Universal Steel plans to renew its targeted growth on premium alloys through new products and approvals, especially for the defense sector.

 

The specialty steel manufacturer indicated in its  H1 2020 and Q2 2020 earnings report that demand for premium alloys remained high for defense and specialty applications despite the setbacks from other key customers such as aerospace and oil and gas industries, who have suffered the economic effects of the COVID-19 pandemic.

 

In H1 2020, the company’s premium alloy sales fell slightly to $20.1mn from $22.2mn achieved during the first six months of 2019. However, the share of premium alloys sales increased to 18.1pc of total sales compared with 16.9pc of sales during the same period under comparison. Overall, Universal’s sales fell to $111mn in H1 2020 from $131.3mn during the same period last year.

 

The Pennsylvania-based steelmaker’s total sales in Q2 2020 stood at $52.5mn, down by 26.1pc from $71mn during the same quarter last year and by 10.3pc from $58.5mn in Q1 2020. Premium alloy sales however increased by 62.3pc to $12.4mn in Q2 2020 from $7.7mn in the previous quarter even though they declined by 2.9pc from the record $12.8mn sales achieved in Q2 2019.

 

The company’s order backlog also reduced during the first six months and in Q2 2020 owing to the continued “dislocation in the metals supply chain” due to the pandemic, according to Dennis Oates, chairman, president, and chief executive officer of Universal Stainless. In Q2 2020, order backlog reduced to $71.8mn from $116.9mn at the end of the same quarter last year, and fell from $110.7mn at the end of Q1 2020.

 

The company’s gross margins in Q2 2020 were also impacted by a $0.2mn charge because of reduced production levels and a $0.4mn loss after selling excess scrap. Excluding these charges, gross margin totaled $2.5mn or 4.8pc of total sales. The firm also reported a net loss of $4.7mn in H1 2020 compared with a $3.3mn profit during the same period last year. Its Q2 net loss totaled $3.3mn compared with a net income of $2.1mn during Q2 2019. 

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