CHICAGO While A.M. Castle & Co. executives have
seen second-half demand weaken across numerous metals-consuming
sectors, including energy, aerospace stands out as a bright
spot for the next two years.
The Oak Brook, Ill.-based company posted net income of
nearly $3.2 million for the three months ended Sept. 30, down
16.6 percent from $3.8 million in the same period last year
despite a 3.1-percent rise in sales to $304.04 million from
$294.86 million. Castles third-quarter performance was
affected by declines in both scrap and metals pricing.
"The results were in line with our expectations despite the
reduction in demand," vice president of finance and chief
financial officer Scott Stephens said Thursday during a
conference call with investors.
Metals segment tons sold per day fell 9.2 percent compared
with the third quarter of 2011, excluding Tube Supply Inc.,
which the company acquired last year, and were 7.6 percent
lower than in the second quarter of this year.
"Most key end-use markets experienced softer demand as
customers adjusted inventory levels due to a more cautious
outlook," Stephens said.
Looking ahead, "pricing levels, inventory and product mix
will be important through the balance of the year," he said.
The fourth quarter will present a seasonally slower period with
fewer shipping days and customer plant shutdowns.
"We remain cautious based on our customers outlooks
and sentiment about the global economy. Based on our outlook,
getting to a pre-tax profit will be a bit of a challenge,"
Stephens said. "Our goal is to get to breakeven for (the fourth
Castle will cut inventory value by $38 million this quarter,
in line with its stated goal of slashing the value by $50
million during the second half.
Next year, "we are most optimistic for the aerospace
segment. That business showed meaningful growth second to third
quarters, and looks to continue to ramp up and grow into 2013,"
In its industrial markets, automotive production should rise
again next year, but outside that "youre into a mixed
bag. Meaningful (metals demand) growth is required to overstep
2012 on an annual basis," he said, "and were not seeing
indications of that at this point. That is a more cloudy
picture with not a lot of catalysts for growth yet."