Planned outage to force Haynes earnings down

High-performance alloy producer Haynes International expects fiscal first quarter 2019 revenues to fall below the previous quarter amid a planned outage on its bright annealing line and typical weakness in demand.

Indiana-based Haynes projects revenues for the three month period ending 31 December to decline below the $122mn earned in the prior quarter. The company expects profit to decline from a $2.1mn profit sequentially. The losses will be made up once the outage finishes around the end of 2018, Haynes said.

Haynes has been upgrading "certain components" for $2mn on one of the three annealing lines since mid-October. The upgrade is projected to take 10-12 weeks, or wrap up by early January 2019, and will raise cold-finishing production capacity from 13.5mn lbs to 18mn lbs.

Shipments in the year ending 30 September rose by 2pc to 18.4mn lbs. Demand from the aerospace market was up by 11pc, while chemical processing and other markets rose by 22pc and 12pc, respectively. Still, shipments for industrial gas turbine markets decreased by 36pc. If volumes fall below 20mn lbs, it "creates significant margin headwind," according to the company. Fiscal fourth quarter shipments grew by 6pc to 5mn lbs, matching this goal.

Order backlogs shrank by 2pc to $216mn by 30 September from a year earlier. The value dropped reflecting a 5pc decline in volumes, partially offset by a 3pc bump in average sales prices. European customers lowered orders over the summer, which was the main driver for the fall in volumes.

The company plans more effectively to draw on open capacity on major assets while managing product mix on constrained assets in order to improve sales prices, especially for proprietary alloys.

Revenues for the fiscal year increased by 10pc to $435mn. The company extended losses to $21.7mn, up from $10.2mn in the prior year period.

Fiscal fourth quarter revenues rose by 21pc to $101mn, while reversing a $3.7mn loss in the prior year quarter to earn $2.1mn in profit. Sales to the aerospace market increased by 22pc to $61mn, reflecting new generation engine sales. Industrial gas turbine market sales edged up by 6.5pc to $15.3mn, while other markets rose by 25pc to $22.3mn.