Carpenter Technology Corporation has announced net sales of US$455.6 million in Q1 2016, compared to sales of US$549.8 million in the same period of 2015. Operating income was US$24.8 million, an increase of US$2.7 million from the first quarter of the prior year.
‘Overall I am encouraged by how the team has responded to the industry challenges in the quarter,’ said Tony Thene, Carpenter’s president and CEO. ‘As we signaled in our most recent public comments, the weakness in the Energy end-use market continues to impact our sequential volume and operating performance. We have also seen this market weakness begin to affect order patterns for customers in our Industrial and Consumer end-use market. These challenges coupled with our normal seasonality, resulted in a 15% sequential volume decline in the quarter.
‘We continued to drive operating cost improvements and reduce overhead costs in our Specialty Alloys Operations (SAO) segment as operating margins were relatively flat sequentially notwithstanding the significantly lower volume,’ he noted. ‘ The cost improvement initiatives are particularly important in this environment of declining volumes and will better position us to capitalize on the operating margin benefits from these cost structure changes as the volumes return.
‘As expected, our Performance Engineered Products (PEP) segment was impacted by the lower sequential demand in the current quarter for Aerospace titanium fastener materials and powder products for the Industrial and Consumer end-use market,’ Thene added. ‘ The operating income results of the Oil and Gas businesses in PEP were sequentially flat as we continue to manage cost structure and take appropriate actions as a result of the depressed activity in this end-use market.
Future plans
‘As we move further into fiscal year 2016, we currently expect the second quarter volumes to be in-line with the recent first quarter. We also expect increased volume in the second half of fiscal year 2016 versus both prior year period and the first half of fiscal year 2016, driven by an increase in Aerospace demand and further opportunities in the Transportation end-use market. In addition, we will continue our focused efforts to drive further operating cost improvements and pursue initiatives to improve working capital. We remain committed to prioritizing our cash deployment to execute against the share repurchase program.’
This story is reprinted from material from Carpenter, with editorial changes made by Materials Today. The views expressed in this article do not necessarily represent those of Elsevier.