Confab to invest US$2.8mn in new company

Brazilian steel tube maker Confab (NYSE: CSFB) plans to invest US$2.8mn in a new company that will make pumping rods for oil extraction on land, business daily Valor Economico reported, quoting the company's CFO Mario Lalla. The project, expected to begin operations in 12 months, is forecast to generate annual income of US$5mn. Diversifying into new markets will help to reduce the company's dependence on the oil pipeline business, according to the paper. The company posted a net loss of 9.4mn reais (US$3.28mn) for the third quarter, compared to a net profit of 71.1mn reais posted in 3Q02. The loss comes from a fall in sales that resulted from project delays and Brazil's economic crisis, the paper said. Quarterly net revenue totaled 216mn reais, down 43.6% from the 383mn reais posted in the same period the year before. At the end of September, Confab's orders reached 371mn, far below the 1bn reais registered a year ago. Lalla said that in typical years, orders are over 500mn reais. Tube sales volumes for the quarter were 62,000t, down from the 104,000t from 3Q02. In October, and not included in the company's portfolio of projects at the end of September, is a 97mn reais order to supply pipes to a gas pipeline in Trinidad and Tobago, the paper cited Lalla as saying. The executive also said that Confab and Argentine pipe and tube maker Siat is likely to supply the US$1bn pipeline to be constructed by Argentine group Techint. Sao Paulo-based Confab is part of the Luxembourg-based steel tube group Tenaris (NYSE: TS), which in turn is controlled by Techint.