Timken Steel expects its Q1 2020 shipments to increase from Q4 2019 by about 15pc, the company indicated while reporting its earnings for 2019.
The Ohio-based customized alloy steel products manufacturer expects a net loss in the range of $12-22mn in Q1 2020 and EBITDA to break even or increase by $10mn during the same period. It projected a capital spending of $30mn in 2020.
The company indicated it is taking major steps to streamline, improve cost structure, and manage proficiency in working capital, while focusing on customers and improving safety. It has reduced its salaried workforce by 14pc and has started divesting from its non-core assets, according to a company spokesperson.
The steelmaker shipped 898,300nt (814,900mt) of material in 2019, a 25pc decrease compared to 2018, driven by lower demand in the energy and industrial markets and lower shipments of oil country tubular goods billets. In Q4 2019, Timken shipped 179,700nt of material, a 39pc decrease compared to Q4 2018 as end markets faced double-digit decreases in volume percentage during the quarter.
The company’s net sales decreased by 25pc to $1.2bn in 2019 compared to $1.6bn in the prior year as improved prices and price mix were offset by less volume and surcharge revenue in a tough special bar quality steel market. Its net sales in Q4 2019 dropped by 44pc to $227mn from $406mn in Q4 of 2018.
Timken’s net loss increased to $110mn in 2019, compared with a loss of $10mn in the prior year. Its net loss in Q4 2019 was reported at $85mn compared to a $29mn loss in the same quarter of the prior year.
The company increased its operating cash flow to $70mn in 2019 compared with $46mn in Q4 2019, due to inventory reductions and precise management of other working capital components, leading to free cash flow generation of $30mn in Q4 2019.
The improvements made to working capital allowed the company to repay $20mn in debt during Q4. Timken had $230mn available liquidity at the end of 2019, its highest level in more than two years.