Carpenter Technology Corporation (CRS - Free Report) is planning to build a manufacturing plant in China to address the rising customer demand in Asia. The move is driven by the rapid growth in that region. However, the Pennsylvania-based company has yet to finalize the location for the new facility.
The company said that the construction of the fully-owned metal bar finishing facility is expected to consummate in 18-24 months at a total cost of roughly $20 million. The plant will have an initial capacity to process roughly 1,500 tons of premium small diameter metal bars annually.
Carpenter makes specialty alloys, including stainless steels, titanium alloys and superalloys primarily for the aerospace and energy industries. It is a major player in the metallurgy industry along with Allegheny Technologies Inc. (ATI - Free Report) .
Carpenter’s revenues surged 33% year over year in the fourth quarter of fiscal 2012 (ended June 30), buoyed by solid growth in its Aerospace & Defense division. The segment benefited from strong demand for engine materials and higher airplane build rates. The company is poised to expand share in the aerospace market in 2012.
The company recently said that it is selling two of its distribution businesses to focus more on manufacturing and selling its core specialty alloys products for high-growth markets. It plans to reinvest the proceeds from the divestiture in its premium product businesses.
While Carpenter remains committed to expand its footprint across fast-growing overseas markets, it continues to concurrently invest on capacity expansions in its core U.S. operation to meet increasing customer demand. Its $500 million investment to build a premium product facility in Alabama and expansion of its Florida facility underlines this strategy.
Carpenter currently retains a Zacks #3 Rank, which translates into a short-term Hold rating.