Ipsco Net Rises to Record on Oil-Industry Steel Sales
Ipsco Inc., a maker of steel pipe for oil and natural-gas companies, said third-quarter profit rose 47 percent to a record as the company’s tax rate fell and demand improved for metal equipment used in energy exploration.
Net income rose to $197 million, or $4.15 a share, from $134 million, or $2.78, a year earlier, Lisle, Illinois-based Ipsco said today in a statement distributed by PRNewswire. Sales rose 37 percent to a record $997 million in the quarter.
Demand for pipes from the energy industry has surged as oil prices jumped to a record this year and infrastructure spending increased. Companies such as Royal Dutch Shell Plc are increasing exploration to stem a decline in reserves, and drilling that involves metal pipes to capture and transport oil and gas has jumped 22 percent this year, Baker Hughes Inc. says.
“Record sales volume and higher margins driven by record average product pricing pushed earnings above the high end of our guidance for the quarter,” Ipsco Chief Executive Officer David Sutherland said in the statement. Profit was boosted by 37 cents a share because of the lower tax rate, he said.
Ipsco, which generates about half its sales from energy products, agreed on Sept. 11 to pay $1.46 billion for NS Group Inc. to increase production of seamless pipes used by the oil and gas industry. Oil companies will boost drilling budgets by 13 percent next year to $312 billion after a 23 percent increase this year, according to James Stone, an analyst at UBS AG in New York.
Global demand for drilling rigs soared 68 percent in the past four years, according to Baker Hughes. Oil companies are increasing exploration in areas such as the deep water off the Gulf of Mexico amid more limited access to conventional resources.
The company forecast four-quarter profit would be $3.30 to $3.50 a share.
Shares of Ipsco rose $2.08, or 2.3 percent, to $91.48 yesterday in New York Stock Exchange composite trading. The stock has gained 44 percent in the past year.
