Mangels ups 2004 investment on higher demand

Brazil's ongoing better-than-expected economic recovery has led local metal products maker Mangels to almost double its planned investment for 2004 to 20mn reais (US$6.6mn), Mangels investor relations director Adelmo Felizati confirmed to BNamericas. Felizati said the company has to increase output to meet higher demand from the automotive and autoparts sectors for rolled steel products and wheels this year. Mangels had originally planned to invest 11mn reais this year, but in May the company's management approved a 70mn-real investment plan for the 2004-2007 period, given an improved market environment. Of that total, 20mn reais will be invested this year, another 20mn reais in 2005 and the remainder in 2006 and 2007. The company aims to increase its output capacity by 30% in its rolled products and aluminum wheels divisions, which are already operating at full capacity. It currently has an installed capacity to produce 10,000t of rolled steel products a month and 100,000 wheels a month. Mangels is also investing to start making cylinders for vehicular natural gas (VNG), Felizati said. The São Paulo-based company plans to raise 80% of required investment from banks, and is currently in talks with Brazil's national development bank BNDES, Minas Gerais-based development bank BDMG and international financial institutions. Mangels will pay for the remaining 20% from its own funds. 2Q04 RESULTS Mangels reported a second quarter net profit of 3.9mn reais (US$1.2mn), down 2.4% from 4.2mn reais in the same year-ago period, reflecting higher financial expenses due to a 6.8% loss of the real against the dollar during the period. Meanwhile, quarterly net sales revenue rose 9.4% from 2Q03 on the back of stronger demand. Mangels traditionally directs 20% of its sales volumes to foreign markets, but higher orders from local clients led the company to increase its share at home. Felizati said exports accounted for just 13-14% of sales volumes in the second quarter.