NEW YORK Stainless and specialty metals producer Allegheny Technologies Inc. (ATI) believes "challenging" business conditions will continue in the first quarter "and perhaps the first half" due to uncertainties surrounding U.S. fiscal and global economic policies, its top executive says.
The company is especially cautious about markets that are sensitive to the gross domestic product (GDP), such as standard stainless, as consumer and business confidence is "extraordinarily low," chairman, president and chief executive officer Richard Harshman said in a statement released Jan. 23 with its latest earnings report.
Even with these "near-term headwinds," the long-term outlook remains positive for the companys key end markets, including aerospace, oil and gas, and medical, although demand from the electrical energy market in the short term is expected to be flat due to tepid GDP growth in advanced economies and weak domestic housing starts, Harshman said.
The company posted full-year net income of $158.4 million, down 26.1 percent from $214.3 million in 2011, on sales that slipped 2.9 percent to $5.03 billion, within a revised estimate of $5 billion to $5.1 billion but lower than the $5.3 billion to $5.4 billion the company had forecast earlier in 2012.
Shipments of standard flat-rolled products totaled 656.3 million pounds last year, an 11.7-percent increase from 2011, as average sales prices fell 18.9 percent to $1.46 per pound.
Pittsburgh-based ATIs fourth-quarter results were affected by "continued low demand and historically low base prices for our standard stainless products," Harshman said. The company also saw lower demand for some of its high-value products in its high-performance metals and flat-rolled products sections due to inventory management by customers.
Fourth-quarter net income tumbled 66.9 percent to $10.5 million from $31.7 million in the same period a year earlier on sales that fell 12 percent to $1.1 billion. ATI shipped 155.6 million pounds of standard flat-rolled products during the quarter, up 27.9 percent from 121.7 million pounds, as average sales prices dipped 14 percent to $1.35 per pound.
ATI took a special charge of $8.8 million during the quarter due to the closure of its iron casting facility in Alpena, Mich., part of an effort to improve operating efficiencies. The company also is consolidating its service center operations, a move that is expected to be complete by the end of the first quarter.