Precision Castparts Misses Q1 Expectations

reported weaker-than-expected results for its fiscal first quarter on Tuesday. The Portland, Oregon-based company posted quarterly net income of $399 million, or $2.87 per share, compared to $483 million, or $3.31 per share, in the year-ago period. Its income from continuing operations slipped to $2.87 per share from $3.32 per share. Its sales dropped to $2.41 billion from $2.52 billion. However, analysts were expecting earnings of $3.00 per share on revenue of $2.51 billion. The average estimate among 11 Estimize users was for earnings of $3.05 per share and revenue of $2.53 billion. Sales for Investment Cast Products segment rose 1 percent in the quarter, while Forged Products sales slipped 8 percent. Sales for Airframe Products segment dropped 3 percent for the quarter. Consolidated operating income declined to $618 million from $737 million, while operating margin narrowed to 25.7 percent from 29.2 percent. "Operationally, Investment Cast Products delivered solid performance, effectively leveraging volume growth into strong margin expansion versus the first quarter of fiscal 2015," said Mark Donegan, chairman and chief executive officer of Precision Castparts Corp. "Industrial gas turbine and the next generation aircraft engines remain solid demand drivers for the segment. Forged Products has appropriately adjusted its cost structure to the demand realities of the oil & gas markets, and this quarter marks a first step in the process of recovering a higher level of performance compared to the fourth quarter of fiscal 2015. While Airframe Products had a slow start to the year, reflecting fastener demand timing and also a heavy new product development load to support contracted share gains and program ramps in our Aerostructures operations, we expect improved performance through this year." For the full year, Precision Castparts projects earnings of $12.25 to $13.15 per share, on revenue of $10 billion to $10.4 billion. Precision Castparts shares fell 0.72 percent to close at $187.33 yesterday.