Restructuring Costs, Production Disruptions Contribute to Allegheny Technologies' First-Quarter Loss
04/27/2016 - Specialty metals producer Allegheny Technologies Inc. posted a net loss of US$101.2 million due to the ongoing market downturn, restructuring costs and the disruption caused by its now-ended lockout of the United Steelworkers union.
For the quarter ended 31 March, the company reported US$757.5 million in sales, a decline of 33 percent from the same quarter last year. Losses for the quarter stood at 94 cents per common share, compared to a net profit of 10 cents per common share – US$10 million in total – last year.
In a statement, the U.S-based company said the results reflect the “ongoing restructuring and transformation of its flat rolled products business.”
Earlier this year, the company announced that it would idle its commodity stainless plant in Midland, Pa., and halt its grain-oriented electrical steel operation. In addition to costs associated with the idlings and with lockout-related production disruptions, it is continuing to lean into market headwinds.
Sales at the flat rolled unit slid 6 percent from the fourth quarter of 2015, falling to US$265 million.
ATI’s high-performance materials segment fared better on increasing demand from the commercial aerospace industry. Those gains, however, were offset by weak demand in the oil and gas and construction and mining markets.
ATI said it expects that its 2016 results will reflect two businesses that are in different places. It expects that demand tied to next-generation commercial airplanes and jet engines will spur improvement in its high-performance materials unit.
But it expects the flat rolled unit to lag.
“While base prices for stainless sheet products have improved, transaction prices remain very low by historical norms and the market for these products continues to be challenged by global overcapacity,” said ATI chairman and chief executive Rich Harshman in a statement.
However, Harshman said the move toward a higher-value product mix should bear fruit as the year goes on. He said ATI expects shipments of specialty coil and plate products to improve and is looking for the unit to turn modest profits in the second half of 2016.
In a statement, the U.S-based company said the results reflect the “ongoing restructuring and transformation of its flat rolled products business.”
Earlier this year, the company announced that it would idle its commodity stainless plant in Midland, Pa., and halt its grain-oriented electrical steel operation. In addition to costs associated with the idlings and with lockout-related production disruptions, it is continuing to lean into market headwinds.
Sales at the flat rolled unit slid 6 percent from the fourth quarter of 2015, falling to US$265 million.
ATI’s high-performance materials segment fared better on increasing demand from the commercial aerospace industry. Those gains, however, were offset by weak demand in the oil and gas and construction and mining markets.
ATI said it expects that its 2016 results will reflect two businesses that are in different places. It expects that demand tied to next-generation commercial airplanes and jet engines will spur improvement in its high-performance materials unit.
But it expects the flat rolled unit to lag.
“While base prices for stainless sheet products have improved, transaction prices remain very low by historical norms and the market for these products continues to be challenged by global overcapacity,” said ATI chairman and chief executive Rich Harshman in a statement.
However, Harshman said the move toward a higher-value product mix should bear fruit as the year goes on. He said ATI expects shipments of specialty coil and plate products to improve and is looking for the unit to turn modest profits in the second half of 2016.
