1/27/2011 11:50:00 AM
NEWS BRIEFS
Industrial Fastener Sales Boost Precision Castparts Results
Precision Castparts Corp. reported sales for Fastener Products increased 6.6% to $344.1 million in the third quarter of fiscal 2011.
Aerospace sales grew by approximately 5% year over year, primarily due to increasing share in new product families, along with aerospace OEM orders coming into line with aircraft build rates and slightly improved aftermarket activity.
Nine-month fastener sales edged up to $1 billion, while operating income declined 8% to $306 million.
“There are two major catalysts that will spur the next significant acceleration in our aerospace sales growth,” Donegan said. “At an average of $5.5 million worth of PCC content per aircraft, the 787 provides us with a great growth platform for years to come. We had begun to see increases in engine schedules as early as the third quarter, but, as aircraft delivery schedules have slipped to the right, we will likely have to wait another four to six months or so for sales to ramp up.
“Higher 787 production levels will also be a major driver of fastener sales. While fasteners comprise about half of our total dollar value on the aircraft, we are seeing very little activity on that front right now.”
“The second catalyst will be the acceleration of our fastener distribution schedules, from which we expect solid growth as soon as the middle of calendar 2011. We are strongly positioned to reap the benefits of these significant events as they occur.”
“We will also benefit over the next few years from the announced build rate increases in the base commercial narrow-body and wide-body programs, and aerospace aftermarket sales of cast and forged components have already begun to improve.”
In addition, Fastener Products’ general industrial sales were 15% higher than last year’s third quarter sales. Distributor demand for aerospace fasteners is holding steady but showing minimal signs of traction; as of today, these schedules are expected to accelerate by the second quarter of fiscal 2012.
The fastener segment’s operating income was $104.8 million, or 30.5% of sales, down from operating income of $105.8 million in the third quarter of fiscal 2010.
“We seem to have finally put destocking behind us and closed the gap between our casting and forging orders and aircraft build rates,” said CEO Mark Donegan. “From this point, the commercial aerospace operations of those two businesses should track fairly closely to aircraft delivery schedules.”
“General industrial sales have also made a strong contribution to our year-over-year sales growth, and, with additional opportunities for further market penetration, should continue to provide modest sequential upside.”
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