By Inti Landauro
PARIS--French steel pipe maker Vallourec SA (VK.FR) Tuesday cut
its full-year guidance for 2014 after large clients delayed orders
until next year.
The company said it now expects earnings before interest, taxes,
depreciation and amortization, or EBITDA, in 2014 will be 10% lower
than the 920 million euros ($1.24 billion) booked last year.
Vallourec previously expected EBITDA to be the same level as in
2013 or slightly higher.
Brazilian state-controlled oil company Petrobras, which picked
Vallourec as its exclusive supplier, decided to eliminate its
inventory of pipes this year and delay all new orders until 2015,
Vallourec's Chief Executive Philippe Crouzet told reporters during
a conference call. Petrobras represents between 5% and 10% of
Vallourec's overall sales, he said.
Founded more than a century ago, Vallourec has become a key
supplier of high-end steel pipes for the oil and gas industry. It
has benefited in recent years from rising demand from the U.S.
shale gas industry, as well as in Brazil, where it supplies pipes
for the exploration of extra-deep fields, known as pre-salt.
The company will also suffer from order delays in the Middle
East and in the North Sea, as well as falling iron ore price at its
mines in Brazil.
Mr. Crouzet said Petrobras will maintain its investment plans
over the coming years and will order the same number of pipes as it
originally announced.
Vallourec said the delays mean it will reduce its investment
program by EUR100 million to EUR400 million this year to maintain
the level of its free cash flow.
Write to Inti Landauro at inti.landauro@wsj.com
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