NEW YORK Carpenter Technology Corp. said it expects strong shipments of premium products such as aerospace and high-temperature alloys to buoy its earnings in the final months of the calendar year, even as makers of more commoditized steel products are generally expecting poorer results.
"There are very few companies that can service these (premium) segments, and this is why our business is less impacted by some of the macroeconomic factors that are affecting the general steel industry," president and chief executive officer William Wulfsohn said during the companys fiscal first-quarter earnings call Tuesday.
Carpenter, however, said it still expects to achieve operating earnings growth of 70 percent, or about $70 million, in its fiscal 2013.
"We remain on track to achieve the targeted financials that we set earlier for the fiscal year," Wulfsohn said.Carpenters upbeat outlook comes as the company reported strong earnings for its fiscal first quarter of 2013 ended Sept. 30 on robust demand for its premium products, even as it saw a slowdown in demand for lower-value products "where economic and political uncertainty impact demand," Wulfsohn said.
The Wyomissing, Pa.-based company recorded net income of $39.2 million during the quarter on net sales of $544.9 million, 64.7 percent higher than net income of $23.8 million on net sales of $414.1 million in the same quarter a year ago.
Carpenter started up one of three new vacuum-arc remelt (VAR) furnaces at its recently acquired Latrobe operations during the quarter as it sought to expand its premium metal output.
"Our backlog (on premium products) is consuming all of our capacity," Wulfsohn said.
The company sold 64 million pounds of product during the quarter, 36.2 percent more than the 47 million pounds sold in the same period last year.
Some 16.1 million pounds were attributable to Latrobe, the company said, noting that integration of the new operations going well.
"In some cases, yields and productivity have improved by more than 30 percent," Wulfsohn said.
Aerospace and energy showed the biggest market-segment growth during the quarter, with sales in aerospace rising 45 percent to $252.6 million compared to the same period last year, while energy sales rose a 31 percent to $77.4 million.
Aerospace sales were driven by increased demand for alloys in engine making and titanium fasteners, according to the company.
Carpenters international sales jumped 19 percent to $163.8 million compared with the first fiscal quarter last year, largely due to higher sales to Chinese aerospace forging customers and the Japanese aerospace supply chain, Carpenter said.