NEW YORK Allegheny Technologies Inc. (ATI) expects first-quarter net income of some $10 million on sales of $1.18 billion as "record-low" prices have crimped its results, the company said in an April 16 forecast.
Richard Harshman, ATIs chairman, president and chief executive officer, has said in January that the first quarter would be "challenging" (amm.com, Jan. 23).
"Operating performance continued to be impacted by record-low base selling prices for cold-rolled standard sheet, primarily due to low-priced imports, weak demand and low prices for grain-oriented electrical steel, and weak demand for our zirconium and related alloys," he said in a statement.
"In addition, falling raw materials prices continued to impact sales and operating income," he said.
Contract business was mostly steady. But transactional business was soft due to falling raw materials prices and short lead times, and many customers continued with conservative inventory management, Harshman said. "Higher inventory costs, including higher conversion costs due to lower operating rates in the fourth quarter of 2012 and manufacturing cycle times for some of our products that do not align raw materials costs with lower surcharges and indexes, reduced operating income."
Harshman believes that market conditions remain favorable for secular growth from Pittsburgh-based ATIs key aerospace, oil and gas/chemical process industry, electrical energy and medical markets over the long term, and sees significantly improved operating performance in its flat-rolled product segment to result from the hot-rolling and processing facility scheduled for completion by the end of 2013. "Formal commissioning is expected to occur through the first half of 2014," he said.
ATI is slated to release its quarterly results April 24.
Subsidiary ATI Allegheny Ludlum Corp. announced earlier this month that it would raise prices on several of stainless products effective May 6 to "support continued growth and investment" (amm.com, April 9).