By Inti Landauro
PARIS--French steel pipe maker Vallourec (VK.FR) reiterated its
targets for this year but warned the weak Brazilian real and the
slowdown of drilling in the South American country may jeopardize
its goals.
In a statement released late Thursday, Vallourec's Chief
Executive Philippe Crouzet said the company still targets higher
sales this year and an improvement of its earnings before interest,
depreciation and amortization margin. "The recent weakness of the
Brazilian real against other currencies and the temporary reduction
of demand for new wells in Brazil will slightly dampen this
improvement," he said.
The company still expects its pipes for the oil and gas industry
to keep driving its growth for the foreseeable future, boosted by
demand from shale gas extraction, as well as other non-conventional
sources of hydrocarbons in areas such as Brazil where the Vallourec
pipes have a competitive advantage.
In the short term, though, Brazil's weak currency has pushed the
state-controlled company Petroleo Brasileiro SA (PBR) over the past
months to slow its exploration activity, which means fewer
exploration wells. This market trend in Brazil is expected to last
between the fourth quarter of this year and the first half of next
year.
Vallourec doesn't see its other businesses improving in the
coming months, with the exception of the Brazilian automotive
market.
Write to Inti Landauro at inti.landauro@wsj.com
