Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Carpenter Technology plans to generate free cash flow and positive adjusted EBITDA in FY 2021 despite a forecast of slow demand during the period. 


The specialty alloys solutions provider reported that it has ample liquidity to face the challenges related to COVID-19 and is confident about emerging stronger in the new financial year. The company was reporting its outlook for Q4 2020. 


In Q4 2020, the company will reduce its production schedules, operating strictly for firm orders only to reduce inventory by around $100-200mn.  


Segmentwise, Carpenter expects a 20-30pc production drop in its Specialty Alloys Operations (SAO) business in Q4 2020, with income from SAO projected at around $4-8mn. The company attributed the potential reductions to economic disturbances due to the pandemic and to the near-term challenge in the aerospace supply chain. 


Carpenter’s Performance Engineered Products (PEP) segment has also been negatively affected because of weak demand with the company projecting an operating loss of around $8-10mn in Q4 2020. 


According to the company’s preliminary estimates, it expects a total adjusted operations loss of around $16-21mn and $90-100mn in free cash flow in Q4 2020. 

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