After an exceptionally good 2008, first quarter 2009 results of the main industrial gas companies in Latin America began to show the effect of the global slowdown in the region, and the exchange rate variations that followed.
Praxair, the market leader in Latin America, reported sales for South America of US$ 353 million (US$ 466 million in Q1 2008) a decline of 24.2 percent. Unfavorable movement of exchange rates, which went down by 23.0 percent (US$ 107 million), explained most of the drop in sales. With higher cost pass-through of US$ 3 million, underlying sales in local currencies went down only 1.9 percent (or US$ 9 million). Operating profit for Praxair South America went down 15.7 percent to US$ 75 million, from US$ 89 million for the first quarter of 2008.
Sales of Praxair in Mexico in local currency increased 11 percent on a year-on-year basis (excluding the impact of foreign exchange), with strong activity in nitrogen sales for Enhanced Oil Recovery and weak industrial production. Based on our calculations, considering a negative foreign exchange effect of 25 percent, Praxair Mexico US dollar sales were down 14 percent in the first quarter of 2009 against same period of 2008.
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