Recent troubles at the 8-month-old Alcoa spinoff range from badly made turbine discs for Boeing’s 737 to the cladding blamed for the disastrous apartment tower fire in London.
It’s been eight months since Arconic split from aluminum giant Alcoa.
In that time, it endured a bruising proxy battle that cost the CEO his job; had one of its products implicated in London’s deadly high-rise fire; and, now, in the latest blow, suffered quality problems with a jet-engine part that forced Boeing to delay delivery of a highly sought-after plane, according to people familiar with the matter.
The missteps are complicating Arconic’s nascent strategy to remake itself by focusing on selling high-value products for the aerospace and automotive industries, while Alcoa sticks with the slow-growing aluminum business. It was seen as a tricky transformation in any case, but now, at least initially, it’s been made more challenging without a permanent chief executive officer to guide the company through the high-profile distractions. After peaking at $30.55 in February, the stock has sunk 25 percent.
“It’s not been an easy ride,” said Josh Sullivan, an analyst with Seaport Global Securities.
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A spokeswoman for Arconic declined to comment.
Klaus Kleinfeld, who had pushed the corporate split, stepped down as Arconic’s CEO in April after sending an unauthorized letter to Elliott Management boss Paul Singer in the midst of the proxy fight. Elliott described the letter as intimidating and Arconic directors said Kleinfeld showed “poor judgment.’’
The shareholder fight ended in a truce in May when Elliott won the right to three seats on Arconic’s board. Appointment of a new CEO is expected later this year. Analysts say that Arconic is positioned to expand profit margins, particularly if it can further bolster its roster of leaders with aerospace experience.
Last week, the New York-based company spooked Wall Street after disclosing its role in the June 14 U.K. fire tragedy, which may make it vulnerable to big litigation bills. Arconic, when it was still part of Alcoa, supplied a product that was used in the cladding system for Grenfell Tower.
Arconic drew criticism over its disclosures in response to media inquiries. On June 26, the company said it would stop selling the product, known as Reynobond PE, and later that day clarified that it had provided one component to the cladding, but not the insulation thought to have spread the fire.
Arconic’s involvement in the tragedy was material information, judging from the market response, and should have been disclosed earlier, according to Carol Levenson, research director with Gimme Credit Publications.
“Ironically, the management that Elliott complained about so bitterly is gone,’’ Levenson said in an email. “But the way Arconic handled the Grenfell situation seems to have been with classic Arconic (and…