Allegheny Technologies (ATI) has forecasted a normalization of its operations and production by next year before they strengthen further by 2022.
The company, which reported its Q2 earnings on Tuesday, said that its cost savings efforts during the quarter, have been in line with expectations. According to Robert S. Weatherbee, president and chief executive officer, ATI, the company could exceed its cost savings target by at least $25mn, which would result in savings of $140-160mn by the end of the year.
In Q2 2020, ATI’s consolidated sales fell to $770mn from $1.1bn during the same quarter last year. The company attributed the fall to weak demand and a significant decline in orders from the commercial aerospace industry, a key customer for ATI.
Sales in the company’s High-Performance Materials & Components (HPMC) business fell 44pc to $300.7mn in the second quarter from $533mn in Q2 2019, with sales to the segment’s commercial aerospace customers halving during the same period under comparison. Orders from the defense sector, however, increased during the period with sales to this industry rising by 35pc in Q2 2020 from Q2 2019. Reduced demand in the segment also resulted in more than 10pc workforce reduction of this business, ATI reported.
The firm’s Advanced Alloys & Solutions (AA&S) business segment fared slightly better, with the business’ overall sales during the quarter reducing by 14pc to $469.6mn from $547.3mn in Q2 2019. In AA&S too, declines were led by a 21pc decrease in sales to commercial aerospace customers even though defense sales increased by 13pc during the same period under comparison.
The company reported a net loss of $2.3mn in Q2 compared with a net income of $75.1mn during the same quarter last year. The firm’s EBITDA fell to $57.6mn from $149.1mn during the same period under comparison.