PARIS, June 10 Steel pipes maker Vallourec
warned core profit would be 10 percent lower in 2014
compared with 2013's 920 million euros ($1.25 billion) as
customers - mainly Brazilian state oil company Petrobras
- run down inventories to save money.
Petrobras alone will account for some 60 million euros of
the slide in earnings before interest, tax, depreciation and
amortisation (EBITDA), which Chairman Philippe Crouzet on
Tuesday told reporters would amount to between 80 and 90 million
Crouzet said it would take Petrobras until about the end of
the year to run its pipe inventories down to nothing. He said
Petrobras was still committed to all high-value deepwater oil
projects, and so the impact of the inventory run-down would be a
"one-off" for Vallourec.
The French company said that throughout Europe, Asia the
Middle East and Africa, the level of orders had also fallen as
other exploration and production companies adjusted their
inventories and delayed some tenders for premium products.
"This will impact deliveries through the end of the year and
in the first half of 2015," Vallourec said.
To mitigate the impact of both factors, Vallourec said in a
statement it would cut capital spending for this year by some
100 million euros from an initially planned 500 million.
"The group is facing a more challenging environment mainly
due to temporary adjustments by selected large customers, and
has taken immediate measures to adjust to this new situation,"
Crouzet said in a statement.
"Management remains convinced of the long-term
attractiveness of the global oil and gas end markets the group
($1 = 0.7345 Euros)
(Reporting by Andrew Callus; Editing by James Regan)