RTI will continue to invest in plants, its president says
An executive won't say if investments in 2008 will equal those from this year.
By DON SHILLING
VINDICATOR BUSINESS EDITOR
WEATHERSFIELD -- RTI International Metals will continue to invest in its plants to take advantage of the boom in titanium demand, its president said.
Timothy Rupert told industry analysts on a conference call Friday that he expects RTI will spend 80 million on capital improvement projects this year. The company spent about 36 million last year.
RTI last year announced 78 million in improvements, including an 8 million upgrade to its RMI Titanium mill in Weathersfield. Those projects are continuing.
More projects are under review, Rupert said. Future projects will depend partly on whether the company signs long-term supply contracts, he said.
One analyst asked whether RTI would spend about 80 million on improvements in 2008 or if this year is an unusual year because of the large projects that have been announced.
Rupert said he wasn't sure. It's too early to say how much more the company will want to expand, he said.
RTI will be guided by the needs of its customers and not worldwide supply-and-demand trends, he said.
There's no doubt that the titanium demand will continue increasing, and other suppliers are adding capacity as well, he said.
"There is an awful lot of demand out there, maybe more than has been announced," he said.
Demand is being led by an increase in air travel, which has created more airplane orders, and new airplane designs, which call for more titanium.
Predicted increases
Chris Olin of Cleveland Research asked Rupert if his forecast for 2007 was too conservative given the boom. Rupert said he expects sales to increase 20 percent to 25 percent this year and operating profit to rise by 35 percent to 40 percent.
Rupert said observers must remember that the company has nearly reached capacity on titanium production. It produced 15 million pounds last year and expects to increase that by about 5 percent this year, he said.
It is adding two melting furnaces at a Canton plant, however, which will boost its annual capacity to 23 million pounds.
Rupert said he wasn't sure if the equipment will be installed in time for orders to be produced and shipped this year.
Upgrades
In Weathersfield, RTI is upgrading its forging operations, where it takes titanium from melting operations and cuts and shapes it.
Besides titanium production, RTI also has a fabrication and distribution group, which has plants in other parts of the U.S. and Canada.
Rupert told analysts that RTI is continuing to look at buying small- or medium-sized fabricating companies that would offer the right capabilities.
When asked about a consolidation among the few major titanium producers, Rupert said that it would be possible but hasn't seen anything to make him think deals are on the horizon.
RTI announced Thursday that it had record earnings for 2006. It earned 75.7 million on sales of 505 million last year, compared with 38.9 million on sales of 346.9 million in 2005.
RTI employs 400 hourly and salaried workers at its Weathersfield mill and 100 at its corporate offices.
shilling@vindy.com