Air Products and Chemicals, Inc. (APD) Stock Analysis

Air Products’ primary competitive advantage is its scale and entrenched infrastructure in the global industrial gases market. The company operates in approximately 50 countries, with a network of over 1,000 production and distribution facilities, and is the world’s largest supplier of hydrogen by pipeline length. This physical footprint creates high barriers to entry, as duplicating such assets would require significant capital and time.

APD’s on-site supply model—where it builds and operates gas plants directly at or near customer sites—accounts for roughly 50% of sales and locks in customers with long-term (15–20 year) contracts. This model ensures stable, recurring revenue and reduces customer switching. In contrast, rivals such as Linde and Air Liquide also employ this model, but APD’s focus on large-scale hydrogen and clean energy projects (e.g., NEOM Green Hydrogen) positions it as a first mover in emerging decarbonization markets.

The company’s engineering expertise and proprietary technology in air separation and hydrogen production further differentiate it. APD’s EBITDA margins (41.7% in FY24) and return on capital employed (10.5% in Q2 FY25) are competitive with, or superior to, peers.

Customer satisfaction is reinforced by reliability of supply and technical support, while a disciplined safety culture and global project execution track record underpin its reputation. However, APD faces similar input cost and regulatory risks as Linde and Air Liquide, and must continue to innovate to defend its edge as the energy transition accelerates.