12/18/2015 12:01:00 AM
NEWS BRIEFS
Hedge Fund Boosts Stake in Precision Castparts

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Harvest Management bought a new stake in Precision Castparts Corp. during the third quarter, according to its filing with the SEC. The hedge fund bought 21,500 shares of the company’s stock, valued at approximately $4.94 million. PCC accounts for approximately 4.5% of Harvest Management’s portfolio, making the stock its 4th largest position.

Precision Castparts Corp. reported Airframe Products sales, including fasteners, declined 9% to $746 million in the second quarter of fiscal 2016, driven by lower aerospace and general industrial sales.  

Commercial aerospace was modestly lower, driven by continued inventory management efforts by key fastener customers. Aerostructures demand declined versus the prior year’s rapid growth due to the disruptive impact of new programs moving out of development and into production.  

Regional/business jet and military sales were also lower by double digits, primarily reflecting difficult year-over-year comparisons and lower military demand.  

“The segment remains focused on delivering to its customers’ demand in support of the next generation of commercial aerospace programs, and is well-positioned with multi-year contracts in place,” PCC stated.

Airframe Products operating income fell 23% to $191 million, and operating margins decreased 480 basis points from 30.4% to 25.6%, reflecting lower volumes and product mix, coupled with higher costs associated with new product introductions.

Consolidated PCC sales during Q2 declined 9% to $2.3 billion. Operating income fell 22% to $548 million, due to the negative impact of lower sales and pricing pressures in the oil & gas market, coupled with continued fastener destocking and operational challenges in the Airframe Products segment.

The company also incurred approximately $6 million of expenses associated with the pending transaction with Berkshire Hathaway Inc., which agreed to acquire PCC for $37.2 billion cash, or about $235 per share. The transaction is expected to close during the first quarter of 2016.

Related Links:

• Precison Castparts Corp.