UPDATE 2-A.M.Castle Q4 results beat Street, shares soar

* Q4 shr $0.23 vs est. of $0.09

* Sees a drop in Q1 revenue

* Says reduced workforce by over 8 pct during Q4

* Sees '09 capex declining to less than $10 mln

* Shares up 48 pct (Recasts; adds conf call details, analyst comment, updates share movement)

By Adveith Nair

BANGALORE, March 10 (Reuters) - A. M. Castle & Co (CAS.N) reported fourth-quarter results above analysts' consensus view, but the specialty metals and plastics distribution company sees a drop in first-quarter revenue due to reduced demand and lower selling prices.

"As 2009 has begun, we have seen continued sequential softness in demand as the overall economy has continued to weaken," Chief Executive Michael Goldberg said on a call with analysts.

Next Generation Equity Research analyst Nat Kellogg expects revenue to be down 20 percent to 25 percent year-over-year.

"One thing that should help, however, is improving gross margins, as they work through some of the higher priced inventory and reduce expenses. This should help offset lower revenue to some extent," Kellogg said.

The company, which supplies aluminum alloys to the aerospace and defense industries, also said it reduced workforce by over 8 percent during the quarter due to lower shipping levels.

Goldberg said by the end of the first quarter, the company would have reduced headcount by more than 10 percent, contributing to a greater than $45 million reduction in year-over-year operating run-rate.

A.M. Castle expects 2009 capital spending to decline to less than $10 million, half the $26.3 million it spent last year.

QUARTERLY RESULTS

For the latest fourth quarter, A.M. Castle earned 23 cents a share, before items. Analysts, on average, were expecting earnings of 9 cents a share, according to Reuters Estimates.

Analyst Kellogg said the fact that the company had a lot more exposure to stainless steel and aluminium, which did not see the big run-up in the first half of 2008 helped it, as pricing was comparatively steadier.