Howmet Aerospace (HWM) Bernstein 41st Annual Strategic Decisions Conference 2025 summary

Market outlook and operational performance

• Narrowbody production, especially from Boeing, is showing improvement, with spares business achieving targets ahead of schedule due to content growth, increased share, and favorable pricing.

• The commercial truck wheels segment is facing some weakness, influenced by uncertainty and tariff-related issues at West Coast ports.

• Tariff impacts have been mitigated through strategies like trade agreements, exemptions, and limited production shifts, with net effects trending better than previously estimated.

• Production of engine parts is running ahead of industry needs, with inventory built up for new configurations and expectations for increased production rates as Boeing ramps up.

• Capital expenditure guidance has increased for 2025, reflecting plans to expand production capacity.

Product development and aftermarket trends

• Transition to new turbine blade configurations for LEAP and Geared Turbofan engines is ongoing, with legacy and new parts produced in parallel through at least 2026-2027.

• Aftermarket demand is expected to rise due to shorter lifespans of current blade designs and higher engine operating temperatures, leading to more frequent shop visits.

• Aftermarket revenue has doubled since 2019, now representing about 20% of total company revenue and approximately 40% of engine product revenue.

• The trend of increasing spares and service parts is projected to continue for the next decade, with a near-term spike due to current engine blade issues.

Margin improvement and automation

• Margins have improved through automation, process control, and productivity gains, with some plants producing more with half the workforce compared to 2019.

• Automation has enabled tighter tolerances and higher yields, especially as product complexity increases.

• New facilities and investments are being made to further enhance automation and capacity, with ongoing recruitment and equipment installation.