Albany International's 3Q income drops
But hopes are high for Safran partnership
Albany International Corp.’s third-quarter income of $4.7 million, or 15 cents a share, is about half the amount it was during the same quarter the previous year, mainly because of a slowdown in the paper machine clothing business, where the company makes most of its money.
But that result isn’t what the Rochester-based company considers important.
The big deal is its relationship with Safran Aerospace –the biggest customer in Albany’s new Engineering Composites unit. Safran has invested some $28 million in a joint venture, the Leading Edge Aviation Propulsion (LEAP) engine. It has tested successfully, and production of the engine – though a year later than expected – will also be higher than expected.
Albany is the exclusive supplier of all 3D woven parts for Safran.
Albany’s paper machine clothing business, however, still drives profits and cash. Machine clothing sales in the quarter ending Sept. 30 declined 8.2 percent, but they still account for almost 90 percent of the company’s $183 million revenue for that quarter, which was down 5.9 percent.
Year-to-date total sales were $568 million, $1 million short of 2012, resulting in net income of $8.8 million (28 cents a share) for the year, compared to $22.8 million last year.
CEO Joe Morone blamed the “disappointing” machine clothing unit’s quarter on weak Asian sales and a seasonal slowdown, though he said it was short term.
“We expect a strong first half in 2014,” Morone said.
Meanwhile, quarterly sales of engine components were up, by 18.5 percent, to $20.3 million.
Safran spent $28 million to get a 10 percent equity in a new Albany subsidiary, Albany Safran Composites LLC, with the potential of growing it to $267 million by 2019. While Albany can’t supply other aerospace engine manufacturers with products from the unit, it is free to work with automobile engine manufacturers.
Production is expected to start in 2016, with 1,700 engines expected to be built by early 2019 and perhaps 1,800 at the end of the decade. The previous estimate was 1,600 engines by 2020.