NEW YORK Allegheny
Technologies Inc. (ATI) saw its first-quarter net income plunge
82.2 percent to $10 million from $56.2 million in the same
period last year on sales that fell 12.8 percent to $1.18
billion as a result of lackluster demand from its major
"We saw continued sluggish
demand from many of our major end markets," ATI chairman,
president and chief executive officer Richard Harshman said in
a conference call with analysts. "While demand from aerospace
OEMs (original equipment manufacturers) in support of new
builds improved compared to the fourth quarter of 2012, demand
from the jet engine aftermarket remained low."
He said that the markets for
flat-rolled stainless sheet and plate and grain-oriented
electrical steel remained challenging due to lackluster demand,
low base selling prices and high levels of imports, and "demand
for forgings from the construction and mining equipment markets
was depressed as OEMs adjusted production and reduced
inventories to match current global demand."
The company had largely
anticipated that "slow and inconsistent economic growth" would
create headwinds in the first quarter, and it expects them to
persist in the near term, Harshman said. "While we see some
signs of improvement as we enter the second quarter, and it
appears the fourth quarter of 2012 may have been the trough in
demand, we expect challenging conditions to continue to impact
many of our end markets throughout the second quarter.
"Our customers will continue to
remain cautious as near-term global economic uncertainties
remain, lead times remain short and raw material prices,
especially for nickel and titanium scrap, remain under
pressure," he added.
Harshman said that construction
of ATIs new hot-rolling and processing facility in
Brackenridge, Pa., is on schedule and it is expected to be
production-ready by the end of 2013. Capital expenditures
related to that project are expected to reach $450 million this
The company is targeting a minimum of $100 million in new
gross cost reductions for 2013, Harshman said.