Albany International reports continued revenue drop
Aerospace manufacturing slowdown results in cuts in annual sales, earnings for New Hampshire firm
Albany international reported a big drop in revenue for the fourth quarter, the year, and perhaps next year as well. But the company increased its profit margins, and thus did better than expected, given the plunge in air travel in general because of the pandemic and the troubles of airplane manufacturer Boeing in the particular.
The Rochester-based firm manufactures material for components used by Boeing, whose 737 Max fleet was grounded in March 2019 due to major crashes in Indonesia and Ethiopia that resulted in the deaths of 346 people. Airlines have just started scheduling it for flights, but the backlog in components is expected well into next year as manufacturing of new planes isn’t expected to begin until April.
In its fourth quarter, Albany’s revenues totaled nearly $227 million, down 12% compared to the same quarter a year earlier, resulting in a net income drop of 5.5%, to nearly $28 million, or 85 cents a share.
That brought total revenue for the year to $900 million, down about 10% from $1 billion in 2019. Next year, the company projects revenue between $850 million and to $900 million. In 2020, net income fell 27%, to $97 million, or $3.05 per diluted share.
In 2021, the earnings could fall even more to as low as $2.40, the company said. Still, it said, in recognition of their work, it is giving out $1,000 across-the-board bonuses to employees.
“Albany International finished 2020 with another strong quarter, particularly in light of the challenging business conditions in some of our end markets,” said Albany International CEO Bill Higgins. “Our operations performed exceptionally well for customers and shareholders. Both segments delivered impressive profit margins despite top-line headwinds caused by the pandemic and the Boeing 737 MAX grounding.”
The grounding particularly affected the company’s Engineering Composite division, which makes components for the Max’s grounded LEAP-1B engines, as well as other commercial aircraft, none of which been much in much demand due to widespread commercial aviation slowdown. While the company expects air travel to rebound, there will be continued headwinds lag because of “inventory destocking.”
Already, the company had to reduce its workforce in Salt Lake City for instance, which produced frames for the Boeing 787 Dreamliner.
But Albany does expect that sales of its LEAP engines – produced in partnership with Safran in Rochester – will again take off because they go in narrow-body aircraft, used more in domestic travel, whose recovery is expected to get off the ground first.
Albany is also investing in the future, betting on 3D-woven composite technology, enabling airlines to fly lighter, saving fuel and helping them comply with more stringent energy standards.