Why is the institution more confident about medium- and long-term earnings?

  • Bernstein raised its adjusted earnings-per-share forecasts for fiscal 2028, 2029 and 2030 by 1%, 3% and 3%, respectively. The new forecasts are 4%, 9% and 18% above the Visible Alpha consensus, respectively; the fiscal 2030 forecast is 20.81 dollars.
  • Using the company’s project portfolio definition and including the aerospace business, Bernstein expects projects to contribute an average of approximately 3.5 percentage points per year to earnings-per-share growth from 2027 to 2030. Together with price increases and production efficiency improvements, the firm believes the company can achieve its target of earnings-per-share growth above the high single digits.
  • The firm maintains its outperform rating and 373-dollar target price, based on a price-to-earnings multiple of 26 times over the next 12 months; the closing price on 22 October listed in the report was 308.22 dollars.

Where will growth from the 3 billion-dollar project backlog come from?

  • Air Products exited or cancelled some non-core clean energy projects in 2025–2026 and refocused on its core business. Many projects in its previous energy-transition portfolio of approximately 15 billion dollars had not yet reached a final investment decision and did not necessarily have long-term offtake commitments secured.
  • The approximately 3 billion-dollar project backlog identified by Bernstein excludes the aerospace business and underperforming projects. Around nine-tenths is related to the electronics industry, with Samsung’s Pyeongtaek project accounting for approximately 40%. The aerospace business currently resembles a retail gas business more closely, but the firm still expects it to generate growth.
  • The Pyeongtaek project will supply nitrogen, oxygen, argon and hydrogen to Samsung’s expanded semiconductor fabrication facilities and is scheduled to enter operation in phases from 2028 to 2030. Based on an investment of 1.2 billion dollars, a return on capital of 15% and an operating margin of 37%, Bernstein estimates annual revenue of approximately 486 million dollars once the project reaches steady-state operations in 2030.
  • The expansion project in Kaohsiung, Taiwan, is likewise modelled to enter operation gradually from 2028 to 2030. Assuming an investment of 800 million dollars and the same return and margin, annual revenue at steady-state operations is estimated at approximately 324 million dollars.

When can NEOM become an engine of profit growth?

  • Bernstein expects the NEOM green hydrogen project to make a material profit contribution only after the long-term offtake agreement with TotalEnergies begins in 2030. Its model forecasts a negative earnings-per-share contribution of 0.03 dollars in fiscal 2028, rising to 0.88 dollars in fiscal 2030.
  • The firm’s base case assumes that Yara gradually sells 75% of its offtake volume at a green premium. At the same time, the model lowers the project joint venture’s internal rate of return from 10.8% to 7.0% and forecasts little impact on group earnings before 2030.
  • According to the firm’s calculations, for group adjusted earnings-per-share forecasts for fiscal 2028 and 2029 to fall to consensus, the proportion Yara sells at a green premium would need to be below 50%. Bernstein believes this outcome is possible but considers the associated risk adequately compensated.

Which projects generate revenue but are unlikely to contribute profit?

  • The Alberta and Rotterdam blue hydrogen projects both have customers and contractual demand, but the loads covered by their contracts are below the 75%–80% level typical of on-site gas-supply projects. Together with cost overruns, this led Bernstein to include no profit or earnings-per-share contribution from either project in its forecasts.
  • Capital expenditure on the Alberta project has risen from an initial 1.3 billion Canadian dollars to approximately 3.3 billion US dollars, and its start-up has been delayed from the original 2024 target to the end of 2027 or early 2028. The Rotterdam project has been affected by delays to associated carbon dioxide transport and storage infrastructure and is expected to start up no earlier than the second half of 2027.
  • Excess capacity may in future serve retail or other offtake customers, but the firm currently uses conservative assumptions.