Allegheny (ATI) Forms 50-50 Joint Venture With Tsingshan
Zacks Investment Research | Mar 01, 2018 08:49PM ET
Allegheny Technologies Incorporated (NYSE:ATI) and Tsingshan Group have formed the previously announced 50-50 joint venture (JV) to produce 60-inch wide stainless sheet products for the North American market.
The JV will be a 50-50 equity investment with the partners sharing its cash flows and operating profit. Notably, sales of the JV will not be consolidated into Allegheny’s sales. All necessary regulatory and anti-trust clearances for the JV have been received on time and initial customer shipments are expected in the first half of 2018.
The JV will offer cost competitive stainless sheet products made for the North American market through a unique combination of Allegheny’s innovative, low-cost Hot Rolling and Processing Facility (HRPF) and Tsingshan’s unparalleled Indonesian refining, mining and castings assets, and the JV’s unique Direct Roll Anneal and Pickle facility in Midland, PA.
The JV supports Allegheny’s considerable investment in the U.S. manufacturing operations, especially its HRPF facility, which will provide value addition to the processing services for the JV’s finished products.
The move will also benefit Allegheny’s Flat Rolled Products (FRP) unit that employs more than 2,000 people in the United States. Moreover, the JV will lay foundations for the company’s long term objectives and additionally support job creation in the United States by directly creating roughly 100 manufacturing jobs in Western Pennsylvania, per the company.
Shares of Allegheny have moved up 12.1% over the last three months, outperforming the industry ’s gain of 6.6%.
Allegheny reported net earnings of $1.7 million or a penny per share for fourth-quarter 2017, compared with $9.9 million or 9 cents per share recorded a year-ago. Barring one-time items, adjusted earnings came in at 27 cents per share for the quarter, which surpassed the Zacks Consensus Estimate of 14 cents.
Allegheny expects continued operating margin improvement and revenue growth in its High Performance Metals and Components (HPMC) unit in 2018 resulting from improved asset utilization and ongoing aerospace market demand growth. The company also expects its FRP unit to build on the operational improvements and product mix benefits attained last year and increase operating margins.
Allegheny Technologies Incorporated Price and Consensus
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