July 23, 2014
ATI Reduces Quarterly Loss
Allegheny Technologies Inc., Pittsburgh, reported a net loss of $3.8 million during the company's second quarter, a 79.0 percent improvement on the first quarter but a reversal of the $3.7 million earned in the same period last year. Net sales of $1.12 billion were up compared to both the previous quarter and the same quarter of 2013.
"We continued to see improvement in end-market demand as we moved through second-quarter 2014. Sales increased 13 percent compared to the first quarter due to improved demand for our nickel-based alloys and superalloys, and titanium alloys in the High Performance Materials & Components segment, as well as increased shipments in our Flat Rolled Products segment," said Rich Harshman, chairman, president and CEO. "Segment operating profit improved to $65.2 million, or 5.8 percent of sales, a 50 percent increase compared to the first quarter of 2014.
Segment operating profit was negatively affected by $15.4 million of start-up and qualification costs associated with two strategic growth projects, the HRPF and the Rowley titanium sponge facility.
"Demand from the jet engine market is improving for both new builds and aftermarket spares. Sales to the oil and gas market in the second quarter were 30 percent higher than in the first quarter. The markets for flat-rolled stainless sheet and plate and grain-oriented electrical steel continue to improve, and modest base price increases are being realized on non-contract business. In addition, demand from global projects in the industrial titanium market is beginning to shows signs of modest improvement after a lengthy period of stagnation," said Harshman.
For the first half of 2014, ATI's international sales totaled $797 million and represented 38 percent of company sales. Sales of high-value products represented over 77 percent of ATI's first-half sales, while sales of precision rolled strip and engineered strip products represented 13 percent.
Cold commissioning of the HRPF project began in the first quarter of 2014 and progressed to hot commissioning and the start of operational integration in the second quarter. Hot commissioning of the HRPF is expected to be completed in the fourth quarter.
"The HRPF is a critical part of our strategy to transform our flat-rolled products business into a more competitive and consistently profitable business. It is designed to significantly expand our product offering capabilities, shorten manufacturing cycle times, reduce inventory requirements, and improve the cost structure of our flat-rolled products business. We expect to begin to realize these benefits in 2015 upon the completion of the commissioning process," Harshman said.