Melissa Schaeffer
Senior Vice President and Chief Financial Officer at Air Products and Chemicals
Thank you. Seifi. Now please turn to Slide 13. Before we discuss the details of our first quarter results, I would like to highlight a few notable items in our reported financials this quarter. As we previously announced, we reorganized our reporting segments starting this quarter. To provide more visibility to our regions, we separated the previous EMEA segment into Europe and a Middle East and India segment. The new segment is made up of our business in the Middle East, which includes the new Jazan joint venture and India. Additionally, we combined global gases with the Corporate and other segment. The historical resegmented financial information is available in a Form 8-K, which we published in December.
We are proud to have completed Phase 1 of the $12 billion Jazan joint venture in late October. This milestone has led to two separate, but related events, which impact our results favorably this quarter. First was the start of the new joint venture known as JIGPC's ongoing financial contribution, consistent with the contract between the joint venture in Saudi Aramco. An an ongoing basis, our portion of the Jazan joint ventures' net profit isn't included in equity affiliate income since we don't consolidate this joint venture.
We also recognized interest income on the shareholder loans associated with our $1.5 billion investment, which is included in a non-operating income line of our income statement. To be clear, these are loans from Air Products to the joint venture and are a mechanism for us to efficiently fund our contribution. Together, these two income streams drive $0.80 to $0.85 of annual Phase 1 EPS, exactly what we expected and committed to our shareholders and consistent with what we recognized for two months in Q1. We remain on track for closing of Phase 2 in 2023.
Second, a non-reoccurring event of approximately $0.20 and while the transfer of the air separation units supporting the gasifiers at Jazan from our previous ASU joint venture to the Jazan joint venture. This transfer required the final settlement of our ASU joint venture, which previously owned and operated these air separation units and enabled us to recognize a portion of the profits that was deferred when Air Products sold the ASU to the joint venture. This profit was recognized as equity affiliate income. Partially offsetting this and also an equity affiliate income, recorded a loss associated with the ASU joint venture settlement. Our joint venture partner's share of this settlement loss is reflected as a favorable non-controlling interest item.
Now, please turn to Slide 14 for our first quarter results. Compared to last year, sales increased 26% to nearly $3 billion. Volume and price were strong and together account for 13% of the increase, while the remaining half was driven by higher energy pass-through. Rapidly escalating energy costs continue to negatively impact our business across the regions this quarter. This situation was especially challenging in Europe and Americas as natural gas and electricity costs surged even higher from the already elevated levels we saw last quarter. Simon will share more details, but in Europe, natural gas costs were almost 6 times higher and power costs were almost 4 times higher than the beginning of the year.
Our onsite business, about half of our total company sales has contractual protection from the energy cost increases. The costs are passed onto the customer. Energy cost pass-through drove sales 14% higher, but did not impact our profit. In our merchant business, our teams around the world have quickly executed price actions to help offset the escalating energy costs. For this quarter, prices improved compared to last year and last quarter in all three largest segments: Asia, Europe and the Americas. We were able to recognize a 10% price increase across the merchant business, which translated to a 5% increase in price for the total company. This is our best pricing results in many years.
I would like to thank all our teams for the excellent work they have done in response to such a significant challenge. However, we still have more work to do. We are actively executing against price actions across the regions to recover the unprecedented cost impacts. Volume improved 8%, up in all segments, driven by new assets, hydrogen, merchant recovery and stronger sale of equipment activities.
EBITDA increased 8%, again exceeding the $1 billion mark for a quarter as favorable volumes, prices and equity affiliate income more than offset higher costs. EBITDA margin declined 570 basis points, mostly due to the higher energy pass-through, which negatively impacted our margins about 450 basis points by higher costs, net of price increases contributed to the remaining shortfall. Sequentially, volumes were down 3%, primarily due to the strong sale of equipment in prior quarter. The 2% price increase was a direct result of our ongoing price action.
EBITDA was 4% lower sequentially as better price and equity affiliate income were more than offset by higher costs and lower sale of equipment profit recognition. ROCE was 10.3%. We currently have significant cash on our balance sheet, which will support the major projects we have announced. Adjusting for this cash, our ROCE would have been 13.9%. We expect ROCE to improve as we deploy the cash and bring projects on stream.
Now please turn to Slide 15. Our first quarter adjusted EPS was $2.52, which is $0.40 or 19% above last year. Volume was favorable $0.19 and price net of variable costs was modestly unfavorable $0.04 as our price actions were able to offset most of the unprecedented energy cost increases. For the quarter, our price actions alone before netting against variable costs, contributed about $0.40. Costs were up this quarter.
Similar to prior quarters, our growth strategy has us continuing to invest in additional resources. The very high and dynamic energy prices in our last in our largest three segments also impacted our supply chain as we incurred higher operating and distribution costs to keep our customers supplied. We had additional discretionary compensation this quarter and a positive settlement of a supply contract last year, neither of which will continue in the future.
The ongoing EPS contribution of Jazan -- of the Jazan joint venture this quarter represents two months and is consistent with our commitment, adding to both equity affiliate income and non-operating income. Equity affiliate income increased $0.29 including the ongoing Jazan results, the deferred profit recognition and the unfavorable ASUs joint venture settlement, which I mentioned earlier. Non-controlling interest was $0.07 favorable versus prior year, representing our partner's portion of the ASU joint venture settlement.
Non-operating income was flat, as the interest income from the shareholder loan associated with the Jazan joint venture was offset by higher pension expense. Our first quarter effective tax rate of 17.1% was 220 basis points lower than last year, including the favorable impacts of Jazan is seasonally lower, primarily due to the additional share-based compensation and we still expect our tax rate to be 19% to 20% this year.
Now please turn to Slide 16. The stability of our business continues to allow us to generate strong cash flow despite the challenging energy environment. Over the last 12 months, we generated about $2.8 billion of distributable cash flow or about $12.50 per share. From our EBITDA of almost $4 billion, we paid interest, tax and maintenance capital. Note that our maintenance capital is a little higher than usual, driven in part by the spending on our new global headquarters, which is now essentially complete.
From the distributable cash flow, we paid over 45% or $1.3 billion as dividends to our shareholders and still have about $1.5 billion available for high return projects. This strong cash flow, even in uncertain times, enables us to continue to create shareholder value through increasing dividends and capital deployment.
Slide number 17 provides an update on our capital deployment. We continue to make great progress in developing and executing our major growth projects. In fact, we see potential opportunities significantly greater than the investment in capacity we show here. With the closing of Jazan Phase 1, we see a reduction in cash on hand and an increase in capital already spent. As you can see, our deployment potential is over $33 billion through fiscal 2027. The $33 billion includes over $8 billion of cash and additional debt capacity available today. Over $16 billion we expect to be available by 2027 and over $9 billion already spent.
We still believe it's capacity is conservative, given the potential for additional EBITDA growth, which generates additional cash flow and additional borrowing capacity. We will continue to focus on managing our debt balance to maintain our current targeted Aa2 rating. So, you can see, we've already spent 27% and have already committed 70% of the updated capacity we show here. We have made great progress and still have substantial investment capacity remaining to invest in high return projects.
Let to begin the review of our business segment results, I'll turn the call back over to Seifi. Seifi?
