CHICAGO Bri-Chem Corp.s profits fell sharply in the third quarter due to a lower Canadian rig count and an uncertain economic outlook, even as the company continued to ramp up its seamless pipe mill.
Canadian drilling activity slowed in the second and third quarters, hampered by wet weather and worries about crude oil and natural gas prices, the Edmonton, Alberta-based company said.
Those concerns will likely affect Bri-Chems fourth-quarter results as well, it said in earnings results released Wednesday. Other problems facing the Canadian drilling industry include spending cutbacks, a strong Canadian dollar and a shortage of skilled labor, the company said
Still, Bri-Chem said that it planned to continue boosting production at its seamless thermal pipe expansion facility in Edmonton to "record levels" and to "aggressively" seek out acquisition opportunities in North America that might give the company greater geographic diversity and boost profits.
Bri-Chem notched net income of Canadian $1.439 million ($1.437 million) in the third quarter, down 63.7 percent from the year-ago quarter, on revenue that dropped 39.6 percent to C$36.92 million ($36.88 million).
Net income for the first nine months totaled C$3.562 million ($3.558 million), down 49.3 percent from the same period last year, on revenue that slipped 12.5 percent to C$120.41 million ($120.29 million).
One bright spot was the companys steel pipe manufacturing division, which posted record sales of C$4.065 million ($4.061 million) for the quarter and C$8.682 million ($8.673 million) in the first nine months of the year. The company added a second production shift at its seamless pipe mill, ramping up output by 20 to 30 percent, the company said. Bri-Chems large-diameter seamless pipe micro-mill started operating in the third quarter of 2011 and is expected to produce up to 25,000 tons per year (amm.com, Sept. 22, 2011).
But Bri-Chem said its steel pipe distribution segment saw sales for the quarter fall to C$4.645 million ($4.643 million) for the third quarter, off 34.7 percent from the third quarter of 2012, while nine-month sales dipped 0.4 percent to C$21.73 million ($21.72 million).