — | (782.5) | — | (782.5) | |||||||||||||||||||||
| Distributions to noncontrolling interests | — | — | — | — | — | — | (13.7) | (13.7) | |||||||||||||||||||||
| Share-based compensation | — | 29.5 | — | — | — | 29.5 | — | 29.5 | |||||||||||||||||||||
| Issuance of treasury shares for stock option and award plans | — | (4.5) | — | — | 1.5 | (3.0) | — | (3.0) | |||||||||||||||||||||
| Investments by noncontrolling interests | — | — | — | — | — | — | 142.6 | 142.6 | |||||||||||||||||||||
| Other equity transactions | — | 0.2 | 1.1 | — | — | 1.3 | — | 1.3 | |||||||||||||||||||||
| Balance as of 31 March 2024 | $249.4 | $1,215.7 | $17,690.0 | ($2,275.9) | ($1,965.8) | $14,913.4 | $1,421.5 | $16,334.9 |
(A)Accumulated other comprehensive loss
The accompanying notes are an integral part of these statements.
Air Products and Chemicals, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF EQUITY (cont.)
(Unaudited)
| (Millions of U.S. Dollars, except for per share data) | |||||||||||||||||||||||||||||
| Three Months Ended 31 March 2025 | |||||||||||||||||||||||||||||
| Common Stock | Capital in Excess of Par Value | Retained Earnings | AOCL(A) | Treasury Stock | Air Products Share-holders' Equity | Non-controlling Interests | Total Equity | ||||||||||||||||||||||
| Balance as of 31 December 2024 | $249.4 | $1,260.9 | $19,767.3 | ($2,586.2) | ($1,999.1) | $16,692.3 | $2,046.4 | $18,738.7 | |||||||||||||||||||||
| Net loss | — | — | (1,730.6) | — | — | (1,730.6) | (6.9) | (1,737.5) | |||||||||||||||||||||
| Other comprehensive income (loss) | — | — | — | 108.5 | — | 108.5 | (44.7) | 63.8 | |||||||||||||||||||||
| Dividends on common stock ($1.79 per share) | — | — | (398.3) | — | — | (398.3) | — | (398.3) | |||||||||||||||||||||
| Share-based compensation | — | 36.7 | — | — | — | 36.7 | — | 36.7 | |||||||||||||||||||||
| Issuance of treasury shares for stock option and award plans | — | (6.0) | — | — | 2.1 | (3.9) | — | (3.9) | |||||||||||||||||||||
| Investments by noncontrolling interests | — | — | — | — | — | — | 81.4 | 81.4 | |||||||||||||||||||||
| Other equity transactions | — | (0.2) | (1.1) | — | — | (1.3) | — | (1.3) | |||||||||||||||||||||
| Balance as of 31 March 2025 | $249.4 | $1,291.4 | $17,637.3 | ($2,477.7) | ($1,997.0) | $14,703.4 | $2,076.2 | $16,779.6 |
| Three Months Ended 31 March 2024 | |||||||||||||||||||||||||||||
| Common Stock | Capital in Excess of Par Value | Retained Earnings | AOCL(A) | Treasury Stock | Air Products Share-holders' Equity | Non-controlling Interests | Total Equity | ||||||||||||||||||||||
| Balance as of 31 December 2023 | $249.4 | $1,200.0 | $17,510.0 | ($2,120.3) | ($1,966.1) | $14,873.0 | $1,256.1 | $16,129.1 | |||||||||||||||||||||
| Net income | — | — | 572.4 | — | — | 572.4 | 8.5 | 580.9 | |||||||||||||||||||||
| Other comprehensive income (loss) | — | — | — | (155.6) | — | (155.6) | 62.5 | (93.1) | |||||||||||||||||||||
| Dividends on common stock ($1.77 per share) | — | — | (393.5) | — | — | (393.5) | — | (393.5) | |||||||||||||||||||||
| Distributions to noncontrolling interests | — | — | — | — | — | — | (13.7) | (13.7) | |||||||||||||||||||||
| Share-based compensation | — | 15.7 | — | — | — | 15.7 | — | 15.7 | |||||||||||||||||||||
| Issuance of treasury shares for stock option and award plans | — | (0.1) | — | — | 0.3 | 0.2 | — | 0.2 | |||||||||||||||||||||
| Investments by noncontrolling interests(B) | — | — | — | — | — | — | 108.1 | 108.1 | |||||||||||||||||||||
| Other equity transactions | — | 0.1 | 1.1 | — | — | 1.2 | — | 1.2 | |||||||||||||||||||||
| Balance as of 31 March 2024 | $249.4 | $1,215.7 | $17,690.0 | ($2,275.9) | ($1,965.8) | $14,913.4 | $1,421.5 | $16,334.9 |
(A)Accumulated other comprehensive loss
(B)Includes noncash activity for conversion of shareholder loans to equity in the NEOM Green Hydrogen Company joint venture.
The accompanying notes are an integral part of these statements.
Air Products and Chemicals, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Millions of U.S. Dollars, unless otherwise indicated
1. BASIS OF PRESENTATION AND MAJOR ACCOUNTING POLICIES
As used in this report, unless the context indicates otherwise, the terms “we”, “our”, “us”, the “Company”, "Air Products", or “registrant” include our controlled subsidiaries and affiliates.
Basis of Presentation
The interim consolidated financial statements of Air Products and Chemicals, Inc. and its subsidiaries included herein have been prepared by us, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC"). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles ("GAAP") have been condensed or omitted pursuant to such rules and regulations. In our opinion, the accompanying statements reflect adjustments necessary to fairly present the financial position, results of operations, and cash flows for those periods indicated and contain adequate disclosures to make the information presented not misleading. Adjustments included herein are of a normal, recurring nature unless otherwise disclosed in the notes to the interim consolidated financial statements.
To fully understand the basis of presentation, the interim consolidated financial statements and related notes included herein should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended 30 September 2024 (the "2024 Form 10-K"), which was filed with the SEC on 21 November 2024. Results of operations for interim periods are not necessarily indicative of the results of operations for a full year.
Major Accounting Policies
Refer to our 2024 Form 10-K for a description of major accounting policies. There have been no significant changes to these accounting policies during the first six months of fiscal year 2025.
Estimates and Assumptions
Preparation of the interim consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect amounts reported in these statements and the accompanying notes. Actual results could differ from those estimates.
2. NEW ACCOUNTING GUIDANCE
New Accounting Guidance to be Implemented
Climate-Related Disclosures
In March 2024, the SEC issued Release No. 33-11275, “The Enhancement and Standardization of Climate-Related Disclosures for Investors", which includes final rules for providing qualitative and quantitative disclosures regarding certain climate-related topics on an annual basis. As a result of ongoing litigation, the SEC issued an order in April 2024 to stay the effectiveness of the rules during judicial review in a U.S. court. The SEC announced that it withdrew its defense of the rules in March 2025; however, the rules have not been formally rescinded and judicial proceedings are continuing.
The outcome of judicial proceedings remains uncertain. We will continue to monitor the status of the rules, which could be effective for us beginning in fiscal year 2026. If the rules are not overturned or rescinded and take effect on schedule, prospective adoption will be permitted with phased-in compliance beginning with our Annual Report on Form 10-K for the fiscal year ending 30 September 2026. We are evaluating the impact these rules may have on our disclosures.
Reportable Segment Disclosures
In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures". We will adopt the update upon its effective date, which applies to our Annual Report on Form 10-K for the fiscal year ending 30 September 2025 and Forms 10-Q for interim periods thereafter. Upon adoption, we will expand our segment financial information disclosures to include significant expense categories that are regularly provided to our chief operating decision maker as well as other segment items reflected in the reported measure of segment profit or loss. Historical periods provided in the affected reports will be recast to conform to the amended presentation.
Income Tax Disclosures
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740)—Improvements to Income Tax Disclosures”, to expand income tax disclosures, primarily through disaggregation requirements for the rate reconciliation and income taxes paid. The update will be effective in our Annual Report on Form 10-K for the fiscal year ending 30 September 2026, although early adoption is permitted. The amendments should be applied on a prospective basis with a retrospective option. We are evaluating the impact this update will have on our disclosures.
Disaggregation of Income Statement Expenses
In November 2024, the FASB issued ASU 2024-03, “Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses”, which requires additional disclosures of certain costs and expenses, including purchases of inventory, employee compensation, depreciation, intangible asset amortization, as well as selling expenses in the notes to the financial statements. In January 2025, the FASB clarified that the update will be effective in our Annual Report on Form 10-K for the fiscal year ending 30 September 2028 as well as interim periods thereafter, although early adoption is permitted. The amendments should be applied either prospectively after the effective date or retrospectively to any or all periods presented. We are evaluating the impact this update will have on our disclosures.
3. VARIABLE INTEREST ENTITIES
We are the primary beneficiary of the NEOM Green Hydrogen Company joint venture ("NGHC"), which is a variable interest entity ("VIE") that is consolidated in our Middle East and India segment. We are not the primary beneficiary of any other material VIEs. We account for a VIE for which we have an equity interest and exercise significant influence but are not the primary beneficiary, such as the Jazan Integrated Gasification and Power Company joint venture ("JIGPC"), as an equity method investment. Additionally, World Energy, LLC ("World Energy") is a VIE for which we have no equity interest and are not the primary beneficiary. Our variable interests in NGHC, JIGPC, and World Energy are further discussed below.
NGHC Joint Venture
The NEOM Green Hydrogen Project is a multi-billion dollar green hydrogen-based ammonia production facility that is being constructed in NEOM City, Saudi Arabia. Owned and operated by NGHC, the facility will be powered by renewable energy to produce green ammonia for Air Products as the exclusive offtaker under a long-term take-if-tendered agreement.
Air Products is an equal owner in NGHC with our joint venture partners, ACWA Power and NEOM Company. While we only hold one-third of the voting interests in the joint venture, substantially all the activities of the joint venture involve or are conducted on behalf of Air Products. Since we have disproportionately few voting rights relative to our economic interests in the joint venture, we determined that NGHC is a VIE. In addition, we determined that we are the primary beneficiary of NGHC since we have the power to unilaterally direct certain significant activities, including key design and construction decisions, and we share power with our joint venture partners related to other activities that are significant to the economic performance of NGHC. Therefore, we consolidate NGHC within the Middle East and India segment.
Under the project financing discussed below, the assets of NGHC can only be used to settle obligations of the joint venture, and creditors of NGHC do not have recourse to the general credit of Air Products. A table summarizing balances associated with NGHC as reflected on our consolidated balance sheets is provided on page 15.
Project Financing
In May 2023, NGHC finalized the $6.7 billion engineering, procurement, and construction ("EPC") agreement with Air Products named as the main contractor and system integrator for the facility. NGHC secured project financing that is non-recourse to Air Products of approximately $6.1 billion, which is expected to fund about 73% of the project and will be drawn over the construction period. At the same time, NGHC secured additional credit facilities that are non-recourse to Air Products, which total approximately $500 and are primarily for NGHC's working capital needs. Total principal borrowings were $4.3 billion and $3.3 billion as of 31 March 2025 and 30 September 2024, respectively. These balances include short-term borrowings of $64.4 and $51.6, respectively, from a 5.60% variable rate Saudi Riyal facility. The remaining borrowings include long-term facilities that are reflected net of unamortized discounts and debt issuance costs within "Long-term debt" on our consolidated balance sheets.
In May 2023, NGHC entered into floating-to-fixed interest rate swaps designed to hedge the long-term variable rate debt facilities available under the project financing during the construction period of the project. We discontinued cash flow hedge accounting for certain swaps during the third quarter of fiscal year 2024. As a result of the de-designation, unrealized gains and losses are recorded to "Other non-operating income (expense), net" on our consolidated income statements. During the three months ended 31 March 2025, we recognized an unrealized loss of $11.5 ($7.5 attributable to our noncontrolling partners, or $3.0 attributable to Air Products after tax). On a year-to-date basis, the total amount recognized was a net unrealized gain of $27.3 ($17.7 attributable to our noncontrolling partners, or $7.3 attributable to Air Products after tax). Refer to Note 8, Financial Instruments, for additional information.
NGHC Balance Sheet
The table below summarizes balances associated with NGHC as reflected on our consolidated balance sheets:
| 31 March | 30 September | |||||||||||||
| 2025 | 2024 | |||||||||||||
| Assets | ||||||||||||||
| Cash and cash items | $12.8 | $34.5 | ||||||||||||
| Trade receivables, net | 1.2 | 6.7 | ||||||||||||
| Prepaid expenses | 36.8 | 31.2 | ||||||||||||
| Other receivables and current assets | 132.1 | 120.6 | ||||||||||||
| Total Current Assets | $182.9 | $193.0 | ||||||||||||
| Plant and equipment, net | 5,643.1 | 3,929.9 | ||||||||||||
| Operating lease right-of-use assets, net | 224.0 | 233.9 | ||||||||||||
| Other noncurrent assets | 175.5 | 37.1 | ||||||||||||
| Total Noncurrent Assets | $6,042.6 | $4,200.9 | ||||||||||||
| Total Assets | $6,225.5 | $4,393.9 | ||||||||||||
| Liabilities | ||||||||||||||
| Payables and accrued liabilities | $344.8 | $308.4 | ||||||||||||
| Accrued income taxes | 0.9 | 2.0 | ||||||||||||
| Short-term borrowings | 64.4 | 51.6 | ||||||||||||
| Total Current Liabilities | $410.1 | $362.0 | ||||||||||||
| Long-term debt | 3,997.1 | 3,053.3 | ||||||||||||
| Noncurrent operating lease liabilities | 18.5 | 24.5 | ||||||||||||
| Other noncurrent liabilities | 40.7 | 30.4 | ||||||||||||
| Deferred income taxes | 13.1 | 3.2 | ||||||||||||
| Total Noncurrent Liabilities | $4,069.4 | $3,111.4 | ||||||||||||
| Total Liabilities | $4,479.5 | $3,473.4 | ||||||||||||
| Equity | ||||||||||||||
| Accumulated other comprehensive income | $44.2 | $13.8 | ||||||||||||
| Noncontrolling interests | 1,281.6 | 937.6 |
JIGPC Joint Venture
JIGPC is a joint venture with Saudi Aramco Power Company (a subsidiary of Aramco), ACWA Power, and Air Products Qudra (“APQ”). JIGPC entered into project financing to purchase power blocks, gasifiers, air separation units, syngas cleanup assets, and utilities to supply electricity, steam, hydrogen, and utilities to Aramco’s refinery and terminal complex under a 25-year agreement, which commenced in the first quarter of fiscal year 2022. JIGPC recorded financing receivables upon acquisition of the assets and recognizes financing income over the supply term.
We determined JIGPC is a VIE for which we exercise significant influence but are not the primary beneficiary as we do not have the power to direct the activities that are most significant to its economic performance. Instead, these activities, including plant dispatch, operating and maintenance decisions, budgeting, capital expenditures, and financing, require unanimous approval of the owners or are controlled by the customer. Accordingly, we account for our 55% investment, which includes 4% that is attributable to the noncontrolling partner of APQ, under the equity method within the Middle East and India segment.
Our loss exposure is limited to our investment in the joint venture. The carrying value of our investment, including amounts attributable to noncontrolling interests, totaled $3,060.0 and $2,871.2 as of 31 March 2025 and 30 September 2024, respectively. The balance as of 31 March 2025 reflects a final investment of approximately $115 that we completed during the second quarter of fiscal year 2025. This investment was made in the form of a shareholder loan, which the joint venture used to purchase additional assets.
Our investment primarily consists of shareholder loans that qualify as in-substance common stock in the joint venture. Certain shareholders receive a preferred cash distribution pursuant to the joint venture agreement, which specifies each shareholder’s share of income after considering the amount of cash available for distribution. As such, the earnings attributable to Air Products may not be proportionate to our ownership interest in the venture.
World Energy
In November 2023, we purchased a sustainable aviation fuel (“SAF”) facility in Paramount, California, from World Energy and accounted for the transaction as a financing arrangement because the agreement contained an embedded sales-type lease. As of 30 September 2024, the related financing receivable had a carrying value of approximately $300. Additionally, we entered into a Master Project Agreement ("MPA") that included terms for operation of the acquired facility as well as amended terms for the construction and operation of an SAF expansion project subject to construction at the same location. The MPA also included a tolling arrangement whereby we would receive feedstock from and produce renewable fuels for World Energy over a term to conclude 15 years after onstream of the expansion project with the option to renew for two five-year terms. Subsequently, the expansion project was put on hold pending receipt of permits.
We determined that World Energy is a VIE, and our financing receivable represented a variable interest in World Energy. We are not the primary beneficiary as we do not have control over their key operating decisions, including feedstock supply, production of renewable fuels, and negotiating and executing supply agreements with customers.
During the second quarter of fiscal year 2025, we terminated the MPA and recorded a project exit charge of approximately $1.8 billion. The charge included $1.4 billion to write down assets that had primarily been reflected within "Plant and equipment, net" and $300 to establish an allowance for credit loss equal to the value of the financing receivable, which had previously been placed on non-accrual status. The remaining charge primarily reflects estimated costs to terminate contractual commitments and other obligations associated with exiting the site. While we have no further exposure to loss for our variable interest in World Energy as of 31 March 2025, there could be future impacts to earnings as we exit the project.
The charges discussed above were recorded in aggregate with those related to other strategic actions as described in Note 4, Business and Asset Actions. Estimates used to calculate the charges reflect our best judgment based on information available at the time the charges were recorded. The amount and timing of final settlement of these items may differ materially from our current estimates, which could materially impact our consolidated financial statements in future periods.
4. BUSINESS AND ASSET ACTIONS
Our consolidated income statements for the three and six months ended 31 March 2025 and 2024 include charges for business and asset actions of $2,934.7 ($2,290.6 attributable to Air Products after tax) and $57.0 ($43.8 after tax), respectively, for the strategic business and asset actions described below. These charges were not allocated to our reportable segments.
Project Exit Costs
During the second quarter of fiscal year 2025, our Board of Directors and Chief Executive Officer initiated a project review in an effort to streamline our backlog and allow us to focus resources on projects that we believe will enhance value for our shareholders. In connection with this review, we decided to exit various projects related to clean energy generation and distribution.
As a result of these decisions, we recorded project exit costs of $2,861.8 and $6.8 through operating loss and equity affiliates' income, respectively. The majority of these costs related to projects in the Americas segment. The charge reflected in operating loss primarily includes the write down of project assets to their estimated net realizable value as well as estimated costs required to terminate various contractual commitments. The non-cash portion of this charge totaled approximately $2.4 billion, which was largely attributable to plant and equipment and other noncurrent assets associated with the sustainable aviation fuel expansion project with World Energy. The $6.8 recorded to equity affiliates' income reflects an other-than-temporary impairment of a joint venture in China that had been formed to develop clean hydrogen infrastructure in the region. The amount of these charges attributable to our noncontrolling partners was $3.5.
We expect cash expenditures associated with these actions to total approximately $500, of which approximately $90 was paid during the second quarter of fiscal year 2025. This estimate primarily reflects amounts to settle open purchase commitments, customer contracts, and expected asset retirement obligations. The remaining amount accrued on our consolidated balance sheet as of 31 March 2025 is reflected within "Payables and accrued liabilities".
Our estimates related to exiting these projects, including the net realizable value of assets to be disposed and expected future cash obligations, reflect our best judgment based on information available at the time the project exit costs were recorded. Final settlement of these items may differ materially from our current estimates, which could impact our consolidated financial statements in future periods. Additionally, while we expect to complete exit activities within the next twelve months, we cannot predict the occurrence of future events and circumstances that could extend this process beyond one year in certain cases.
Global Cost Reduction Plan
We initiated a global cost reduction plan in June 2023 that provides severance and other postemployment benefits to employees identified for involuntarily separation. Benefits provided under the plan are calculated according to our ongoing benefit arrangements. During the second quarter of fiscal year 2025, we committed to taking additional actions under the plan and recorded related separation costs of $66.1. Our consolidated income statement for the comparative period reflects costs of $57.0 for actions identified during the second quarter of fiscal year 2024. Costs incurred since the plan was initiated in 2023 total $150.1 for approximately 2,400 employees globally.
As of 30 September 2024, the liability for unpaid benefits reflected within "Payables and accrued liabilities" on our consolidated balance sheet was $34.0. The table below reconciles this balance to the remaining liability as of 31 March 2025:
| Amount accrued as of 30 September 2024 | $34.0 | ||||
| Charge for severance and other benefits | 66.1 | ||||
| Cash payments | (23.9) | ||||
| Currency translation adjustment | (0.9) | ||||
| Amount accrued as of 31 March 2025 | $75.3 |
The remaining liability as of 31 March 2025 primarily relates to employees identified during the second quarter of fiscal year 2025. We expect implementation of these actions to be substantially complete by the end of the second quarter of fiscal year 2026. However, position eliminations are subject to legal requirements that vary by jurisdiction, which may extend this process beyond one year in certain cases.
5. REVENUE RECOGNITION
The majority of our revenue is generated from our sale of gas customers within the regional industrial gases segments. We distribute gases through either our on-site or merchant supply mode depending on various factors, including the customer's volume requirements and location. We also design and manufacture equipment for air separation, hydrocarbon recovery and purification, and liquid helium and liquid hydrogen transport and storage. The Corporate and other segment serves our sale of equipment customers.
Disaggregation of Revenue
The tables provided below present our consolidated sales disaggregated by supply mode for each of our reportable segments for the second quarter and first six months of fiscal years 2025 and 2024. We believe this presentation best depicts the nature, timing, type of customer, and contract terms for our sales.
| Three Months Ended 31 March 2025 | |||||||||||||||||||||||
| Americas | Asia | Europe | Middle East and India | Corporate and other | Total | % | |||||||||||||||||
| On-site | $760.5 | $523.1 | $249.2 | $19.7 | $— | $1,552.5 | 53 | % | |||||||||||||||
| Merchant | 526.7 | 251.0 | 478.2 | 13.1 | — | 1,269.0 | 44 | % | |||||||||||||||
| Sale of equipment | — | — | — | — | 94.7 | 94.7 | 3 | % | |||||||||||||||
| Total | $1,287.2 | $774.1 | $727.4 | $32.8 | $94.7 | $2,916.2 | 100 | % | |||||||||||||||
| Three Months Ended 31 March 2024 | |||||||||||||||||||||||
| Americas | Asia | Europe | Middle East and India | Corporate and other | Total | % | |||||||||||||||||
| On-site | $695.5 | $495.9 | $194.5 | $18.5 | $— | $1,404.4 | 48 | % | |||||||||||||||
| Merchant | 550.3 | 283.8 | 473.4 | 17.2 | — | 1,324.7 | 45 | % | |||||||||||||||
| Sale of equipment | — | — | — | — | 201.1 | 201.1 | 7 | % | |||||||||||||||
| Total | $1,245.8 | $779.7 | $667.9 | $35.7 | $201.1 | $2,930.2 | 100 | % |
| Six Months Ended 31 March 2025 | ||||||||||||||||||||||||||
| Americas | Asia | Europe | Middle East and India | Corporate and other | Total | % | ||||||||||||||||||||
| On-site | $1,473.6 | $1,052.4 | $477.5 | $37.3 | $— | $3,040.8 | 52 | % | ||||||||||||||||||
| Merchant | 1,101.2 | 538.8 | 947.1 | 28.3 | — | 2,615.4 | 45 | % | ||||||||||||||||||
| Sale of Equipment | — | — | — | — | 191.5 | 191.5 | 3 | % | ||||||||||||||||||
| Total | $2,574.8 | $1,591.2 | $1,424.6 | $65.6 | $191.5 | $5,847.7 | 100 | % | ||||||||||||||||||
| Six Months Ended 31 March 2024 | ||||||||||||||||||||||||||
| Americas | Asia | Europe | Middle East and India | Corporate and other | Total | % | ||||||||||||||||||||
| On-site | $1,409.6 | $999.1 | $453.7 | $36.0 | $— | $2,898.4 | 48 | % | ||||||||||||||||||
| Merchant | 1,088.3 | 574.4 | 945.4 | 35.1 | — | 2,643.2 | 45 | % | ||||||||||||||||||
| Sale of Equipment | — | — | — | — | 386.0 | 386.0 | 7 | % | ||||||||||||||||||
| Total | $2,497.9 | $1,573.5 | $1,399.1 | $71.1 | $386.0 | $5,927.6 | 100 | % |
Interest income associated with financing and lease arrangements accounted for approximately 1% of our total consolidated sales for the periods presented.
Remaining Performance Obligations
As of 31 March 2025, the transaction price allocated to remaining performance obligations is estimated to be approximately $26 billion. This amount includes fixed-charge contract provisions associated with our on-site and sale of equipment supply modes. We estimate that approximately half of this revenue will be recognized over the next five years and the balance thereafter.
Our remaining performance obligations do not include (1) expected revenue associated with new on-site plants that are not yet on-stream; (2) consideration associated with contracts that have an expected duration of less than one year; and (3) variable consideration for which we recognize revenue at the amount to which we have the right to invoice, including energy cost pass-through to customers.
In the future, actual amounts will differ due to events outside of our control, including, but not limited to, inflationary price escalations; currency exchange rates; and amended, terminated, or renewed contracts.
Contract Balances
The table below details balances arising from contracts with customers:
| 31 March | 30 September | |||||||||||||
| Balance Sheet Location | 2025 | 2024 | ||||||||||||
| Assets | ||||||||||||||
| Contract assets – current | Other receivables and current assets | $118.8 | $76.2 | |||||||||||
| Contract fulfillment costs – current | Other receivables and current assets | 105.9 | 103.7 | |||||||||||
| Contract assets – noncurrent | Other noncurrent assets | 52.6 | — | |||||||||||
| Liabilities | ||||||||||||||
| Contract liabilities – current | Payables and accrued liabilities | $244.0 | $240.0 | |||||||||||
| Contract liabilities – noncurrent | Other noncurrent liabilities | 280.2 | 290.0 |
During the first six months of fiscal year 2025, we recognized sales of approximately $75 associated with sale of equipment contracts that were included within our current contract liabilities as of 30 September 2024.
6. INVENTORIES
The components of inventories are as follows:
| 31 March | 30 September | |||||||||||||
| 2025 | 2024 | |||||||||||||
| Finished goods | $191.3 | $210.2 | ||||||||||||
| Work in process | 49.4 | 42.2 | ||||||||||||
| Raw materials, supplies, and other | 529.0 | 513.6 | ||||||||||||
| Inventories | $769.7 | $766.0 | ||||||||||||
7. GOODWILL
Changes to the carrying amount of consolidated goodwill by segment for the six months ended 31 March 2025 are as follows:
| Americas | Asia | Europe | Middle East and India | Corporate and other | Total | |||||||||||||||
| Goodwill, net as of 30 September 2024 | $146.3 | $174.7 | $534.3 | $15.8 | $34.0 | $905.1 | ||||||||||||||
| Currency translation | (2.3) | (6.0) | (9.7) | — | — | (18.0) | ||||||||||||||
| Goodwill, net as of 31 March 2025 | $144.0 | $168.7 | $524.6 | $15.8 | $34.0 | $887.1 | ||||||||||||||
| 31 March | 30 September | |||||||||||||
| 2025 | 2024 | |||||||||||||
| Goodwill, gross | $1,165.3 | $1,199.8 | ||||||||||||
| Accumulated impairment losses(A) | (278.2) | (294.7) | ||||||||||||
| Goodwill, net | $887.1 | $905.1 |
(A)Accumulated impairment losses are attributable to our Latin America reporting unit ("LASA") within the Americas segment and include the impact of currency translation.
We review goodwill for impairment annually in the fourth quarter of the fiscal year and whenever events or changes in circumstances indicate that the carrying value of goodwill might not be recoverable. The business and asset actions discussed in Note 4 did not have a significant impact on the fair value of our reporting units as most of the assets were still under construction and did not significantly contribute to previous fair value estimates. Accordingly, we did not perform an interim goodwill impairment test during the second quarter of fiscal year 2025.
8. FINANCIAL INSTRUMENTS
Currency Price Risk Management
Our earnings, cash flows, and financial position are exposed to foreign currency risk from foreign currency-denominated transactions and net investments in foreign operations. It is our policy to seek to minimize our cash flow volatility from changes in currency exchange rates. This is accomplished by identifying and evaluating the risk that our cash flows will change in value due to changes in exchange rates and by executing strategies necessary to manage such exposures. Our objective is to maintain economically balanced currency risk management strategies that provide adequate downside protection.
Forward Exchange Contracts
We enter into forward exchange contracts to reduce the cash flow exposure to foreign currency fluctuations associated with highly anticipated cash flows and certain firm commitments, such as the purchase of plant and equipment. We also enter into forward exchange contracts to hedge the cash flow exposure on intercompany loans and third-party debt. This portfolio of forward exchange contracts consists primarily of Euros and U.S. Dollars. The maximum remaining term of any forward exchange contract currently outstanding and designated as a cash flow hedge at 31 March 2025 is 2.6 years.
Forward exchange contracts are also used to hedge the value of investments in certain foreign subsidiaries and affiliates by creating a liability in a currency in which we have a net equity position. The primary currency pair in this portfolio of forward exchange contracts is Euros and U.S. Dollars.
We also utilize forward exchange contracts that are not designated as hedges. These contracts are used to economically hedge foreign currency-denominated monetary assets and liabilities, primarily working capital. The primary objective of these forward exchange contracts is to protect the value of foreign currency-denominated monetary assets and liabilities from the effects of volatility in foreign exchange rates that might occur prior to their receipt or settlement. This portfolio of forward exchange contracts consists of multiple foreign currency pairs, with a profile that changes from time to time depending on our business activity and sourcing decisions.
The table below summarizes our outstanding currency price risk management instruments:
| 31 March 2025 | 30 September 2024 | |||||||||||||||||||||||||
| US$ Notional | Years Average Maturity | US$ Notional | Years Average Maturity | |||||||||||||||||||||||
| Forward Exchange Contracts: | ||||||||||||||||||||||||||
| Cash flow hedges | $3,200.5 | 0.5 | $4,003.2 | 0.6 | ||||||||||||||||||||||
| Net investment hedges | 779.2 | 2.3 | 911.4 | 2.5 | ||||||||||||||||||||||
| Not designated | 1,939.0 | 0.3 | 1,880.0 | 0.3 | ||||||||||||||||||||||
| Total Forward Exchange Contracts | $5,918.7 | 0.7 | $6,794.6 | 0.8 |
We also use foreign currency-denominated debt to hedge the foreign currency exposures of our net investment in certain foreign subsidiaries. The designated foreign currency-denominated debt and related accrued interest was €2,642.6 million ($2,858.5) at 31 March 2025 and €1,905.7 million ($2,121.9) at 30 September 2024. The designated foreign currency-denominated debt is presented within "Long-term debt" and "Current portion of long-term debt" on the consolidated balance sheets.
Debt Portfolio Management
It is our policy to identify, on a continuing basis, the need for debt capital and to evaluate the financial risks inherent in funding the Company with debt capital. Reflecting the result of this ongoing review, we manage our debt portfolio and hedging program with the intent to (1) reduce funding risk with respect to borrowings made by us to preserve our access to debt capital and provide debt capital as required for funding and liquidity purposes, and (2) manage the aggregate interest rate risk and the debt portfolio in accordance with certain debt management parameters.
Interest Rate Management Contracts
We enter into interest rate swaps to change the fixed/variable interest rate mix of our debt portfolio in order to maintain the percentage of fixed- and variable-rate debt within the parameters set by management. In accordance with these parameters, the agreements are used to manage interest rate risks and costs inherent in our debt portfolio. Our interest rate management portfolio generally consists of fixed-to-floating interest rate swaps (which are designated as fair value hedges), pre-issuance interest rate swaps and treasury locks (which hedge the interest rate risk associated with anticipated fixed-rate debt issuances and are designated as cash flow hedges), and floating-to-fixed interest rate swaps (which are designated as cash flow hedges). As of 31 March 2025, the outstanding interest rate swaps were denominated in U.S. Dollars. The notional amount of the interest rate swap agreements is equal to or less than the designated debt being hedged. When interest rate swaps are used to hedge variable-rate debt, the indices of the swaps and the debt to which they are designated are the same. It is our policy not to enter into any interest rate management contracts which lever a move in interest rates on a greater than one-to-one basis.
Cross Currency Interest Rate Swap Contracts
We enter into cross currency interest rate swap contracts when our risk management function deems necessary. These contracts may entail both the exchange of fixed- and floating-rate interest payments periodically over the life of the agreement and the exchange of one currency for another currency at inception and at a specified future date. The contracts are used to hedge either certain net investments in foreign operations or non-functional currency cash flows related to intercompany loans. The current cross currency interest rate swap portfolio consists of fixed-to-fixed swaps primarily between the U.S. Dollar and each of the Chinese Renminbi, Indian Rupee, and Chilean Peso.
The table below summarizes our outstanding interest rate management contracts and cross currency interest rate swaps:
| 31 March 2025 | 30 September 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||
| US$ Notional | Average Pay % | Average Receive % | Years Average Maturity | US$ Notional | Average Pay % | Average Receive % | Years Average Maturity | |||||||||||||||||||||||||||||||||||||||||||
| Interest rate swaps (fair value hedge) | $800.0 | SOFR | 1.64 | % | 2.5 | $800.0 | SOFR | 1.64 | % | 3.0 | ||||||||||||||||||||||||||||||||||||||||
| Interest rate swaps (cash flow hedge)(A) | $2,750.8 | 2.77 | % | SOFR | 20.7 | $2,159.3 | 2.72 | % | SOFR | 21.2 | ||||||||||||||||||||||||||||||||||||||||
| Interest rate swaps (not designated)(A) | $322.7 | 3.26 | % | SOFR | 19.5 | $461.4 | 3.27 | % | SOFR | 20.5 | ||||||||||||||||||||||||||||||||||||||||
| Cross currency interest rate swaps (net investment hedge) | $— | — | % | — | % | 0.0 | $16.7 | 5.39 | % | 3.64 | % | 0.2 | ||||||||||||||||||||||||||||||||||||||
| Cross currency interest rate swaps (cash flow hedge) | $308.4 | 5.12 | % | 3.01 | % | 1.8 | $410.6 | 4.96 | % | 2.80 | % | 1.9 | ||||||||||||||||||||||||||||||||||||||
| Cross currency interest rate swaps (not designated) | $— | — | % | — | % | 0.0 | $34.7 | 5.39 | % | 3.64 | % | 0.2 |
(A)In May 2023, NGHC entered into floating-to-fixed interest rate swaps designed to hedge long-term variable rate debt facilities available under non-recourse project financing during the construction period of the NEOM Green Hydrogen Project. During the third quarter of fiscal year 2024, we discontinued cash flow hedge accounting for certain instruments that will remain de-designated until outstanding borrowings from the available financing are commensurate with the notional value of the instruments.
The table below provides the amounts recorded on the consolidated balance sheet related to cumulative basis adjustments for fair value hedges:
| Carrying amounts of hedged item | Cumulative hedging adjustment, included in carrying amount | ||||||||||||||||
| 31 March | 30 September | 31 March | 30 September | ||||||||||||||
| Balance Sheet Location | 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Current portion of long-term debt | $546.2 | $— | ($3.5) | $— | |||||||||||||
| Long-term debt | $1,512.1 | $2,057.1 | ($32.8) | ($36.6) |
The table below summarizes the fair value and balance sheet location of our outstanding derivatives:
| Balance Sheet Location | 31 March | 30 September | Balance Sheet Location | 31 March | 30 September | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||
| Derivatives Designated as Hedging Instruments: | ||||||||||||||||||||
| Forward exchange contracts | Other receivables and current assets | $30.4 | $74.5 | Payables and accrued liabilities | $65.5 | $21.6 | ||||||||||||||
| Interest rate management contracts | Other receivables and current assets | 5.3 | 1.2 | Payables and accrued liabilities | 3.6 | 1.2 | ||||||||||||||
| Forward exchange contracts | Other noncurrent assets | 15.6 | 9.6 | Other noncurrent liabilities | 10.8 | 15.6 | ||||||||||||||
| Interest rate management contracts | Other noncurrent assets | 165.6 | 34.3 | Other noncurrent liabilities | 33.5 | 40.2 | ||||||||||||||
| Total Derivatives Designated as Hedging Instruments | $216.9 | $119.6 | $113.4 | $78.6 | ||||||||||||||||
| Derivatives Not Designated as Hedging Instruments: | ||||||||||||||||||||
| Forward exchange contracts | Other receivables and current assets | $5.4 | $16.5 | Payables and accrued liabilities | $10.4 | $21.8 | ||||||||||||||
| Interest rate management contracts | Other receivables and current assets | — | 1.7 | Payables and accrued liabilities | — | — | ||||||||||||||
| Forward exchange contracts | Other noncurrent assets | 0.2 | 0.2 | Other noncurrent liabilities | 0.1 | 0.2 | ||||||||||||||
| Interest rate management contracts | Other noncurrent assets | 16.7 | 4.6 | Other noncurrent liabilities | — | — | ||||||||||||||
| Total Derivatives Not Designated as Hedging Instruments | $22.3 | $23.0 | $10.5 | $22.0 | ||||||||||||||||
| Total Derivatives | $239.2 | $142.6 | $123.9 | $100.6 |
Refer to Note 9, Fair Value Measurements, which defines fair value, describes the method for measuring fair value, and provides additional disclosures regarding fair value measurements.
The tables below summarize gains (losses) recognized in other comprehensive income during the period related to our net investment and cash flow hedging relationships:
| Three Months Ended | Six Months Ended | ||||||||||||||||
| 31 March | 31 March | ||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||
| Net Investment Hedging Relationships | |||||||||||||||||
| Forward exchange contracts | ($20.0) | $31.6 | $33.9 | ($0.2) | |||||||||||||
| Foreign currency debt | (112.4) | 48.2 | 28.0 | (41.7) | |||||||||||||
| Cross currency interest rate swaps | — | 0.8 | 0.4 | (1.1) | |||||||||||||
| Total Amount Recognized in OCI | (132.4) | 80.6 | 62.3 | (43.0) | |||||||||||||
| Tax effects | 32.1 | (19.6) | (15.4) | 10.5 | |||||||||||||
| Net Amount Recognized in OCI | ($100.3) | $61.0 | $46.9 | ($32.5) |
| Three Months Ended | Six Months Ended | ||||||||||||||||
| 31 March | 31 March | ||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||
| Derivatives in Cash Flow Hedging Relationships | |||||||||||||||||
| Forward exchange contracts | $43.4 | ($63.5) | ($134.4) | $51.6 | |||||||||||||
| Forward exchange contracts, excluded components | (4.8) | (3.4) | (6.3) | (12.4) | |||||||||||||
| Other(A) | (79.7) | 149.4 | 143.3 | (112.3) | |||||||||||||
| Total Amount Recognized in OCI | (41.1) | 82.5 | 2.6 | (73.1) | |||||||||||||
| Tax effects | (3.9) | (0.2) | 18.1 | (5.7) | |||||||||||||
| Net Amount Recognized in OCI | ($45.0) | $82.3 | $20.7 | ($78.8) |
(A)Other primarily includes interest rate and cross currency interest rate swaps for which excluded components are recognized in “Payables and accrued liabilities” and “Other receivables and current assets” as a component of accrued interest payable and accrued interest receivable, respectively. These excluded components are recorded in “Other non-operating income (expense), net” over the life of the cross currency interest rate swap. Other also includes the recognition of our share of gains and losses, net of tax, related to interest rate swaps held by our equity affiliates.
The table below summarizes the location and amounts recognized in income related to our cash flow and fair value hedging relationships by contract type:
| Three Months Ended 31 March | ||||||||||||||||||||||||||||||||||||||||||||
| Sales | Cost of Sales | Interest Expense | Other Non-Operating Income (Expense), Net | |||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||||||||||||||||
| Total presented in consolidated income statements that includes effects of hedging below | $2,916.2 | $2,930.2 | $2,053.9 | $1,991.5 | $42.2 | $59.9 | ($18.6) | ($9.2) | ||||||||||||||||||||||||||||||||||||
| (Gain) Loss Effects of Cash Flow Hedging: | ||||||||||||||||||||||||||||||||||||||||||||
| Forward Exchange Contracts: | ||||||||||||||||||||||||||||||||||||||||||||
| Amount reclassified from OCI into income | $0.2 | ($0.4) | $6.7 | $0.5 | $— | $— | ($24.9) | $48.3 | ||||||||||||||||||||||||||||||||||||
| Amount excluded from effectiveness testing recognized in earnings based on amortization approach | — | — | — | — | — | — | 4.3 | 5.3 | ||||||||||||||||||||||||||||||||||||
| Other: | ||||||||||||||||||||||||||||||||||||||||||||
| Amount reclassified from OCI into income | — | — | — | — | — | 1.1 | 4.4 | (9.4) | ||||||||||||||||||||||||||||||||||||
| Total (Gain) Loss Reclassified from OCI to Income | 0.2 | (0.4) | 6.7 | 0.5 | — | 1.1 | (16.2) | 44.2 | ||||||||||||||||||||||||||||||||||||
| Tax effects | (0.1) | 0.1 | (1.5) | (0.1) | — | (0.4) | 3.9 | (10.2) | ||||||||||||||||||||||||||||||||||||
| Net (Gain) Loss Reclassified from OCI to Income | $0.1 | ($0.3) | $5.2 | $0.4 | $— | $0.7 | ($12.3) | $34.0 | ||||||||||||||||||||||||||||||||||||
| (Gain) Loss Effects of Fair Value Hedging: | ||||||||||||||||||||||||||||||||||||||||||||
| Other: | ||||||||||||||||||||||||||||||||||||||||||||
| Hedged items | $— | $— | $— | $— | $11.2 | ($8.2) | $— | $— | ||||||||||||||||||||||||||||||||||||
| Derivatives designated as hedging instruments | — | — | — | — | (11.2) | 8.2 | — | — | ||||||||||||||||||||||||||||||||||||
| Total (Gain) Loss Recognized in Income | $— | $— | $— | $— | $— | $— | $— | $— |
| Six Months Ended 31 March | ||||||||||||||||||||||||||||||||||||||||||||
| Sales | Cost of Sales | Interest Expense | Other Non-Operating Income (Expense), Net | |||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||||||||||||||||
| Total presented in consolidated income statements that includes effects of hedging below | $5,847.7 | $5,927.6 | $4,070.4 | $4,058.7 | $84.8 | $113.4 | $20.3 | ($24.0) | ||||||||||||||||||||||||||||||||||||
| (Gain) Loss Effects of Cash Flow Hedging: | ||||||||||||||||||||||||||||||||||||||||||||
| Forward Exchange Contracts: | ||||||||||||||||||||||||||||||||||||||||||||
| Amount reclassified from OCI into income | $0.4 | ($0.1) | $7.6 | $1.8 | $— | $— | $104.4 | ($26.6) | ||||||||||||||||||||||||||||||||||||
| Amount excluded from effectiveness testing recognized in earnings based on amortization approach | — | — | — | — | — | — | 10.4 | 11.0 | ||||||||||||||||||||||||||||||||||||
| Other: | ||||||||||||||||||||||||||||||||||||||||||||
| Amount reclassified from OCI into income | — | — | — | — | 0.5 | 2.4 | (12.9) | 1.9 | ||||||||||||||||||||||||||||||||||||
| Total (Gain) Loss Reclassified from OCI to Income | 0.4 | (0.1) | 7.6 | 1.8 | 0.5 | 2.4 | 101.9 | (13.7) | ||||||||||||||||||||||||||||||||||||
| Tax effects | (0.1) | — | (1.6) | (0.4) | (0.2) | (0.9) | (23.6) | 3.5 | ||||||||||||||||||||||||||||||||||||
| Net (Gain) Loss Reclassified from OCI to Income | $0.3 | ($0.1) | $6.0 | $1.4 | $0.3 | $1.5 | $78.3 | ($10.2) | ||||||||||||||||||||||||||||||||||||
| (Gain) Loss Effects of Fair Value Hedging: | ||||||||||||||||||||||||||||||||||||||||||||
| Other: | ||||||||||||||||||||||||||||||||||||||||||||
| Hedged items | $— | $— | $— | $— | $0.3 | $17.9 | $— | $— | ||||||||||||||||||||||||||||||||||||
| Derivatives designated as hedging instruments | — | — | — | — | (0.3) | (17.9) | — | — | ||||||||||||||||||||||||||||||||||||
| Total (Gain) Loss Recognized in Income | $— | $— | $— | $— | $— | $— | $— | $— |
The tables below summarize the location and amounts recognized in income related to our derivatives not designated as hedging instruments by contract type:
| Three Months Ended 31 March | |||||||||||||||||||||||
| Other Income (Expense), Net | Other Non-Operating Income (Expense), Net | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| The Effects of Derivatives Not Designated as Hedging Instruments: | |||||||||||||||||||||||
| Forward exchange contracts | ($2.8) | ($2.9) | $1.1 | $0.3 | |||||||||||||||||||
| De-designated interest rate swaps | — | — | 11.5 | — | |||||||||||||||||||
| Other | — | — | — | (0.7) | |||||||||||||||||||
| Total (Gain) Loss Recognized in Income | ($2.8) | ($2.9) | $12.6 | ($0.4) |
| Six Months Ended 31 March | |||||||||||||||||||||||
| Other Income (Expense), Net | Other Non-Operating Income (Expense), Net | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| The Effects of Derivatives Not Designated as Hedging Instruments: | |||||||||||||||||||||||
| Forward exchange contracts | ($6.7) | $0.3 | ($0.8) | ($0.9) | |||||||||||||||||||
| De-designated interest rate swaps | — | — | (27.3) | — | |||||||||||||||||||
| Other | — | — | (1.7) | 0.1 | |||||||||||||||||||
| Total (Gain) Loss Recognized in Income | ($6.7) | $0.3 | ($29.8) | ($0.8) |
The amount of unrealized gains and losses related to cash flow hedges as of 31 March 2025 that are expected to be reclassified to earnings in the next twelve months is not material.
The cash flows related to derivative contracts are generally reported in the operating activities section of the consolidated statements of cash flows.
Credit Risk-Related Contingent Features
Certain derivative instruments are executed under agreements that require us to maintain a minimum credit rating with both Standard & Poor’s and Moody’s. If our credit rating falls below this threshold, the counterparty to the derivative instruments has the right to request full collateralization on the derivatives’ net liability position. The net liability position of derivatives with credit risk-related contingent features was $37.6 and $47.3 as of 31 March 2025 and 30 September 2024, respectively. Because our current credit rating is above the various pre-established thresholds, no collateral has been posted on these liability positions.
Counterparty Credit Risk Management
We execute financial derivative transactions with counterparties that are highly rated financial institutions, all of which are investment grade at this time. Some of our underlying derivative agreements give us the right to require the institution to post collateral if its credit rating falls below the pre-established thresholds with Standard & Poor’s, Moody’s, or Fitch. The collateral that the counterparties would be required to post was $193.3 and $57.2 as of 31 March 2025 and 30 September 2024, respectively. No financial institution is required to post collateral at this time, as all have credit ratings at or above threshold.
9. FAIR VALUE MEASUREMENTS
Fair value is defined as an exit price, or the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels as follows:
Level 1 — Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 — Inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the asset or liability.
Level 3 — Inputs that are unobservable for the asset or liability based on our own assumptions about the assumptions market participants would use in pricing the asset or liability.
The methods and assumptions used to measure the fair value of financial instruments are as follows:
Short-term Investments
Short-term investments primarily include time deposits with original maturities greater than three months and less than one year. We estimated the fair value of our short-term investments, which approximates carrying value as of the balance sheet date, using Level 2 inputs within the fair value hierarchy. Level 2 measurements were based on current interest rates for similar investments with comparable credit risk and time to maturity.
Derivatives
The fair value of our interest rate management contracts and forward exchange contracts are quantified using the income approach and are based on estimates using standard pricing models. These models consider the value of future cash flows as of the balance sheet date, discounted to a present value using discount factors that match both the time to maturity and currency of the underlying instruments. These standard pricing models utilize inputs that are derived from or corroborated by observable market data such as interest rate yield curves as well as currency spot and forward rates; therefore, the fair value of our derivatives is classified as a Level 2 measurement. On an ongoing basis, we randomly test a subset of our valuations against valuations received from the transaction’s counterparty to validate the accuracy of our standard pricing models. Counterparties to these derivative contracts are highly rated financial institutions.
Refer to Note 8, Financial Instruments, for a description of derivative instruments, including details related to the balance sheet line classifications.
Long-term Debt, Including Related Party
The fair value of our debt is based on estimates using standard pricing models that consider the value of future cash flows as of the balance sheet date, discounted to a present value using discount factors that match both the time to maturity and currency of the underlying instruments. These standard valuation models utilize observable market data such as interest rate yield curves and currency spot rates; therefore, the fair value of our debt is classified as a Level 2 measurement.
The carrying values and fair values of financial instruments were as follows:
| 31 March 2025 | 30 September 2024 | |||||||||||||||||||||||||
| Carrying Value | Fair Value | Carrying Value | Fair Value | |||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||
| Derivatives | ||||||||||||||||||||||||||
| Forward exchange contracts | $51.6 | $51.6 | $100.8 | $100.8 | ||||||||||||||||||||||
| Interest rate management contracts | 187.6 | 187.6 | 41.8 | 41.8 | ||||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||
| Derivatives | ||||||||||||||||||||||||||
| Forward exchange contracts | $86.8 | $86.8 | $59.2 | $59.2 | ||||||||||||||||||||||
| Interest rate management contracts | 37.1 | 37.1 | 41.4 | 41.4 | ||||||||||||||||||||||
| Long-term debt, including current portion and related party | 15,084.7 | 14,588.8 | 14,144.4 | 13,897.3 |
The carrying amounts reported on the consolidated balance sheets for cash and cash items, short-term investments, trade receivables, payables and accrued liabilities, accrued income taxes, and short-term borrowings approximate fair value due to the short-term nature of these instruments. Accordingly, these items have been excluded from the above table.
The table below summarizes assets and liabilities on the consolidated balance sheets that are measured at fair value on a recurring basis:
| 31 March 2025 | 30 September 2024 | ||||||||||||||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||
| Assets at Fair Value | |||||||||||||||||||||||||||||
| Derivatives | |||||||||||||||||||||||||||||
| Forward exchange contracts | $51.6 | $— | $51.6 | $— | $100.8 | $— | $100.8 | $— | |||||||||||||||||||||
| Interest rate management contracts | 187.6 | — | 187.6 | — | 41.8 | — | 41.8 | — | |||||||||||||||||||||
| Total Assets at Fair Value | $239.2 | $— | $239.2 | $— | $142.6 | $— | $142.6 | $— | |||||||||||||||||||||
| Liabilities at Fair Value | |||||||||||||||||||||||||||||
| Derivatives | |||||||||||||||||||||||||||||
| Forward exchange contracts | $86.8 | $— | $86.8 | $— | $59.2 | $— | $59.2 | $— | |||||||||||||||||||||
| Interest rate management contracts | 37.1 | — | 37.1 | — | 41.4 | — | 41.4 | — | |||||||||||||||||||||
| Total Liabilities at Fair Value | $123.9 | $— | $123.9 | $— | $100.6 | $— | $100.6 | $— |
The following is a tabular presentation of nonrecurring fair value measurements along with the level within the fair value hierarchy in which the fair value measurement in its entirety falls:
| 31 March 2025 | |||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | Q2 FY25 Charge | |||||||||||||
| Plant and Equipment(A) | $22.5 | $22.5 | $1,687.5 |
(A) As a result of our project exits, we assessed the recoverability of assets capable of being marketed in a secondary equipment market using an orderly liquidation valuation resulting in an impairment loss for the difference between the orderly liquidation value and net book value of the assets as of 31 March 2025. For additional information regarding our project exits, refer to Note 4, Business and Asset Actions, to the consolidated financial statements.
10. DEBT
Eurobond Issuance
In February 2025, we issued Euro-denominated senior fixed-rate notes ("Eurobonds") with an aggregate principal amount of €1.0 billion in a registered public offering. The interest rate, maturity, and carrying amount of each instrument as of 31 March 2025 are summarized in the table below:
| Fiscal Year Maturities | 31 March 2025 | |||||||||||||
| Eurobonds 2.950% | 2031 | $540.9 | ||||||||||||
| Eurobonds 3.450% | 2037 | 540.9 | ||||||||||||
| Total | $1,081.8 |
The proceeds from the Eurobonds were reduced by deferred financing charges and discounts of approximately $8, which are being amortized through interest expense over the life of the underlying bonds. We used the proceeds from the offering to repay commercial paper obligations, including those incurred prior to the closing of our 2025 Eurobond offering for repayment of €300 million aggregate principal amount outstanding of our 1.000% Eurobonds at maturity, plus accrued interest.
Credit Facilities
During the second quarter of fiscal year 2025, we refinanced our existing 364-day $500 revolving credit agreement to extend its maturity date from 27 March 2025 to 26 March 2026. All other terms remain consistent with the original agreement. Fees associated with the refinancing were not material. Separately, we also have a five-year $3.0 billion revolving credit agreement that matures on 31 March 2029. Both the five-year agreement and the 364-day agreement are syndicated facilities that provide a source of liquidity and support our commercial paper program through availability of senior unsecured debt to us and certain of our subsidiaries. No borrowings were outstanding under either of the agreements as of 31 March 2025.
As of 30 September 2024, we also had credit facilities available to certain of our foreign subsidiaries totaling $1,223.9, of which $1,129.0 was borrowed and outstanding. During the second quarter of fiscal year 2025, we derecognized long-term borrowings from two Saudi Riyal facilities upon deconsolidation of the Blue Hydrogen Industrial Gases Company ("BHIG") subsidiary. These borrowings had been drawn from a 7.35% variable-rate facility and a 2.00% stated rate facility, which had carrying values of $451.1 and $222.2 as of 30 September 2024, respectively. As further discussed in Note 17, Supplemental Information, we continue to have exposure to BHIG's borrowings through our equity method investment in the entity. As of 31 March 2025, the amount available under foreign credit facilities totaled $415.7, all of which was borrowed and outstanding.
Related Party Debt
Refer to Note 17, Supplemental Information.
11. RETIREMENT BENEFITS
The components of net periodic cost for our defined benefit pension plans for the three and six months ended 31 March 2025 and 2024 were as follows:
| Pension Benefits | |||||||||||||||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||||||||||||||
| Three Months Ended 31 March | U.S. | International | Total | U.S. | International | Total | |||||||||||||||||||||||||||||
| Service cost | $2.3 | $2.7 | $5.0 | $2.4 | $2.8 | $5.2 | |||||||||||||||||||||||||||||
| Non-service cost: | |||||||||||||||||||||||||||||||||||
| Interest cost | 29.9 | 13.8 | 43.7 | 33.7 | 15.0 | 48.7 | |||||||||||||||||||||||||||||
| Expected return on plan assets | (33.2) | (14.5) | (47.7) | (30.0) | (11.9) | (41.9) | |||||||||||||||||||||||||||||
| Prior service cost amortization | 0.3 | 0.2 | 0.5 | 0.3 | 0.3 | 0.6 | |||||||||||||||||||||||||||||
| Actuarial loss amortization | 11.7 | 2.4 | 14.1 | 14.3 | 3.2 | 17.5 | |||||||||||||||||||||||||||||
| Settlements | — | 0.1 | 0.1 | — | 0.2 | 0.2 | |||||||||||||||||||||||||||||
| Other | — | — | — | — | 0.1 | 0.1 | |||||||||||||||||||||||||||||
| Net Periodic Cost | $11.0 | $4.7 | $15.7 | $20.7 | $9.7 | $30.4 | |||||||||||||||||||||||||||||
| Pension Benefits | |||||||||||||||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||||||||||||||
| Six Months Ended 31 March | U.S. | International | Total | U.S. | International | Total | |||||||||||||||||||||||||||||
| Service cost | $4.6 | $5.6 | $10.2 | $4.8 | $5.6 | $10.4 | |||||||||||||||||||||||||||||
| Non-service cost: | |||||||||||||||||||||||||||||||||||
| Interest cost | 59.8 | 27.7 | 87.5 | 67.4 | 29.8 | 97.2 | |||||||||||||||||||||||||||||
| Expected return on plan assets | (66.4) | (29.2) | (95.6) | (60.0) | (23.5) | (83.5) | |||||||||||||||||||||||||||||
| Prior service cost amortization | 0.6 | 0.4 | 1.0 | 0.6 | 0.5 | 1.1 | |||||||||||||||||||||||||||||
| Actuarial loss amortization | 23.4 | 4.8 | 28.2 | 28.6 | 6.4 | 35.0 | |||||||||||||||||||||||||||||
| Settlements | — | 0.1 | 0.1 | — | 0.2 | 0.2 | |||||||||||||||||||||||||||||
| Other | — | 0.1 | 0.1 | — | 0.2 | 0.2 | |||||||||||||||||||||||||||||
| Net Periodic Cost | $22.0 | $9.5 | $31.5 | $41.4 | $19.2 | $60.6 | |||||||||||||||||||||||||||||
Our service costs are primarily included within "Cost of sales" and "Selling and administrative expense" on our consolidated income statements. The amount of service costs capitalized in the first six months of fiscal years 2025 and 2024 were not material. The non-service related impacts are presented outside operating results within "Other non-operating income (expense), net."
For the six months ended 31 March 2025 and 2024, our cash contributions to funded pension plans and benefit payments under unfunded pension plans were $14.3 and $19.2, respectively. Total contributions for fiscal year 2025 are expected to be approximately $30 to $40. During fiscal year 2024, total contributions were $34.7.
During the three and six months ended 31 March 2025, we recognized actuarial gain amortization of $0.1 and $0.4, respectively, for our other postretirement benefits plans. During the three and six months ended 31 March 2024, we recognized actuarial gain amortization of $0.2 and $0.3, respectively, for our other postretirement benefits plan.
12. COMMITMENTS AND CONTINGENCIES
Litigation
We are involved in various legal proceedings, including commercial, competition, environmental, intellectual property, regulatory, product liability, and insurance matters. We do not currently believe there are any legal proceedings for which it is reasonably possible, individually or in the aggregate, to have a material impact on our financial condition, results of operations, or cash flows.
In September 2010, the Brazilian Administrative Council for Economic Defense ("CADE") issued a decision against our Brazilian subsidiary, Air Products Brasil Ltda., and several other Brazilian industrial gas companies for alleged anticompetitive activities. CADE imposed a civil fine of R$179.2 million (approximately $31 at 31 March 2025) on Air Products Brasil Ltda. This fine was based on a recommendation by a unit of the Brazilian Ministry of Justice, following an investigation beginning in 2003, which alleged violation of competition laws with respect to the sale of industrial and medical gases. The fines are based on a percentage of our total revenue in Brazil in 2003.
We have denied the allegations made by the authorities and filed an appeal in October 2010 with the Brazilian courts. On 6 May 2014, our appeal was granted and the fine against Air Products Brasil Ltda. was dismissed. CADE has appealed that ruling and the matter remains pending. We, with advice of our outside legal counsel, have assessed the status of this matter and have concluded that, although an adverse final judgment after exhausting all appeals is possible, such a judgment is not probable. As a result, no provision has been made in the consolidated financial statements. In the event of an adverse final judgment, we estimate the maximum possible loss to be the full amount of the fine of R$179.2 million (approximately $31 at 31 March 2025) plus interest accrued thereon until final disposition of the proceedings.
Environmental
In the normal course of business, we are involved in legal proceedings under the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA," the federal Superfund law), the Resource Conservation and Recovery Act ("RCRA"), and similar state environmental laws relating to the designation of certain sites for investigation or remediation. Presently, there are 25 sites on which a final settlement or remediation has not been achieved where we, usually along with others, have been designated as a potentially responsible party by environmental authorities or are otherwise engaged in investigation or remediation, including cleanup activity at certain of our former manufacturing sites. We continually monitor these sites for which we have environmental exposure.
Accruals for environmental loss contingencies are recorded when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. As of 31 March 2025 and 30 September 2024, the consolidated balance sheets included an accrual of $79.3 and $79.1, respectively, primarily as part of other noncurrent liabilities. These environmental liabilities will be paid over a period of up to 30 years. We estimate the exposure for environmental loss contingencies to range from $79 to a reasonably possible upper exposure of $92 as of 31 March 2025.
Actual costs to be incurred at identified sites in future periods may vary from the estimates, given inherent uncertainties in evaluating environmental exposures. Using reasonably possible alternative assumptions of the exposure level could result in an increase to the environmental accrual. Due to these inherent uncertainties, a significant increase to the reasonably possible upper exposure level could occur if a new site is designated, the scope of remediation is increased, a different remediation alternative is identified, or a significant increase in our proportionate share occurs. We do not expect that any sum we may have to pay in connection with environmental matters in excess of the amounts recorded or disclosed above would have a material adverse impact on our financial position or results of operations in any one year.
Pace
At 31 March 2025, $54.4 of the environmental accrual was related to our facility in Pace, Florida.
In 2006, we sold our Amines business, which included operations at the Pace facility and recognized a liability for retained environmental obligations associated with remediation activities at the facility. We are required by the Florida Department of Environmental Protection ("FDEP") and the United States Environmental Protection Agency ("USEPA") to continue our remediation efforts. We recognized a before-tax expense of $42 in fiscal year 2006 in results from discontinued operations and recorded an environmental accrual of $42 in continuing operations on the consolidated balance sheets.
In the first quarter of 2015, we entered into a consent order with the FDEP requiring us to continue our remediation efforts at the Pace facility and complete a cost review every five years. In fiscal year 2020, we completed an updated cost review of the environmental remediation status at the Pace facility and increased our environmental accrual for this site by $19 in continuing operations on the consolidated balance sheet and recognized a before-tax expense of $19 in results from discontinued operations. In fiscal year 2024, we completed our most recent cost review of the environmental remediation status at the Pace facility. Based on our review, we expect ongoing activities to continue for 30 years. Additionally, we increased our estimate of near-term spending for an improved groundwater recovery system and future annual costs due to higher inflation. As a result of these changes, we increased our environmental accrual for this site by $19 in continuing operations on the consolidated balance sheets and recognized a before-tax expense of $19 in results from discontinued operations in fiscal year 2024. There have been no significant changes to the estimated exposure.
We have implemented many of the remedial corrective measures at the Pace facility required under the 1995 consent orders issued by the FDEP and the USEPA. Contaminated soils have been bioremediated, and the treated soils have been secured in a lined on-site corrective action management unit. Several groundwater recovery systems have been installed to contain and remove contamination from groundwater. We completed an extensive assessment of the site to determine the efficacy of existing measures, what additional corrective measures may be needed, and whether newer remediation technologies that were not available in the 1990s might be better suited for groundwater remediation. Based on assessment results, we completed a focused feasibility study that identified alternative approaches that may more effectively remove contaminants. We continue to review alternative remedial approaches with the FDEP, and we completed additional field work during 2021 to support the design of an improved groundwater recovery network. This network targets areas of higher contaminant concentration and avoids areas of high groundwater iron which has proven to be a significant operability issue for the project. The design of the optimized recovery system was completed in fiscal year 2024, with construction expected to begin in fiscal year 2025. In fiscal years 2025 and 2026, we expect to connect the additional groundwater recovery wells and ancillary equipment to the existing groundwater recovery system. In the fourth quarter of fiscal year 2024, we completed an updated cost review which resulted in a change in assumptions regarding future operating costs as discussed above.
Pasadena
At 31 March 2025, $10.1 of the environmental accrual was related to a production facility site in Pasadena, Texas.
During fiscal year 2012, management committed to permanently shutting down our polyurethane intermediates ("PUI") production facility in Pasadena, Texas. In shutting down and dismantling the facility, we have undertaken certain obligations related to soil and groundwater contaminants. We have been pumping and treating groundwater to control off-site contaminant migration in compliance with regulatory requirements and under the approval of the Texas Commission on Environmental Quality ("TCEQ"). We estimate that the pump and treat system will continue to operate until 2042.
We continue to perform additional work to address other environmental obligations at the site. This additional work includes remediating impacted soils as required, investigating groundwater west of the former PUI facility, continuing post closure care for two closed RCRA surface impoundment units, and maintaining engineering controls. Additionally, we have conducted an interim corrective action to treat impacted soils as recommended in the TCEQ 2019 Annual Report. In 2012, we estimated the total exposure at this site to be $13. There have been no significant changes to the estimated exposure.
Asset Retirement Obligations
Our asset retirement obligations are primarily associated with long-term on-site supply contracts under which we have built a facility on land owned by the customer and are obligated to remove the facility at the end of the contract term. The retirement of assets includes the contractually required removal of a long-lived asset from service and encompasses the sale, removal, abandonment, recycling, or disposal of the assets as required at the end of the contract term. These obligations are primarily reflected within "Other noncurrent liabilities" on the consolidated balance sheets. The timing and/or method of settlement of these obligations are conditional on a future event that may or may not be within our control.
Changes to the carrying amount of our asset retirement obligations were as follows:
| 30 September 2024 | $334.7 | ||||
| Additional accruals(A) | 62.0 | ||||
| Liabilities settled | (4.9) | ||||
| Accretion expense | 6.4 | ||||
| Currency translation adjustment | (8.3) | ||||
| 31 March 2025 | $389.9 |
(A)Primarily relates to project exits discussed in Note 4, Business and Asset Actions.
13. SHARE-BASED COMPENSATION
Our outstanding share-based compensation programs include deferred stock units and stock options. During the six months ended 31 March 2025, we granted market-based and time-based deferred stock units. Under all programs, the terms of the awards are fixed at the grant date. We issue shares from treasury stock upon the payout of deferred stock units and the exercise of stock options. As of 31 March 2025, there were 0.8 million shares available for future grant under our Long-Term Incentive Plan ("LTIP"), which is shareholder approved.
Share-based compensation cost recognized on the consolidated income statements is summarized below:
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||
| 31 March | 31 March | |||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||
| Before-tax share-based compensation cost(A) | $38.3 | $14.8 | $54.8 | $28.4 | ||||||||||||||||||||||
| Income tax benefit | (9.0) | (3.6) | (13.0) | (6.9) | ||||||||||||||||||||||
| After-tax share-based compensation cost | $29.3 | $11.2 | $41.8 | $21.5 |
(A)Fiscal year 2025 includes noncash executive separation costs of $22.4 to accelerate vesting of share-based awards. Refer to the "Shareholder Activism-Related Costs" disclosure in Note 17, Supplemental Information, for additional information.
Before-tax share-based compensation cost is primarily included in "Selling and administrative expense" on our consolidated income statements. The amount of share-based compensation cost capitalized in the first six months of fiscal years 2025 and 2024 was not material.
Deferred Stock Units
During the six months ended 31 March 2025, we granted 95,490 market-based deferred stock units. The market-based deferred stock units are earned over the performance period beginning 1 October 2024 and ending 30 September 2027, conditioned on the level of our total shareholder return in relation to the S&P 500 Index over the three-year performance period.
The market-based deferred stock units had an estimated grant-date fair value of $470.13 per unit, which was estimated using a Monte Carlo simulation model. The model utilizes multiple input variables that determine the probability of satisfying the market condition stipulated in the grant and calculates the fair value of the awards. We generally expense the grant-date fair value of these awards on a straight-line basis over the applicable vesting period. The calculation of the fair value of market-based deferred stock units used the following assumptions:
| Expected volatility | 30.3 | % | ||||||
| Risk-free interest rate | 4.1 | % | ||||||
| Expected dividend yield | 2.1 | % |
In addition, during the six months ended 31 March 2025, we granted 125,282 time-based deferred stock units at a weighted average grant-date fair value of $332.36.
14. ACCUMULATED OTHER COMPREHENSIVE LOSS
The tables below summarize changes in accumulated other comprehensive loss ("AOCL"), net of tax, attributable to Air Products for the three and six months ended 31 March 2025:
| Derivatives qualifying as hedges | Foreign currency translation adjustments | Pension and postretirement benefits | Total | |||||||||||
| Balance at 31 December 2024 | $65.2 | ($2,152.8) | ($498.6) | ($2,586.2) | ||||||||||
| Other comprehensive income (loss) before reclassifications | (45.0) | 102.3 | — | 57.3 | ||||||||||
| Amounts reclassified from AOCL | (7.0) | 2.5 | 11.0 | 6.5 | ||||||||||
| Net current period other comprehensive income (loss) | ($52.0) | $104.8 | $11.0 | $63.8 | ||||||||||
| Amount attributable to noncontrolling interests | (43.9) | (0.8) | — | (44.7) | ||||||||||
| Balance at 31 March 2025 | $57.1 | ($2,047.2) | ($487.6) | ($2,477.7) | ||||||||||
| Derivatives qualifying as hedges | Foreign currency translation adjustments | Pension and postretirement benefits | Total | |||||||||||
| Balance at 30 September 2024 | $27.2 | ($1,545.3) | ($509.6) | ($2,027.7) | ||||||||||
| Other comprehensive income (loss) before reclassifications | 20.7 | (521.7) | — | (501.0) | ||||||||||
| Amounts reclassified from AOCL | 84.9 | 2.5 | 22.0 | 109.4 | ||||||||||
| Net current period other comprehensive income (loss) | $105.6 | ($519.2) | $22.0 | ($391.6) | ||||||||||
| Amount attributable to noncontrolling interests | 75.7 | (17.3) | — | 58.4 | ||||||||||
| Balance at 31 March 2025 | $57.1 | ($2,047.2) | ($487.6) | ($2,477.7) |
The table below summarizes the reclassifications out of AOCL and the affected line item on the consolidated income statements:
| Three Months Ended | Six Months Ended | |||||||||||||
| 31 March | 31 March | |||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||
| (Gain) Loss on Cash Flow Hedges, net of tax | ||||||||||||||
| Sales | $0.1 | ($0.3) | $0.3 | ($0.1) | ||||||||||
| Cost of sales | 5.2 | 0.4 | 6.0 | 1.4 | ||||||||||
| Interest expense | — | 0.7 | 0.3 | 1.5 | ||||||||||
| Other non-operating income (expense), net | (12.3) | 34.0 | 78.3 | (10.2) | ||||||||||
| Total (Gain) Loss on Cash Flow Hedges, net of tax | ($7.0) | $34.8 | $84.9 | ($7.4) | ||||||||||
| Currency translation adjustment associated with business and asset actions | $2.5 | $— | $2.5 | $— | ||||||||||
| Pension and Postretirement Benefits, net of tax(A) | $11.0 | $13.6 | $22.0 | $27.3 |
(A)The components of net periodic benefit/cost reclassified out of AOCL include items such as prior service cost amortization, actuarial loss amortization, settlements, and curtailments and are included in “Other non-operating income (expense), net” on the consolidated income statements. Refer to Note 11, Retirement Benefits, for additional information.
15. EARNINGS (LOSS) PER SHARE
The table below details the computation of basic and diluted earnings (loss) per share:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| 31 March | 31 March | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Numerator | |||||||||||||||||||||||
| Net income (loss) attributable to Air Products | ($1,730.6) | $572.4 | ($1,113.2) | $1,181.7 | |||||||||||||||||||
| Denominator (in millions) | |||||||||||||||||||||||
| Weighted average common shares — Basic | 222.8 | 222.5 | 222.7 | 222.5 | |||||||||||||||||||
| Effect of dilutive securities: | |||||||||||||||||||||||
| Employee stock option and other award plans | — | 0.2 | — | 0.3 | |||||||||||||||||||
| Weighted average common shares — Diluted | 222.8 | 222.7 | 222.7 | 222.8 | |||||||||||||||||||
| Per Share Data (U.S. Dollars per share) | |||||||||||||||||||||||
| Basic earnings (loss) per share attributable to Air Products | ($7.77) | $2.57 | ($5.00) | $5.31 | |||||||||||||||||||
| Diluted earnings (loss) per share attributable to Air Products | ($7.77) | $2.57 | ($5.00) | $5.30 |
Due to the net loss reported for the three and six months ended 31 March 2025, outstanding share-based awards were excluded from the computation of diluted loss per share. These shares would have had an antidilutive impact, thus diluting the loss per share. For the three and six months ended 2024, there were 0.1 antidilutive outstanding share-based awards that were excluded from the computation of diluted earnings (loss) per share.
16. INCOME TAXES
Effective Tax Rate
For the three and six months ended 31 March 2025, our consolidated income statements include an income tax benefit of $505.8 and $365.1, respectively, compared to an income tax expense of $130.5 and $265.9 for the comparative prior year periods. The tax benefit in fiscal year 2025 represents an effective tax rate of 22.5% and 25.1% on the pre-tax losses reported for the three and six months ended 31 March 2025, respectively. The tax expense in fiscal year 2024 represented an effective rate of 18.3% and 18.1% on the pre-tax income reported for the three and six months ended 31 March 2024, respectively. The current year rate was primarily impacted by the $2.9 billion pre-tax charge for business and asset actions and other items as further discussed below.
Our estimates related to the items discussed below reflect our best judgment based on information available at the time the items were recorded. The amount and timing of final settlement of these items may differ from our current estimates, which could impact our tax provision in future periods. Similarly, impacts recognized in future periods may impact period tax costs and benefits.
Business and Asset Actions
During the second quarter of fiscal year 2025, we recorded charges for project cancellations and other cost reduction measures as described in Note 4, Business and Asset Actions. As a result of these strategic initiatives, we recorded a pre-tax charge of $2.9 billion. The related net tax benefit of $640.6 recorded during the second quarter includes a cost of $22.5 to establish reserves for uncertain tax positions related to the deductibility of business and asset actions incurred in foreign jurisdictions as well as a cost of $13.1 primarily related to lower U.S. tax benefits for foreign-derived income. We also incurred a $41.8 increase in our valuation allowance related to tax benefits for foreign business and asset actions for which we could not recognize an income tax benefit.
Tax Reform Adjustment Related to Deemed Foreign Dividends
During the second quarter of fiscal year 2025, we recorded a net income tax benefit of $34.9 related to our intent to file a refund claim after a review of several U.S. Tax Court cases regarding the U.S. taxation of deemed foreign dividends in the transition year of the U.S. Tax Cuts and Jobs Act (our fiscal year 2018). While we were not a party to these cases, the opinions resulted in a change to our intent to pursue a refund claim. The $34.9 income tax benefit is net of a $67.8 reserve for an uncertain tax position related to the calculation of the refund amount.
Tax on Repatriation of Foreign Earnings
During the second quarter of fiscal year 2025, we recorded an income tax expense of $31.4 related to estimated withholding taxes on foreign earnings that we no longer intend to indefinitely reinvest. There were no other changes to our assumptions regarding the reinvestment of foreign earnings during the first six months of fiscal year 2025.
Shareholder Activism-Related Costs
During the first six months of fiscal year 2025, we incurred costs of $61.3 related to a proxy contest led by an activist shareholder as further discussed in Note 17, Supplemental Information. The related net tax benefit recorded during the first half of fiscal year 2025 was $8.4.
Cash Paid for Taxes, Net of Refunds
Income tax payments, net of refunds, were $710.1 and $321.8 for the six months ended 31 March 2025 and 2024, respectively. Our income tax payments increased in fiscal year 2025 primarily due to tax payments related to the gain on the sale of our LNG business in fiscal year 2024.
17. SUPPLEMENTAL INFORMATION
Related Party Transactions
We have related party sales to certain of our equity affiliates and joint venture partners as well as other income primarily from fees charged for use of Air Products' patents and technology. Sales to and other income from related parties totaled approximately $70 and $150 for the three and six months ended 31 March 2025, respectively, and $75 and $170 for the three and six months ended 31 March 2024, respectively. Sales agreements with related parties include terms that are consistent with those that we believe would have been negotiated at an arm’s length with an independent party. As of 31 March 2025 and 30 September 2024, our consolidated balance sheets included related party trade receivables of approximately $155 and $120, respectively.
Total debt owed to related parties was $294.4 and $304.4 as of 31 March 2025 and 30 September 2024, respectively, of which $193.5 and $200.0, respectively, was reflected within "Current portion of long-term debt" on our consolidated balance sheets. Our related party debt primarily includes a loan with our joint venture partner, Lu’An Clean Energy Company.
Shareholder Activism-Related Costs
During the first half of fiscal year 2025, we recorded costs in connection with a proxy contest led by an activist shareholder that concluded in January upon certification of the election of directors following our 2025 Annual Meeting of Shareholders. These costs, which are reflected as "Shareholder activism-related costs" on our consolidated income statements, totaled $31.4 ($31.0 after tax) and $61.3 ($52.9 after tax) for the three and six months ended 31 March 2025, respectively.
The costs incurred during the second quarter primarily reflect executive separation costs for our former CEO following the appointment of our new CEO by the Board of Directors. These costs included a noncash expense of $22.4 to accelerate vesting of share-based awards and $7.3 for severance and other cash benefits that were paid during the quarter.
On a year-to-date basis, shareholder activism-related costs also include legal and other professional service fees as well as incremental proxy solicitation costs related to the 2025 Annual Meeting of Shareholders, which were mostly incurred during the first quarter. We paid all remaining liabilities for these items during the second quarter of fiscal year 2025.
Uzbekistan Asset Purchase
On 25 May 2023, we entered into an investment agreement with the Government of the Republic of Uzbekistan and Uzbekneftegaz JSC (“UNG”) to purchase a natural gas-to-syngas processing facility in Qashqadaryo Province, Uzbekistan, for $1 billion. Under the agreement, Air Products owns and operates the acquired facility and is supplying all offtake products to UNG under a 15-year on-site contract, with UNG supplying the feedstock natural gas and utilities. Throughout this term, we receive a fixed monthly fee (regardless of whether UNG requires the output) comprised of two components: a plant capacity fee and an operating and maintenance fee.
We are accounting for the transaction as a financing arrangement as we did not obtain accounting control of the facility due to UNG having the unilateral right to reacquire the facility at the end of the contract term. The repurchase price on a discounted basis, which consists of the total monthly plant capacity fees received over the term of the arrangement plus the repurchase option price, exceeds our purchase price. Accordingly, our payments related to the facility are reflected within "Financing receivables" on our consolidated balance sheets. Financing receivables associated with the Uzbekistan transaction were approximately $965 and $920 as of 31 March 2025 and 30 September 2024, respectively.
Divestitures
Blue Hydrogen Industrial Gases Company
In January 2025, our 51%-owned consolidated subsidiary, Air Products Qudra ("APQ"), issued equity in its wholly-owned subsidiary, Blue Hydrogen Industrial Gases Company ("BHIG"), to form a 50/50 joint venture with Saudi Aramco Development Company (a subsidiary of Aramco). BHIG is currently constructing plants and pipelines to distribute hydrogen, nitrogen and oxygen in Saudi Arabia’s Jubail Industrial City.
As a result of the transaction, we determined that APQ no longer holds a controlling financial interest in BHIG. Accordingly, the assets and liabilities associated with the entity were derecognized from our consolidated balance sheet during the second quarter of fiscal year 2025. Amounts derecognized primarily included plant and equipment of approximately $600 and long-term debt, net of deferred financing costs, of approximately $655.
While we no longer control BHIG, we maintain the ability to exercise significant influence regarding key decisions. Accordingly, we recorded an equity method investment for APQ's 50% interest in the entity. This investment is reflected within "Investment in net assets of and advances to equity affiliates" on our consolidated balance sheet and totaled $149.8 as of 31 March 2025.
Changes in Estimates
Changes in estimates on sale of equipment projects accounted for under the cost incurred input method are recognized as a cumulative adjustment for the inception-to-date effect of such change. We recorded changes to project revenue and cost estimates that unfavorably impacted operating loss by approximately $15 and $45 for the second quarter and first six months of fiscal year 2025, respectively, and operating income by approximately $35 and $65 for the second quarter and first six months of fiscal year 2024, respectively.
18. BUSINESS SEGMENT INFORMATION
We manage our operations, assess performance, and report earnings under the following reportable segments:
-
Americas;
-
Asia;
-
Europe;
-
Middle East and India; and
-
Corporate and other.
Our reportable segments reflect the manner in which our chief operating decision maker reviews results and allocates resources. We evaluate the performance of our segments based upon segment operating income (loss). Except for the Corporate and other segment, each reportable segment meets the definition of an operating segment and does not include the aggregation of multiple operating segments. Our Corporate and other segment includes the aggregation of two operating segments that meet the aggregation criteria under GAAP.
Summary by Business Segment
| Americas | Asia | Europe | Middle East and India | Corporate and other | Total | ||||||||||||||||||
| Three Months Ended 31 March 2025 | |||||||||||||||||||||||
| Sales | $1,287.2 | $774.1 | $727.4 | $32.8 | $94.7 | $2,916.2 | (A) | ||||||||||||||||
| Operating income (loss) | 365.7 | 191.4 | 195.5 | (2.9) | (118.4) | 631.3 | (B) | ||||||||||||||||
| Depreciation and amortization | 178.4 | 131.8 | 56.8 | 6.4 | 10.2 | 383.6 | |||||||||||||||||
| Equity affiliates' income | 31.2 | 10.5 | 27.7 | 78.2 | 4.7 | 152.3 | (B) | ||||||||||||||||
| Three Months Ended 31 March 2024 | |||||||||||||||||||||||
| Sales | $1,245.8 | $779.7 | $667.9 | $35.7 | $201.1 | $2,930.2 | (A) | ||||||||||||||||
| Operating income (loss) | 371.9 | 203.6 | 201.0 | 5.6 | (87.9) | 694.2 | (B) | ||||||||||||||||
| Depreciation and amortization | 174.1 | 116.4 | 50.8 | 6.7 | 12.8 | 360.8 | |||||||||||||||||
| Equity affiliates' income | 44.2 | 8.3 | 11.7 | 73.9 | 5.2 | 143.3 | (B) | ||||||||||||||||
| Six Months Ended 31 March 2025 | |||||||||||||||||||||||
| Sales | $2,574.8 | $1,591.2 | $1,424.6 | $65.6 | $191.5 | $5,847.7 | (A) | ||||||||||||||||
| Operating income (loss) | 753.9 | 407.8 | 382.0 | (3.5) | (235.4) | 1,304.8 | (B) | ||||||||||||||||
| Depreciation and amortization | 351.8 | 254.7 | 111.3 | 12.9 | 19.7 | 750.4 | |||||||||||||||||
| Equity affiliates' income | 66.3 | 20.8 | 45.9 | 163.2 | 6.7 | 302.9 | |||||||||||||||||
| Six Months Ended 31 March 2024 | |||||||||||||||||||||||
| Sales | $2,497.9 | $1,573.5 | $1,399.1 | $71.1 | $386.0 | $5,927.6 | (A) | ||||||||||||||||
| Operating income (loss) | 726.3 | 414.8 | 398.6 | 9.5 | (188.1) | 1,361.1 | (B) | ||||||||||||||||
| Depreciation and amortization | 343.8 | 228.2 | 99.0 | 13.3 | 25.7 | 710.0 | |||||||||||||||||
| Equity affiliates' income | 81.3 | 12.5 | 32.4 | 166.8 | 8.7 | 301.7 | |||||||||||||||||
| Total Assets | |||||||||||||||||||||||
| 31 March 2025 | $11,274.1 | $6,990.9 | $6,215.6 | $10,067.4 | $4,324.9 | $38,872.9 | |||||||||||||||||
| 30 September 2024 | 12,383.8 | 7,436.5 | 5,849.2 | 8,477.4 | 5,427.7 | 39,574.6 |
(A)Sales relate to external customers only. All intersegment sales are eliminated in consolidation.
(B) Refer to the "Reconciliation to Consolidated Results*"* section below.
Reconciliation to Consolidated Results
The table below reconciles total operating income disclosed in the table above to consolidated operating income (loss) as reflected on our consolidated income statements:
| Three Months Ended | Six Months Ended | ||||||||||||||||
| 31 March | 31 March | ||||||||||||||||
| Operating Income (Loss) | 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Total | $631.3 | $694.2 | $1,304.8 | $1,361.1 | |||||||||||||
| Business and asset actions | (2,927.9) | (57.0) | (2,927.9) | (57.0) | |||||||||||||
| Shareholder activism-related costs | (31.4) | — | (61.3) | — | |||||||||||||
| Consolidated Operating Income (Loss) | ($2,328.0) | $637.2 | ($1,684.4) | $1,304.1 |
| The table below reconciles total equity affiliates' income disclosed in the table above to consolidated equity affiliates' income as reflected on our consolidated income statements: | ||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||
| 31 March | 31 March | |||||||||||||
| Equity Affiliates' Income | 2025 | 2024 | 2025 | 2024 | ||||||||||
| Total | $152.3 | $143.3 | $302.9 | $301.7 | ||||||||||
| Equity method investment impairment associated with business and asset actions | (6.8) | — | (6.8) | — | ||||||||||
| Consolidated Equity Affiliates' Income | $145.5 | $143.3 | $296.1 | $301.7 |
Previous: Cover and table of contents · Next: Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations