Co. doesnt plan to curtail capacity at its steel business
as it is realizing profits even at low utilization rates, the
The decision might run
counter to investors expectations since the Canton,
Ohio-based company is working to separate its steel and
bearings businesses, but executives said that investments in
its steel operation increase Timkens ability to meet
tougher high-quality applications that command a premium,
thereby enhancing steel margins.
"Our automated tool
processing line is up and running, lowering both fixed and
variable costs. The forge press and ladle refiner are both
operational and being qualified with new, differentiated
products, and we plan to start up our vertical caster in
mid-2014, improving our structural costs at all levels of
demand," president and chief executive officer James W.
Griffith said during an earnings call.
Steel production is
operating about 55 percent of capacity, chairman Ward J. "Tim"
Timken Jr. said, but "weve actually had favorable
double-digit margins with that rate of utilization, although
not during the third quarter, allows the steelmaker to offer
"very high service levels, (and) we do not see a need for large
capacity rationalization, given the markets we choose to serve
and the places we create value," Griffith said.
"The steel business
has not taken out and is not taking out any capacity," group
president Christopher A. Coughlin said.
"The steel business is
actually performing pretty well and only gets better as our mix
and our volume improves," Tim Timken said. "That we can hit
these kinds of margins (10.2 percent for the nine months ended
Sept. 30) at an average of 55 percent of capacity for the year
is pretty impressive relative to the rest of the industry."