Air Products exits three U.S. projects, takes $3.1bn charge amid strategic overhaul

Air Products has announced its decision to withdraw from three major projects in the United States, marking a significant shift in its strategic direction. The decision follows a comprehensive review led by its newly elected Board of Directors and Chief Executive Officer, Eduardo Menezes. As a result, the company expects to take a pre-tax charge of up to $3.1 billion in its financial second quarter, primarily to account for asset write-downs and contract terminations.

Despite the substantial charge, Air Products has clarified that its adjusted earnings per share (EPS) for fiscal 2025 will remain unaffected. The company views the move as a necessary step to streamline its portfolio and prioritize projects that align with long-term financial and operational goals.

What led to the cancellation of the Massena hydrogen project?

Among the scrapped Air Products projects, the hydrogen production facility in Massena, New York, was one of the most notable. Originally planned to produce 35 metric tons per day of green liquid hydrogen, the project encountered regulatory obstacles that significantly impacted its viability.

Recent changes to U.S. tax credit policies rendered the hydroelectric power supply ineligible for the Clean Hydrogen Production Tax Credit (45V). This unexpected regulatory shift, coupled with slower-than-anticipated growth in hydrogen-powered transportation, made the project financially unsustainable. Given the challenges in securing the necessary tax benefits and market demand, Air Products determined that continuing with the hydrogen production facility would not yield the expected returns.

Why did Air Products terminate its sustainable aviation fuel expansion?

Air Products has also opted to exit its agreement with World Energy for the sustainable aviation fuel (SAF) expansion project in Paramount, California. The SAF expansion was designed to increase production of low-carbon aviation fuel, which has gained traction as a cleaner alternative for the airline industry. However, the company cited challenging commercial conditions and operational constraints as key factors in its decision to walk away.

While the aviation industry continues to push for low-emission fuel alternatives, Air Products determined that the Paramount project did not align with its long-term profitability goals. The withdrawal signals the company’s cautious approach in selecting projects that offer both environmental benefits and sustainable financial returns.

Why was the carbon monoxide project in Texas abandoned?

In addition to exiting its hydrogen production facility and SAF expansion, Air Products has decided to cancel a carbon monoxide production project in Texas. While the company did not provide extensive details on the specific reasons, it noted that unfavorable project economics made it impractical to proceed.

This decision highlights the company’s broader strategy of optimizing capital expenditures and focusing on projects with stronger financial prospects. By discontinuing ventures that present economic challenges, Air Products aims to allocate resources to initiatives with more predictable and favorable market conditions.

How does this impact Air Products’ financial outlook?

The company’s decision to exit three major U.S. projects is expected to result in significant contract termination costs. While the exact financial impact remains under evaluation, Air Products anticipates that adjustments will be reflected in its financial second quarter results.

Despite these write-downs, Air Products has maintained a strong financial outlook, as demonstrated by its recent first-quarter earnings report for fiscal 2025. The company posted a GAAP EPS of $2.77, marking a one percent increase from the prior year, while GAAP net income rose by five percent to $650 million. The improvement was largely driven by higher pricing, favorable business mix, and operational efficiencies, which helped offset inflationary pressures and shareholder-related costs.

In addition, Air Products continues to focus on shareholder returns, having increased its quarterly dividend to $1.79 per share. This marks the 43rd consecutive year of dividend growth, reinforcing the company’s commitment to long-term investor value.

Which major projects remain on track?

Despite these project cancellations, Air Products remains committed to advancing its largest hydrogen production facility initiatives globally. The company has emphasized that its two most significant ongoing projects are progressing as planned.

The NEOM Green Hydrogen Project in Saudi Arabia has reached 80% completion, with the first phase of green ammonia production expected to commence by the end of 2026. This project is a cornerstone of Air Products’ strategy to lead the global green hydrogen economy.

The Louisiana Clean Energy Complex, which is slated for startup in 2028, remains a priority. Air Products is actively engaging with potential equity partners to reduce capital outlay while maintaining its focus on carbon sequestration and clean ammonia production.

These projects underscore Air Products’ continued investment in low-carbon solutions and hydrogen infrastructure, positioning it as a key player in the transition toward clean energy.

What’s next for Air Products?

While the decision to exit three U.S. projects reflects Air Products’ strategic shift, the company has reassured stakeholders that no additional material cancellations are currently anticipated. It will continue evaluating its project backlog, ensuring that future investments align with financial performance goals and shareholder interests.

Further details on capital expenditure forecasts and ongoing project developments will be provided in the company’s financial second quarter earnings release. Investors and industry stakeholders will be closely monitoring Air Products’ next earnings call for insights into its evolving business strategy and clean energy ambitions.

Air Products’ decision to withdraw from key U.S. projects reflects a calculated move to optimize resources and prioritize financially viable initiatives. While the company takes a $3.1 billion pre-tax charge, it remains focused on strengthening its global hydrogen production facility investments and maintaining a solid financial second quarter outlook.

With the NEOM Green Hydrogen Project and the Louisiana Clean Energy Complex progressing as planned, Air Products continues to position itself as a leader in clean energy innovation. Its long-term financial strategy, combined with sustained shareholder returns, reinforces its commitment to delivering value-driven growth in an evolving industrial landscape.