UPDATE 1-Vallourec confirms forex, Brazil to weigh on 2013 results

Thu Nov 7, 2013 1:03pm EST

Related Topics

* Sales rise 3.4 pct to 1.379 bln euros, miss consensus

* CFO welcomes ECB rate cut amid sluggish EU industry

* Sees no sign of recovery in U.S. shale gas market (Adds detail, CFO comments)

PARIS, Nov 7 (Reuters) - French steel tube maker Vallourec posted higher third-quarter sales, driven by its oil and gas markets, but warned that adverse foreign exchange rates and a slowdown in Brazil would weigh on the next two quarters.

It warned in September that a weak Brazilian real and lower demand for new oil and gas wells in Brazil could limit growth in revenue and gross margin this year.

A bellwether for investment in heavy industry, Vallourec makes seamless steel tubing used in oil and shale gas drilling, the automotive industry as well as building components.

It joins a string of European companies to blame a strong euro exchange rate for slashing the value of overseas sales, and to complain of weaker equipment spending as the economies of Europe and the United States remain sluggish and those in emerging markets show signs of a slowdown.

Chief Financial Officer Olivier Mallet said he was relieved by the European Central Bank's decision earlier in the day to cut interest rates.

"We had been watching with concern the weakening of the dollar over the past weeks, and in this respect, the ECB's decision is welcome," Mallet said a conference call.

However, Vallourec said it saw no signs of recovery in its European industrial markets nor in the U.S. shale gas market and said its product mix there was mainly driven by lower-margin products used in shale oil drilling.

"While these temporary factors will also affect the next quarters, Vallourec remains very much focused on strengthening its premium positioning and enhancing its operating efficiency," Chief Executive Philippe Crouzet said in a statement.

Sales rose 3.4 percent to 1.379 billion euros ($1.85 billion) in the third quarter, missing a company-provided market consensus of 1.437 billion.

Earnings before interest, tax, depreciation and amortisation (EBITDA) rose 15.4 percent to 240 million euros, with an EBITDA margin up 1.8 percentage points to 17.4 percent.

Net income rose 29 percent to 80 million euros.

Vallourec shares, which have gained over 10 percent since the start of the year, closed at 43.58 euros before the release of the results, valuing the company around 5.5 billion euros.

($1 = 0.7472 euros) (Reporting by Natalie Huet and Benjamin Mallet; editing by David Evans)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.