Specialty metal manufacturer Allegheny Technologies Inc. is restructuring its Engineered Products division, an effort that will see it sell an Indiana ferrous foundry. That decision, and others, resulted from ATI’s recent strategic review of its assets. The company also is reporting lower 3Q income, which it attributed to weaker demand from the aerospace sector.
The foundry, ATI Casting Service in Laporte, IN, produces gray and ductile iron castings from 500 to 200,000 lb., for manufacturers of wind turbines, industrial gas turbines, railroad structures, and machine tools.
Pittsburgh-based ATI did not indicate any potential buyers for the foundry. It will retain two other metalcasting operations in its portfolio: ATI Pacific Cast Technologies, Portland, OR, which produces nonferrous investment castings for aircraft OEMs; and ATI Wah Chang, Albany, OR, which manufactures corrosion-resistant rammed graphite castings for chemical processing, oil-and-gas, aerospace, nuclear, and power-generation industries.
ATI said it has been restructuring the Engineered Products businesses for over a year. That process led to the recent decision to sell its tungsten materials business to Kennametal Inc. The process also drove a recent realignment of theATI Portland Forge operation into the ATI Ladish business structure, “to improve operating and manufacturing efficiencies.”
Also, ATI said it “integrated” its titanium and specialty alloy flat-products finishing operations into the ATI Allegheny Ludlum specialty plate business.
In addition, as a result of its review, ATI closed its fabricated components business. The sale of the foundry and other adjustments following the strategic review will result in a $9-million pretax charge for the third quarter, the company said.
"These strategic actions are designed to position ATI for improved financial performance in 2014 and beyond, simplify capital allocation decisions, and enhance our focus on ATI's strategic businesses," stated chairman, president, and CEO Rich Harshman.
3Q Costs, Shipments, Income
All the changes were announced in coordination with Allegheny Technologies third-quarter earnings statement. The company expects 3Q 2013 sales of approximately $970 million and total segment operating profit of $25 million-$30 million.
“Third quarter results continued to be negatively impacted by lower shipments associated with many high-value and standard products, lower base-selling prices for many products, and the impact of higher raw material input costs for products with longer manufacturing cycle times not aligned with falling raw material sales indices and surcharges, which continue to negatively impact raw materials cost recovery,” according to the company’s announcement.
Harshman described “expected, challenging conditions” that continued to frame ATI’s financial performance during the recent order: "Jet engine destocking at OEMs, while beginning to show signs of stabilizing, continued to impact shipments of both mill products and forged and machined components in our High Performance Metals segment,” he stated.
“Global economic uncertainties impacted project-related demand for our Flat-Rolled Products segment industrial titanium and nickel-based and specialty alloy sheet and plate products.”
ATI forecast a 3Q 2013 loss from continuing operations to be approximately $(0.27) to $(0.30) per share.