Seifi Ghasemi: Okay.
Patrick Cunningham: Great. Thank you.
Seifi Ghasemi: Thank you. Operator this would be the last question, okay.
Operator: Thank you. Okay, we’ll go to Mike Sison from Wells Fargo.
Seifi Ghasemi: Sorry. I made a mistake about the timing, we can answer some more questions, if necessary. If people have questions, go ahead.
Mike Sison: Hey, good morning, everybody. I guess my first question on fiscal ’24 EPS growth, the projects that’s recently come onstream before that you’ve noted in the slide, Are those contributing what you thought they would contribute in 2024? And I guess sort of the follow-up is that the delta between the 13% growth to the 6% to 9% growth now has nothing to do with the projects, more of the other stuff that you talked about in terms of headwinds?
Seifi Ghasemi: Well, the thing is that — I don’t like to give you a general answer in the sense that if you’re up year-on-year and in the meantime China is going down, helium volumes are lower and we have had these headwinds, then the only reason that it’s going up is because some of the other projects are contributing, of course. So that’s the way I would like to leave it with you, okay? Negative is still going up. Therefore, the other products are contributing, yes.
Mike Sison: Yes, that’s great. And then beyond 2024, when you think about ’25, ’26, ’27, more of a longer-term sort of view, how do you think the growth algorithm changes or maybe doesn’t change as we look out of those years in terms of EPS growth?
Seifi Ghasemi: I think Air Products will deliver on the average an EPS growth of the 10% that we have delivered before. That’s our goal. And one year, we might be 9%, one year we’re going to be 11%. But overall, we are going to continue on that trend. And we promised that 10-years ago, we have delivered, and I fully expect that we will continue to deliver that.
Mike Sison: Right. Thank you.
Seifi Ghasemi: Thank you, sir.
Operator: Thank you. We’ll go to Laurence Alexander from Jefferies.
Dan Rizzo: Hi, this is Dan Rizzo on for Laurence. Thank you for getting me in. I just want to make sure that of the projects under execution that’s listed on page 19, the next one that’s going to come online is the one in Alberta, Canada, correct?
Seifi Ghasemi: Yes. Alberta, Canada is the next one, which is going to come onstream. And as Dr. Serhan said, we expect that to be in fiscal year 2025.
Dan Rizzo: Are there, and this will be my second question, should the other projects come on right behind that? Or will there be, I don’t know, year like delays? Or I’m just trying to think of the cadence as these are coming online.
Seifi Ghasemi: Well, after that, we will have in ’26 — by the end of fiscal year ’26, we will have — by the end of calendar ’26, we will have our green hydrogen project in Saudi Arabia, The year after that, we will have our blue hydrogen project in Louisiana. And the year after that, we will have hopefully other projects that we will announce.
Dan Rizzo: Okay, thank you very much.
Seifi Ghasemi: Thank you.
Operator: We’ll go next to Laurent Favre from BNP.
Laurent Favre: Yes, good morning and thanks for squeezing me in. I’d like to go back to the SAF project, actually. I think you just mentioned that the start-up would be in 2027. In May last year, you had in, I guess, for startup in ’25. And in August, it was still part of the group of projects that should be up and running by 2026. So I was wondering if you could talk about, I guess, what are the specific reasons for this more than one year delay. Is it the customer side? Or is it execution on your side? Thank you.
Seifi Ghasemi: Well, it is related to the fact that we are building this plant in California. And you know in California, it usually takes a long time to get permits. So it is dependent on the timing of the permits for construction for that facility. Once we have a final, final ruling on the permit, then we will be able to give you a definite date about when that plant is going to come onstream.
Laurent Favre: And could you size for us the potential cost of a run on top of the $2.5 billion that was initially slated? Are we talking about a material difference?
Seifi Ghasemi: I’m not sure I understood the question.
Sidd Manjeshwar: No. I think Laurence, on that one, the capital, we earn the return on the capital of the project. We won’t anticipate any capital update there.
Seifi Ghasemi: The return on the project is fixed. We are going to get a return on the capital that we spent, no matter what the capital is. Okay?
Laurent Favre: Okay, thank you.
Seifi Ghasemi: Thank you, sir.
Laurent Favre: Thank you.
Operator: And we’ll take our last question from Sebastian Bray from Berenberg.
Sebastian Bray: Hello, good morning, everybody and thank you for taking my questions. My first one is on merchant pricing as it stands today. Is this stable in Europe or the U.S.? Has it started to decline? Or has it started to go up? So it seems to be stable, but I wanted to double check? My second one is on guidance. Are we just assuming when setting the EPS growth rate guided for ’24 the dollar rates as they stand today hold for the rest of the year? My third one is a more philosophical question on pricing. Is the desire to wait longer for the clean ammonia and clean hydrogen project offtake agreements a reaction to try and hedge out for risk that IRA subsidies maybe changed from ’25, i.e., if that industry shakes out and it turns out the projects need clean — higher clean hydrogen pricing to be economic with fewer subsidies available? Is the APD approach to say, well, we’ll wait for the industry to shake out and see what comes? Thank you.
Seifi Ghasemi: Well, you’re asking a very, very good question and I would like to tell you that we are the first mover in these projects. We are investing significant amount of money being the first mover. We — obviously, my job is try to maximize return for the investors. And if we were the first mover and we took the risk, as they say, building these facilities before we had contracts, we should get rewarded by that and not just have projects which have the standard returns but be rewarded with a higher return. That’s one thing. And then the second thing is that we genuinely believe that where we are in these projects, we will have a product which will be in significant demand as we get closer to people trying to comply with the rules that are already in place, in Europe especially.
By 2028, a lot of the industries have to use the products that we make, and we don’t see that many people making the product. So in that case, we are not in a hurry to give it away. Obviously, our job is to maximize profit for the company, get the best that we can, and that is the philosophy that we are following. It is not because of concerns about the other things that you mentioned, no. I think that the subsidies and so on are going to get enacted. Every day that goes by you see the governments taking action. Recently it was Japan, before it has been Europe, it’s well established, U.S. with the IRA. So events as you go forward every day points in the direction that hopefully our strategy is the right strategy, and we want to take maximum advantage of that.
Samir Serhan: Actually Seifi, there has been a report from the International Energy Agency that indicated that out of all of the projects announced for green hydrogen by 2030 to come onstream, only 7% will eventually come onstream by 2030.
Seifi Ghasemi: Okay. Sorry, we gave you a long answer, but I hope we addressed your issue.
Sebastian Bray: No, it’s appreciated, Seifi. Thank you. And the merchant pricing and the question on FX assumption for the rest of the year on a more tactical or short-term basis.
Seifi Ghasemi: Yes. Well, that’s again a very good question. We make our estimate — Melissa, why don’t you answer that?
