BOC plans $70m US oxygen plant
This latest deal involves construction of America's largest cryogenic separation plant, supplying 2,800 tons of oxygen and other gases every day. Demand for oxygen is rising because of increasing output of high- grade steel, which needs large volumes of the gas in its production.
"This new plant for US Steel represents one of BOC's most significant single investments and our largest to date in this industry," the company said.
Analysts welcomed the announcement, saying BOC would be able to use the extra capacity to supply other customers as well as US Steel. This should enable the company to maintain recent momentum for at least another couple of years.
Reporting pre-tax profits for the nine months to June, BOC said conditions for its gas businesses remained difficult in Continental Europe but that some price increases were obtained in the UK; overall profits were satisfactory.
The gases business saw operating profits rise by 12 per cent on last year, continuing the trend of the first two quarters. The main areas of growth are the Americas, South Africa and the Pacific.
Pre-tax profit for the nine months to June was up by around 70 per cent per cent to pounds 294.6m, although the previous year's profits were hit by re-structuring costs. Sales rose from pounds 2.4bn to pounds 2.6bn; like-for-like sales, excluding currency effects, were 10 per cent ahead. Profits at Ohmeda, the healthcare business, rose by 6 per cent, with profits at the vacuum technology business jumping by 32 per cent.
The shares fell 19p to 864p, although analysts said this was largely due to profit-taking after a recent good run. "There were no nasty surprises in the results. They were pretty much as expected," according to the chemicals team at James Capel. "The outlook is still pretty good."
BOC has been reaping the benefits of an pounds 85m restructuring last year and an economic cycle that is turning in its favour. Gas prices are rising and BOC's exposure to the US steel and chemicals business is providing a boost.
The company has been stepping up its investment from pounds 80m to pounds 500m in the current year, with a substantial proportion earmarked for the US. Other investment is also planned for China, where the company is already the leading foreign gas supplier.
Last month the company announced that Richard Giordano was stepping down as chairman after more than 15 years with the company. Pat Dyer, the chief executive, also resigned. Their positions were taken by David John - who joined from Inchcape - and Danny Rosenkranz, a former BOC divisional director.
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