Project Cancellation Drives Return to Free Cash Flow

Research evidence excerpt

Project Cancellation Drives Return to Free Cash Flow

Deutsche Bank

Research

Rating Company Date

Hold Air Products & Chemicals 30 June 2026

North America Reuters Bloomberg Rating Hold

United States APD.N APD US Price target (USD) 315.00 Price at 30 Jun 26 293.18

52-week range 306.20 – 230.76

Industrials

Chemicals / Specialty Valuation & Risks

Project Cancellation Drives Return to Free

Cash Flow DavidResearchBegleiterAnalyst

+1-212-250-5473

Failed clean energy projects limit capital to invest in traditional IG projects. Hold

Emily Fusco We view Air Products’ decision not to proceed with its Louisiana clean energy Research Associate

project as a strong positive as: i) it should help drive a return to free cash flow +1-212-250-5162

generation in ’27 and ’28, depending on how quickly capital is reallocated to other

projects. This compares to $10B of cash burn in ’22-’25 and forecasted slightly

positive free cash flow in ’26 and ii) it removes a significant overhang on the

shares as this project – which would have cost the company an additional $4-$5B

on top of $2.5B already spent – has been the key decision facing CEO Eduardo

Menezes since he assumed the top job in February 2025.

While we are encouraged by Air Products’ disciplined capital allocation with

respect to this and other projects, we remain cautious on the shares. This is

because Air Product needs to grow organically to justify its healthy 22x P/E and

16x EBITDA FY’26 multiples (versus 29x and 18.5x for Linde). And with another

$3B write-off on clean energy projects – on top of $3B of write-offs on a different

set of clean energy projects in February ’25 – and the expected breakeven returns

on its $2B net-zero hydrogen project in Alberta – Air Products has less capital to