Specialty-Metals Producer Allegheny Technologies Posts 25% Drop in Net Income on Sharp Demand Decrease

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Researched by Industrial Info Resources (Sugar Land, Texas)--A combination of negative economic events has pulled down Allegheny Technologies Incorporated's (NYSE:ATI) (ATI) (Pittsburgh, Pennsylvania) fourth-quarter 2008 profit by 25.5% to $110.9 million, compared with $148.9 million year over year. Sales dropped 12.6% to $1.11 billion down from $1.27 billion in 4Q07. For the full year, net income dropped 24% to $565.9 million from 2007's $747.1 million, although year-over-year sales only showed a 2.6% dip to $5.31 billion, compared with $5.45 billion.

Looking forward, the company doesn't expect the challenges to go away in the near term. "A continuing credit crisis leading to frozen new project lending in some of our markets, the global recession and its resulting circumstances of uncertainty and lack of forward visibility for customers, and the short-term impact of the precipitous drop of metal prices during the fourth quarter of 2008 are expected to negatively impact ATI earnings in the first quarter of 2009," said L. Patrick Hassey, Chairman, CEO and President.

The company said it expects 2009 capital expenditures to be about $450 million, down from an initial announcement of $600 million. The change is due to plans to revise project schedules in light of the economy. Industrial Info is tracking seven projects worth $1.71 billion involving ATI as part of our North American Project Database. The database includes information on the grassroot premium titanium sponge facility in Utah, which is now expected to start up in late 2009. Industrial Info has been tracking this project since June 2006.

"We will see through the fog of uncertainty and risk, deploy and execute our plans to effectively compete, operate and navigate the recession for as long as it lasts, while looking to position ATI for long-term success where opportunities may arise," Hassey said.

ATI is one of the world's largest specialty-metals producers, with 9,600 employees worldwide. The company's products include titanium and titanium alloys, stainless and specialty steels, and forgings and castings for markets such as aerospace, defense, chemical processing, energy and mining.

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