Allegheny Technologies Incorporated NYSE: ATI May 3, 2009. By: John Ortelle. What ATI Does. Allegheny Technologies aims to build “The best specialty metals company in the world.”
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By: John Ortelle
Suppliers: Raw material commodities.
Customers: Many large organizations with bargaining power such as Boeing, the US gov’t and large oil and gas companies.
Threat of new entrants: Large capital outlay required to enter market.
Threat of Substitutes: No real substitute for specialty metals in most applications.
Rivalry: Fairly intense rivalry between firms; ATI is one of the the largest and is attempting to differentiate through quality measures and large product offering.
$400m untapped domestic credit facility
Two new production facilities opening in ’09
Well diversified customer base
Total cash on hand exceeds total debt: $506m to $503.5m
Planned cost reductions in ’09 of $150m
Soft demand for most products
Sensitivity to economy
Lower profit margins due to raw materials mismatch charges of $60m in 1Q ’09. Will continue with $20m in charges in 2Q ’09.SWOT Analysis
Can take advantage of stimulus plans in the U.S. and China
U.S. DOD report calls for more ground combat and support vehicles– ATI can benefit by providing armor and metal for frames
Can take advantage of low raw materials costs
If economy recovers, ATI is in position to return to higher levels of profitability
Only 30% of sales international; room to expand.
Weak economy may not recover for some time
Future inflation may drive raw material costs up
Pricing environment may worsen due to competition
Weak demand may lead to reduction in capital expenditures.
Schedule pushouts in the aerospace industry may continue in the short term.SWOT Analysis