787 issues don’t affect RTI
So far, RTI International Metals Inc. has not seen lithium battery problems with the Boeing 787 dreamliner affect production or orders.
Pittsburgh-based RTI, which employs more than 350 workers in its Weathersfield Township plant, is a key supplier of titanium for the dreamliner that uses significantly more titanium than previous aircraft. RTI manufactures precision machined titanium components for the passenger jet.
The Federal Aviation Administration last month grounded the new aircraft, however, after a Jan. 7 fire believed to be caused by the battery.
RTI President and CEO Dawne Hickton spoke about the issue during a conference call Wednesday.
”The most recent uncertainty with the most potential impact on RTI has been the grounding of the Boeing 787. In that regard, although the investigation into the lithium ion battery remains open, RTI’s production plan for the 787 has not been changed for any of our businesses,” Hickton said. “We have been advised to proceed with our schedule to produce 75 ship sets this year, which is an increase of over 30 from 2012.”
Hickton noted that she still expects accelerated production for the 787 components during the second half of this year.
But one analyst has said the longer the 787 remains grounded, the more likely Boeing will consider slowing production, a decision that would hurt RTI.
“As long as (the) 787 remains grounded, Boeing is faced with the choice of either slowing production or building physical inventory. It will build inventory for now,” UBS analyst David Strauss said.
Boeing already has about 46 787s that have been built but not yet delivered. Many of those were built early on and require more work before they can be handed over to customers.
Boeing currently is producing five 787s per month. After the groundings, it reiterated its plans to boost production to 10 per month by the end of the year, and said it planned to deliver at least 60 of the jets this year.
Despite the uncertainty, RTI, which also specializes in defense, medical and energy markets, reported a strong outlook, record revenues last year and more than 98 percent increase in operating income in 2012 over the previous year.
During the fourth quarter of 2012, the company reported that net sales rose almost 40 percent. Hickton said Titanium mill product shipments during the quarter were 3.7 million pounds at an average price of $19.13 per pound. This compares to fourth quarter 2011 titanium mill product shipments of 4.0 million pounds at an average price of $19.11 per pound.
For the year, net sales rose almost 40 percent to $738.6 million, and net income was $23.5 million for 2012, versus net income of $6.6 million for 2011.
Hickton also pointed out that the company’s partners in the energy industry led to a pickup in orders for components used in the oil and gas industry.
RTI on Wednesday also announced a new management organizational structure that combines the global operations of the company into two business segments, one focused on titanium and one for engineering products and services.
The Associated Press contributed to this story.