Boulogne-Billancourt, France-based Vallourec, world leader in premium tubular solutions, has announced the downgrading of its EBITDA outlook for the second half of 2011. The current business environment remains positive in energy markets, and so Vallourec forecasts an increase in volumes and sales in the second half of 2011 compared to the first half. Costs associated with new projects - essentially VSB in Brazil and the new rolling mill V & M Two in Youngstown, Ohio, US - are confirmed at approximately €110 million over the full year of 2011, including €60-70 million over the second half of the year.
Taking into account the cautious attitude of the distributors in non-energy markets as a consequence of economic uncertainties, as well as the negative effect resulting from the recent evolution of the Brazilian real against the euro, the EBITDA of the second half of 2011 is expected to be similar to that in the first half of 2011.
Looking at 2012, the prospects for the oil and gas markets remain favourable, despite the uncertainties of the macro-economic environment. The impact of the new projects on the full year EBITDA is expected to be reduced to an estimated negative €60-80 million in 2012, mainly reflecting the startup costs of V & M Two in the first half of the year and the impact of VSB's not yet fully optimized load and mix during its ramp-up phase. Entering into 2012, Vallourec will benefit from selling price increases implemented in 2011.