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 end-market sectors.
"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 year.
The company is targeting a minimum of $100 million in new gross cost reductions for 2013, Harshman said.