Air Products Outlook Raised to Stable

Overview

S&P Global Ratings revised Air Products and Chemicals Inc.'s outlook to stable from negative on 20 Aug 2026, while affirming its long‑term ‘A’ issuer rating, issue‑level ‘A’ rating and short‑term ‘A‑1’ rating.

Project Exits and Charges

Management decided to exit high‑risk projects, specifically the Louisiana Clean Energy complex and the Casa Grande, Arizona liquid‑hydrogen facility. The exits generated approximately $2.9 billion of pre‑tax charges. The Louisiana project’s cost estimate had risen to $8‑9 billion from about $4.5 billion when announced in 2021.

Capital Expenditure and Cash Flow

Air Products lowered its capital‑expenditure guidance to $3.5 billion, down from the prior $4.0 billion target. The S&P‑adjusted free operating cash flow turned positive on a last‑twelve‑month (LTM) basis as of March 2026, marking the first annual positive free cash flow since fiscal 2022.

Leverage and Coverage Ratios

Funds‑from‑operations to debt improved to 30 % for the LTM period ended June 2026, up from 25 % for the same period in June 2025. The weighted‑average free‑flow‑to‑debt ratio remained at 30 % or higher, and the debt‑to‑EBITDA ratio stood at 2.7×, within S&P’s forecast range of 2×‑3×.

Profitability and Growth Focus

The LTM S&P‑adjusted EBITDA margin expanded to 41.8 % as of June 2026. S&P expects Air Products to shift growth emphasis toward traditional industrial‑gas projects, citing recent wins in the electronics segment. Over the past five years, the company has grown organically at a faster rate than any of its major competitors.

Outlook

S&P projects that Air Products will continue to maintain a weighted‑average free‑flow‑to‑debt ratio of at least 30 % and a debt‑to‑EBITDA ratio between 2× and 3×, supporting the stable outlook.