air products & chemicals 7 May 2008 Bankof America BASics

Mike HiltonSenior VP and GM, Electronics and Performance MaterialsBank of AmericaBASics / Industrials ConferenceMay 7, 2008

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ForwardForward--Looking Statements Looking Statements NOTE: This document contains “forward-looking statements” within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management’s reasonable expectations and assumptions as of the date of this document regarding important risk factors. Actual performance and financial results may differ materially from projections and estimates expressed in the forward-looking statements because of many factors, including, without limitation, overall economic and business conditions different than those currently anticipated; future financial and operating performance of major customers and industries served by the Company; the impact of competitive products and pricing; interruption in ordinary sources of supply of raw materials; the ability to recover unanticipated increased energy and raw material costs from customers; costs and outcomes of litigation or regulatory activities; consequences of acts of war or terrorism impacting the United States’ and other markets; the effects of a pandemic or a natural disaster; the ability to attract, hire and retain qualified personnel in all regions of the world where the company operates; charges related to portfolio management, goodwill recoverability, business restructuring and cost reduction actions; the success of implementing cost reduction programs; the timing, impact, and other uncertainties of future acquisitions or divestitures; unanticipated contract terminations or customer cancellation or postponement of projects or sales; significant fluctuations in interest rates and foreign currencies from that currently anticipated; the continued availability of capital funding sources in all of the company's foreign operations; the impact of new or changed environmental, healthcare, tax or other legislation and regulations in jurisdictions in which the Company and its affiliates operate; the impact of new or changed financial accounting standards; and the timing and rate at which tax credits can be utilized. The Company disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained in this document to reflect any change in the Company’s assumptions, beliefs or expectations or any change in events, conditions or circumstances upon which any such forward-looking statements are based.

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Air Products Air Products At a glanceAt a glance

$10B companyDiverse markets and geographiesPositioned for continued long-term value creation

FY07 Geographic Sales

United States(44%)

Asia(17%)

Europe(32%)

Canada/LatinAmerica (5%)

FY07 Segment SalesROW (2%)

MerchantGases(34%)

TonnageGases(31%)

Equipment & Energy

(6%)Healthcare

(7%)Electronics &

Performance Materials(22%)

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Air Products Value PropositionAir Products Value PropositionProfitable GrowthProfitable Growth

Stability– Long term contracts– Consistent and predictable

cash flows – Strong balance sheet

Growth– Solid project backlog– High bidding activity– Energy opportunities

Improving returns– Margin improvement– Productivity– Increasing dividends– Share buyback

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Supply Modes Supply Modes Durable Business ModelsDurable Business Models

Package Gases & Specialty Materials

25%

Onsite/Pipeline36%

Liquid/Bulk21%

10, 15 and 20-year contractsTake-or-pay

Contractual energy pass-throughFormula escalation

3-5 year contractsRegional business

Cost pass-through/surcharges

Equipment & Services 18%

66

Lesscyclical

Higherreturn

Higher growth

Morefocused

Morefocused

Lesscyclical

Higherreturn

Higher growth

Transforming Air Products

The APDTransformation

The APDTransformation

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Sales ($B)………………EPS ($/share)…….......ORONA (%) …………..ROCE (%)……………..SG&A / Sales (%)……

Balance Sheet………….Shareholder Value…….

A Healthy Report CardA Healthy Report CardFour consecutive yearsFour consecutive years

9.6%$2.45

14.7%

“A” ratingDividend increase & share repurchase

$6.4 $7.1 $8.2

FY04 FY05 FY06

$2.80 $3.35

9.9%

14.2% 12.8%

11.3%

FY07

$9.4

$4.20

12.4%

12.2%9.6% 10.1% 11.2% 12.3%

* Comparisons are non-GAAP.

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Sales ($B) $4.8 $5.1 11%

SG&A as a % of Sales 12.2% 12.0% (20bp)

Operating Margin 13.7% 14.5% 80bp

Diluted EPS ($/share) $1.96 $2.39 22%

ROCE (%) 11.7% 12.4% 70bp

Q2 YTD Q2 YTDFY07 FY08 Change

Consolidated Consolidated ’’08 YTD Financials:08 YTD Financials:Delivering LeverageDelivering Leverage

Comparisons are non-GAAP

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Outlook for Industrial GasesOutlook for Industrial GasesContinued StrengthContinued Strength

Global outlook for gases tracking on forecast

Future demand drivers are strong– High energy costs efficiencies– High capital costs debottlenecking– Environmental pressures new applications

Well positioned globally with market leadership– Hydrogen for clean fuels– Oxygen for gasification– Electronics

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Electronics & Performance Materials:Electronics & Performance Materials:A natural extension of whatA natural extension of whatAir Products does bestAir Products does best

$2B+ segment under-pinned by technology, innovationFranchise positions / global leadershipStrategic positions with leading customers Operationally excellent global supply chainGlobal process engineering capabilityLeading edge applied technology

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ElectronicsElectronicsContinued Strong GrowthContinued Strong Growth

Global leader, double-digit top-line growth~$1.3 billion bulk gas, specialty material and equipment businessDriven principally by: – Semiconductor (~85%)– LCD (~10%)

Board markets: Silicon and compound semiconductors, flat panel displays, photovoltaic devicesBusiness trends:– New materials for 45nm– Asia growth– Product simplification & controlling the

value chain

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Performance MaterialsPerformance MaterialsGrowth through DifferentiationGrowth through Differentiation

A global platform with >$700MM in sales#1 or #2 positions in targeted markets– Performance-based sale

3 key product lines + new initiative platforms– Epoxy curing agents– Specialty surfactants– Polyurethane additives

~50% of sales outside of North AmericaFormulated products that drive leadership positionsGlobal supply chain, R&D, applied technology infrastructure

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Electronics & Performance MaterialsElectronics & Performance MaterialsPerformance MetricsPerformance Metrics

Sales

0

500

1000

1500

2000

2500

2004 2005 2006 2007

Operating Income & Margin

0

50

100

150

200

250

2004 2005 2006 20070.0%

3.0%

6.0%

9.0%

12.0%

15.0%$MM $MM

11% CAGR

Asia (40%)

North America (40%)

Latin America (2%)Europe

(18%)

Revenue by region ($, FY07) • Strong top line growth over the past four years

• Excellent profit and return improvement

• Near term focus on further improvement:

Electronics Performance Materials- Continued strong hit rate - Mix improvement - Portfolio restructuring - Growth in adjacent

markets

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2008 and Beyond2008 and BeyondSustainable DoubleSustainable Double--Digit GrowthDigit Growthat Superior Returnsat Superior Returns

Targeting sustainable double-digit EPS growth– 15% to 19% EPS growth in FY 08

● Targeting 300bp margin improvement over 3 years– Cost reduction and SG&A improvement– Accelerated productivity– 100 basis points in FY’08

Targeting a ROCE 3% to 5% above our cost of capital

More Focused, Less Cyclical,More Focused, Less Cyclical,Higher Growth, Higher ReturnsHigher Growth, Higher Returns

tell me morewww.airproducts.com

Thank you