| - PROCESS GAS SOLUTIONS |
| - INDUSTRIAL AND SPECIAL PRODUCTS |
| - BOC EDWARDS |
| - AFROX HOSPITALS |
| - GIST |
| Industrial and Special Products | 2004 £ million |
Change on previous year |
Change on previous year1 |
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| Turnover | 1,782.3 | +2% | +3% |
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| Operating profit | 253.9 | +7% | +5% |
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| Adjusted operating profit2 | 269.5 | +11% | +10% |
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| 1. At constant currency. 2. Adjusted operating profit excludes exceptional items. |
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Industrial and Special Products
Industrial and Special Products (ISP) performed well this year with improvements to the business in all parts of the world. Economic conditions were generally good, with South Africa being the notable exception as the mining and manufacturing sectors were affected by the strength of the rand. Elsewhere, the sale of our packaged gas business in the US left us with a smaller but potentially more profitable business. We also disposed of a small business in Turkey.
The strength of ISP has traditionally been its ability to deliver well-targeted products and services to the diverse markets and economies in which it operates. In recent years we have overlaid strong global strategies onto this successful formula. Our key markets for industrial, medical, hospitality and special products and services now have global direction. World-class operating and commercial practice is now widespread, delivering higher levels of customer service and efficiency.
In Europe both turnover and adjusted operating profit improved. The UK still faces a challenging manufacturing environment where high levels of customer service are of the greatest importance. Our customers tell us that they particularly value certain aspects of our service. We measure each of these and have continuous improvement programmes in place for all of them. While maintaining our position in the core UK market for industrial gases we grew our equipment business by rebranding and improving our network of retail outlets. In medical, we continue to benefit from further additions to our range of lightweight cylinders and improved service offerings to hospitals. Following our agreement last year with Hudson Technologies we deployed the first of their units in the UK, offering an environmentally-friendly service to our refrigeration customers. Our Sureflow business that serves pubs and clubs successfully integrated the new business it won last year in the UK and added an important win, Heineken, to its list of customers in Ireland. In Poland sales and adjusted operating profit increased in the first full year since we acquired Praxair Polska in January 2003.
The Australian economy performed well last year and our business delivered a very strong performance, improving its position in each of its target segments. Sales and adjusted operating profit improved as a result, with the largest volume increases being seen in industrial and safety products. Oil and gas projects in Western Australia and on the north west shelf, and mineral projects in central Queensland were highlights. Customers increasingly use the Internet to do business with us and we are extending this capability to our agents through the introduction of PartnerNet. At the same time we have centralised all information processing in the UK, with the Internet again being used to pass real-time data back and forth across the world. New Zealand also had a good year backed by improving economic performance.
In both Australia and South Africa our liquefied petroleum gas businesses had an excellent year.
We have again demonstrated our improved ability to respond rapidly to volatile raw material prices, which are often related to the price of oil, while continuing to grow volumes in both countries. The industrial market in South Africa saw reduced production in the early part of the year owing to the strong rand but activity levels rose later in the year. Overall, both turnover and adjusted operating profit improved, the latter helped by operating and overhead efficiencies. Afrox continues to respond to its social and economic environment with a seven-point black economic empowerment strategy and it has won notable awards in South Africa for its governance approach, including being named best-governed company by Deloitte & Touche.
In the Americas, the divestment of our US packaged gas business was completed at the end of July and as a result turnover for the year declined. However, adjusted operating profit improved. Canada benefited from underlying improvements in performance as well as a full year of trading following our acquisition of Air Products' packaged gas business. In Latin America, Venezuela produced a notable performance, improving turnover and adjusted operating profit despite political unrest, and the continued roll-out of global product and efficiency programmes contributed to growth throughout the region.
In Asia, our joint venture Japan Air Gases performed well and delivered expected synergies ahead of time. Taiwan saw strong growth and TIG, our business in Thailand, performed well. Elsewhere, Hong Kong continues to see manufacturing move to China while bird flu generally had the effect of dampening economic growth.
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