Profits sputter at Allegheny Technology
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Allegheny Technology reported sharply lower profits for the fourth quarter and all of 2012, citing global economic uncertainty that prompted customers to lighten up on inventories.
The Pittsburgh-based specialty metals producer expects this year will get off to a slow start, but that conditions will improve enough later to generate what Chairman, President and CEO Rich Harshman characterized as modest, single-digit increases in revenue and operating profits.
"We believe conditions in the first quarter, and perhaps the first half, of 2013 are likely to remain challenging," he said.
Mr. Harshman also said construction of a $1.1 billion rolling mill at Brackenridge, which the company describes as a "game changing investment," is on budget and on schedule to be completed by year's end.
Problems that have grounded Boeing's 787 Dreamliner airplane have not affected demand for the company's products, Mr. Harshman added. Allegheny Technologies is one of Boeing's largest suppliers: The company has a long-term contract to provide titanium that was extended three years in 2011 and will expire at the end of 2018.
Mr. Harshman made the comments during a mid-day conference call with analysts.
Fourth quarter profits totaled $10.5 million, or 10 cents per share, vs. earnings of $31.7 million, or 29 cents per share, in the year-ago quarter. Sales fell 12 percent to $1.1 billion.
Analysts were forecasting profits of 14 cents per share and sales of $1.1 billion.
The results included an aftertax charge of $8.8 million, or 8 cents per share, to close an iron casting plant in Alpena, Mich. Mr. Harshman said the plant's customers included the wind energy market, which faces slumping demand and competition from China.
For all of 2012, Allegheny Technologies earned $158.4 million, or $1.43 per share, vs. 2011 earnings of $214.3 million, or $1.97 per share. Sales fell 3 percent to $5.03 billion.
Mr. Harshman said the new mill will replace 60-year-old equipment at the Brackenridge plant. It will allow the company to produce wider, longer coils of stainless, titanium and other metals at lower costs and in less time. The mill will be commissioned next year and significant benefits will start to be realized in 2015, he said.
Asked to quantify the savings, he said: "That's a pretty significant number that we haven't commented on publicly."
Allegheny Technology shares closed Wednesday at $30.85, up 28 cents.
First Published January 24, 2013 12:14 am