Carpenter Technology Corporation (NYSE:CRS) today announced it will
close its Crawley, UK, metal strip manufacturing facility as part of an
overall plan designed to reduce fixed costs and more efficiently utilize
its production capabilities.
The Company also announced that sales and operating margins for the
second half of its fiscal year are expected to fall below its previous
estimate that revenues (excluding raw material surcharges) would be
20-25% lower than the second half of FY2008 with low double-digit
operating margins.
Facility Closure
The operations of Carpenter’s UK strip facility will wind down during
the next several months with final closure targeted for June 30, 2009.
The UK facility employs 33 workers and manufactures soft magnetic
nickel-iron and cobalt-iron alloys in strip and bar form. The facility’s
customers will be serviced by operations in Reading, Pennsylvania, and
through arrangements with other suppliers.
The closure of the U.K. strip operation is expected to have a one-time
profit impact of approximately $8 million. The cash cost of the shutdown
is projected to be $2 million, which should be offset next year by
expected savings from the closure. Part of the charges associated with
the plant closing will impact the third fiscal quarter with the majority
of the costs affecting fourth quarter results.
Revised Outlook
Carpenter’s overall outlook for the remainder of its fiscal year has
been adjusted downward. "Revenue declines, excluding the impact of raw
material surcharges, are expected to be at the low end of the 20-25%
range we previously projected for the third quarter,” said Anne L.
Stevens, chairman and chief executive officer. “Based on our current
view of end market conditions and customer inventories through the end
of our fiscal year, revenues will likely decline further, resulting in a
fourth quarter operating loss.”
Stevens said third quarter operating performance showed improvement in a
number of areas, and management continued to reduce expenses and adjust
manufacturing costs to the lower production levels. “However, the
combination of lower volume and aggressive actions being taken to reduce
our second half inventory levels have hurt our margins more than
previously expected,” Stevens said. “These, together with costs
associated with closing the UK facility, will likely result in a third
quarter operating margin below our prior estimate.”
“In the 4th quarter, we expect to report an operating loss
due to the higher impact of the U.K.
