Allegheny Technologies forecasts 3Q loss, lower sales
Allegheny Technologies Inc. on Monday said it expects a third-quarter loss, citing “challenging conditions,” caused by lower sales, higher raw materials prices, a failed stainless steel price increase and expenses from a restructuring of its engineered products segment.
The Downtown-based manufacturer of specialty steel and titanium expects a loss for the period of about 27 cents to 30 cents a share, including higher income taxes and a $9 million expense from the closing and planned sale of two small businesses. It expects three-month sales of about $970 million, down about 20 percent from the same period a year ago.
“As expected, challenging conditions continued during the third quarter,” said CEO Richard Harshman. “Jet engine destocking at (manufacturers), while beginning to show signs of stabilizing, continued to impact shipments of both mill products and forged and machined components in our high-performance metals segment.”
Global economic uncertainty affected demand for flat-rolled products, industrial titanium and nickel-based and specialty alloy sheet and plate products, Harshman said. A stainless steel price increase on Aug. 1 did not have a significant impact on improving profit in the quarter.
After a strategic review, ATI said it closed a fabricated components business in Bolingbrook, Ill., and intends to sell its iron casting business in Laporte, Ind., which were part of the engineered products segment. During the first half of 2013, the units had revenue of $10 million and a loss before taxes of $9 million. The restructuring follows ATI's announced sale of its tungsten materials business for $605 million to Kennametal Inc., expected to close in the fourth quarter.
A loss in the third-quarter would compare to a profit of $35.3 million, or 32 cents a share, on sales of $1.22 billion in the same period in 2012 and continues a downward trend in earnings and sales. In the same quarter in 2011, the company earned $62.3 million, or 56 cents, on sales of $1.34 billion.
In the second quarter of this year, ATI reported net income of $4.4 million, or 4 cents a share, compared with $56.4 million, or 50 cents a share, a year ago. Sales fell 16 percent to $1.14 billion versus $1.36 billion last year. In that report, Harshman said cost reduction and completing a $1.2 billion hot rolling mill at its Allegheny Ludlum Brackenridge Works in Harrison were top priorities.
ATI is scheduled to issue its full third-quarter earnings report on Oct. 23. Its stock closed down 10 cents at $30.82, recovering from an earlier fall to $29.49.
John D. Oravecz is a staff writer for Trib Total Media. He can be reached at 412-320-7882 or email@example.com.