TIMET warns of more production cutbacks

Thursday, Dec. 23, 1999 | 11:02 a.m.

A slump in sales to the aerospace industry prompted Titanium Metals Corp. on Wednesday to reduce quarterly sales estimates and warn of potential layoffs at production plants.

The Denver-based company said the workforce reduction would be 6 percent of the third-quarter employment level for the company worldwide by early next year. The company did not specify what TIMET plants would be affected or whether layoffs are imminent at the company's Henderson plant near Las Vegas.

Tom Montgomery, vice president of finance for TIMET in Denver, said today that there already have been job reductions at the Henderson plant this year, some through attrition, but he couldn't say how many and would not say if more are planned.

Steelworkers Union officials said in October that about 60 people had been laid off at the Henderson plant in the last year and there now are about 300 workers there.

TIMET said fourth-quarter losses would be between 30 cents a share and 35 cents a share before special charges on sales of $95 million to $100 million. Analysts had estimated losses would be around 21 cents a share.

The quarterly sales volume is the lowest in four years. TIMET said it doesn't anticipate significant sales to Boeing Co. in 2000 and 2001.

"They've told us they already have a lot of metal in the pipeline they need to use up before buying more," Montgomery said of TIMET's long-term contract with Boeing.

Boeing has told TIMET that it wants to modify its contracts with all its titanium suppliers. Montgomery said the company is evaluating its options in light of Boeing's plans and the company may have to take additional charges and lay off more people in the first quarter of 2000.

Montgomery said TIMET does not have a long-term contract with the world's other major aircraft manufacturer, Airbus Industries.

In the fourth quarter of 1998, TIMET lost $2.5 million, or 8 cents a share, before restructuring charges of $18 million, on sales of $156.3 million. The company would have earned 30 cents a share without the charges.

For the 1998 fiscal year, the company reported earning $45.7 million or $1.46 a share, including charges, with sales of $707.7 million.

Wednesday's announcement forced TIMET stock down 25 cents this morning to $4.50 -- its 52-week low.