Howmet CEO Comments on GE Aerospace-CPP Acquisition Amid Surging Demand
Howmet's Response to GE Aerospace's CPP Acquisition
By Allison Lampert
Overview of the Acquisition Deal
Sept 9 (Reuters) - Howmet Aerospace's CEO said on Wednesday he is fine with a $12 billion deal by GE Aerospace to acquire a castings giant, even as the company's own growth to meet customers' vast demand for jet engine parts is "testing us."
GE Aerospace announced plans on Tuesday to acquire Consolidated Precision Products (CPP) to address jet-engine supply bottlenecks, leading shares of Howmet, a major producer of castings, to close down 10%.
CEO John Plant's Perspective
CEO John Plant told the Jefferies Global Industrials Conference in New York that Howmet remains confident in its own abilities even as he expects GE to invest in growing its smaller rival CPP through the acquisition.
Confidence in Howmet's Position
"And you saw the intent, you know, yesterday was to look at developing it over the years. And I think we should be fine with that," Plant said.
Concerns About Future Competition
"I know the question is, if there is additional investment and capacitization of CPP in the future, is that (to) the detriment of everybody else, or is it one of our competitors, or is it more aimed at the turbine side or the structural casting side?"
Market Demand and Operational Challenges
Soaring Demand for Engine Parts
Demand for engine parts is soaring as commercial planemakers and defense contractors ramp up production. Howmet also produces blades and vanes for gas turbines used in data centers, which are growing due to demand for AI.
Operational Strain and Capital Expansion
"It is testing us in many ways because, you know, we hadn't thought we were going to be there building this amount of equipment," he said.
"The sheer scale of the capital expansion is certainly testing us."
Future Revenue Goals and Outlook
Upcoming Updates on Revenue Targets
Plant said he would give an update on Howmet's longer-term revenue goals within the next few earnings calls.
Potential Doubling of Revenues
"My statement was that we would, from the 2025, we would see a doubling of our revenues somewhere in the three- to five-year time period," he said. "I think I'm going to update that not today, but you know it will be coming at some point."
(Reporting by Allison Lampert and Megavarshini G. Somasundaram in Bangalore; Editing by Andrea Ricci )
