Air Products and Chemicals, Inc. (APD)

From Megaproject Empire-Building to Capital Discipline

Air Products and Chemicals, Inc. (APD) is in the middle of one of the most dramatic governance turnarounds in the US industrial gas sector. In 2025, activist fund Mantle Ridge LP, holding a stake worth roughly $1.3 billion in APD, ran a proxy campaign against then-CEO Seifi Ghasemi, citing years of weak capital allocation, troubled execution on hydrogen megaprojects, and inadequate succession planning. All three major proxy advisory firms, ISS, Glass Lewis and Egan-Jones, backed Mantle Ridge's board nominees and recommended replacing Ghasemi.

Mantle Ridge won. The board was overhauled, Ghasemi lost his board seat and CEO role, and Eduardo Menezes was installed as the new CEO. The market cheered the governance win, but the real proof came about a year later.

On 30 June 2026, Menezes made his first major call: Air Products announced it will not proceed with the Louisiana Clean Energy Complex (LCEC), a zero-carbon liquid hydrogen megaproject, along with a related Arizona liquid hydrogen facility and several smaller US clean-energy projects. The decision triggers a pre-tax charge of up to $2.9 billion (about $2.2 billion after-tax) hitting fiscal Q3 2026, mostly asset write-downs and contract terminations. The stated reason: expected returns no longer met the company's stricter return criteria under new management.

At the same time, Air Products is finalizing a marketing and distribution agreement with Yara International for renewable ammonia offtake from the NEOM Green Hydrogen Project in Saudi Arabia, the world's first large-scale renewable ammonia plant. This shifts APD's model from build, own and market it ourselves in the US to supply into an already-established global distributor's network, a materially lower-risk posture.

The market's reaction? APD stock jumped 8% to 12% around the late-June 2026 announcement. That's the opposite of the usual write-down equals bad news pattern; here, investors are rewarding the project cancellation as a sign of capital discipline, not failure. It's exactly the outcome Mantle Ridge was pushing for.

The Core Business: Industrial Gases

It matters that you understand this: APD's problem was never its core business. APD is the world's largest hydrogen producer and one of the largest global industrial gas companies, built on three pillars: on-site plants (piped or co-located gas supply directly to customer facilities), atmospheric/process gases (oxygen, nitrogen, argon, helium and hydrogen sold via bulk tanks or cylinders), and equipment sales (air separation units, gasification systems). This segment is stable, high-margin and largely contracted long-term, the real engine of APD. The problem was how prior management funneled that engine's cash flow into risky, high-uncertainty new hydrogen megaprojects.

Management: Eduardo Menezes

Eduardo Menezes now carries a clear mandate from the Mantle Ridge-refreshed board: cut the weak projects, defend the strong ones, and rebuild market trust in APD's capital discipline. The LCEC cancellation is the first real evidence of action, not just post-proxy rhetoric. But other megaprojects (including NEOM itself, Uzbekistan, and other blue/green hydrogen commitments) remain on APD's books and still carry execution risk. The fiscal Q3 2026 earnings call on 30 July 2026 will be a key test of whether this discipline narrative holds.

Shariah Compliance Status

APD is confirmed Shariah COMPLIANT per Zoya screening. The industrial gas business, producing and distributing oxygen, nitrogen, hydrogen and other process gases for industrial use, doesn't involve non-compliant activities such as interest-based lending, gambling or prohibited products. That said, you should still check financial ratios (debt, cash, non-compliant income) periodically since compliance status can shift with each screening cycle.

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