Specialty metals producer Allegheny Technologies Inc. on Wednesday reported third-quarter profit fell 26 percent because of lower metals prices and demand, and warned that fourth-quarter earnings will be well below a year ago.
Allegheny Technologies, parent firm of ATI Allegheny Ludlum, said profit for the quarter was $144.1 million, or $1.45 a share, on sales of $1.39 billion, compared to $193.9 million, or $1.88 a share, on sales of $1.33 billion, a year ago.
ATI's stock fell to $22.81 a share in trading yesterday, down $1.92, or 7.76 percent.
Pittsburgh-based ATI said pricing was more competitive in the third quarter and the company was caught in a situation where it purchased raw materials when prices were higher, but was selling those products when those prices had dropped, CEO L. Patrick Hassey said yesterday in a conference call. The company also suffered from a decreased demand for standard stainless sheet and plate products.
Hassey said the problem of dropping raw materials prices was a "double-edged sword" because ATI benefited from the fact that lower raw materials prices make it less likely that customers would buy imports when domestic prices are falling.
ATI "is not immune to the economic fallout from the global credit crisis," Hassey said. Demand and pricing for some of its major products are clearly being hurt by uncertainties in the U.S. and global economies, along with a machinist strike at aircraft maker Boeing Co. and a delay in its 787 Dreamliner airplane.
Sales for the quarter were 4.3 percent higher than in 2007 because international sales increased to a record $402.1 million, representing almost 30 percent of the total sales. Shipments of titanium products exceeded 12.5 million pounds, an increase of 19 percent compared to the third quarter of 2007.
ATI is anticipating growth in its defense armor products, based on the very large global armor market and the volume of customer inquiries, Hassey said. The oil and gas and chemical markets have been strong, as has been the electrical energy market, he noted.
ATI is expecting fourth-quarter results to be in the range of $1.00 to $1.10 per share, resulting in 2008 earnings ranging from $5.51 per share to $5.61 a share. Fourth-quarter 2007 earnings were $1.45 per diluted share.
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