CHICAGO Specialty metals
distributor A.M. Castle & Co. hopes to improve profits as
it restructures in 2013, but president and chief executive
officer Scott Dolan doesnt expect a major pickup in
top-line revenue amid a weak demand environment.
The Oak Brook, Ill.-based
company posted a full-year net loss of nearly $9.75 million, up
more than fivefold from a $1.76-million loss in 2011, on sales
that rose 12.2 percent to $1.27 billion.
"We remain cautious based on
sentiment from many of our customers and a weaker economic
outlook in early 2013 vs. 2012," Dolan said during a Feb. 26
earnings conference call. "We are not anticipating much revenue
growth in 2013 compared with the strong start to 2012. What we
see (now) is close to the second half of 2012. There is a lot
of talk about things getting better, but we are not seeing it
Many Castle customers "clearly
... got into an over-inventoried position," Dolan said, and
Castle also built excess stocks last year. "We had too many
(mill) orders in place and didnt turn it off fast
enough," he said. The company expects to reduce inventories by
$50 million by the end of the first half, but Dolan said it
wont shed inventories at the risk of losing sales.
The operational restructuring
Castle announced last month (
amm.com, Jan. 17) is moving quickly, with "one big
round of layoffs" affecting some 10 percent of the workforce
already executed, Dolan said. "We have executed the initial
steps and should see benefits in the first quarter and
extending throughout the year.
"We havent lost any key
talent in the cost-cutting," Dolan said. As for sales impact,
"even in the markets where we announced we will close a
warehouse, we have not lost traction in those markets."
The 2012 full-year and
fourth-quarter losses were perhaps exaggerated, Dolan said,
because Castles customers serve more cyclical markets
than do some of Castles competitors.
"It continues to be a difficult environment, but we are
optimistic at the levers we do have to pull," he said. "Getting
inventory and costs under control sets us up well going