Air Products books $3.2 billion of charges after exiting hydrogen projects

Air Products recorded about $3.2 billion of pre-tax charges in its fiscal year ended September 30, 2026, mostly for exiting clean energy projects led by two it had under construction: a hydrogen and ammonia complex in Louisiana and a green hydrogen facility in Casa Grande, Arizona. The charges come to $2.4 billion after tax, or $10.95 a share, according to the full-year results released November 5. They help explain why the industrial gas company reported just $23 million of operating income on $13.0 billion of sales.

The release leads with the parts that went right. Capital expenditures fell to $3.3 billion from $5.1 billion the year before, a cut of $1.8 billion, and Air Products guides to $3.0 billion to $3.5 billion for fiscal 2027. On an adjusted basis, which excludes the exit charges, earnings per share rose 12 percent to $13.45.

What was cancelled, and when

Most of the money was written off at the end of June. Air Products decided on June 26, 2026 to exit the Louisiana Clean Energy Complex, a project to produce low-carbon hydrogen and ammonia, along with the Casa Grande project and "other smaller scale projects supporting clean energy distribution," according to its June 30 Form 8-K. It expected a charge of up to $2.9 billion, primarily to write down assets and terminate contracts, and estimated the cash cost at no more than $925 million, while saying it "anticipates lower cash spend once negotiations and ultimate settlements are finalized with third parties."

The third-quarter results on July 30 booked about $2.9 billion of project exit charges for the quarter ended June 30. The fourth-quarter charge of $224.5 million was mostly about coal. It went primarily to two coal gasification plants in China held for sale: Air Products fully impaired the remaining assets of one due to limited buyer interest and marked the other to the terms of a sales agreement, and that plant was sold in October 2026.

The Louisiana complex failed a test the company had set for itself. Air Products had said it would not take a final investment decision unless it could sign firm offtake agreements for hydrogen and nitrogen, hold construction and capital costs to its return expectations, and divest the ammonia production and carbon sequestration pieces, per the 8-K. "After a detailed review, the Company determined that the expected financial returns from the project would not meet its return criteria."

Casa Grande was still under construction when Air Products dropped it; the June 30 release called it a zero-carbon liquid hydrogen facility, and the November 5 results call it a green hydrogen production facility. Air Products gave Casa Grande and the smaller distribution projects reasons of their own, separate from Louisiana's: "These exits are being driven by challenging commercial conditions, project-specific economic factors, and slower-than-expected development in certain markets, largely hydrogen for mobility."

An earlier round of exits

This is not the first round. On February 24, 2025, Air Products exited three US projects and warned of a pre-tax charge of up to $3.1 billion, according to that 8-K. The list was a sustainable aviation fuel expansion with World Energy in Paramount, California; a 35 metric ton per day green liquid hydrogen plant in Massena, New York, with its distribution and dispensing operations; and a carbon monoxide project in Texas.

Massena's reasons overlap with the ones Air Products gave for Casa Grande and the smaller projects in June 2026. The company cited "recent regulatory developments rendering existing hydroelectric power supply ineligible for the Clean Hydrogen Production Tax Credit (45V) as well as slower than expected development of a hydrogen mobility market in the region." The same filing said Air Products would keep evaluating its backlog "but that it does not currently expect any additional material cancellations going forward." The Louisiana exit was decided on June 26, 2026.

Fiscal 2025's charges came to about $3.7 billion, which the new release says covered project exits, among them certain clean-energy generation and distribution projects, the initial impairment of the two Chinese coal plants, and separation costs under a cost reduction plan. Added to fiscal 2026, that is about $6.9 billion of business and asset action charges in two years, by our arithmetic from the income statement; not all of it is hydrogen.

What remains, and the wider retreat

The one hydrogen project the November 5 release names other than the exits is NEOM Green Hydrogen Company in Saudi Arabia, in which Air Products holds a one-third interest and which it consolidates. Its capital expenditure figure excludes the joint venture's spending funded by sources other than Air Products' cash, such as its project financing and its partners' equity: $1.02 billion in fiscal 2026 against $2.47 billion a year earlier, per the release. The July 30 results reported a finalized marketing and distribution agreement with Yara for the project's renewable ammonia.

The pitch now is industrial gas. Chief executive Eduardo Menezes described the plan in July as "a clear pathway to reduce capital expenditures and drive continued profitable growth through high-quality, traditional industrial gas projects." The November release highlights over $2.0 billion of new electronics wins in the backlog, and its boilerplate still describes Air Products as the leading global hydrogen supplier, builder and operator of some of the world's largest hydrogen projects.

Air Products is not the only part of the hydrogen supply chain retrenching. On the equipment side, Nel's alkaline electrolyser revenue fell 91% in its third quarter, when that segment booked NOK 8 million of new orders.