July 27 (Reuters) – Vallourec announced on Wednesday that it expects its profit to rise in 2022 to between 650 and 750 million euros, even if its iron ore mine in Brazil does not operate at full capacity.
Its previous forecasts expected a result “significantly higher” than that of 2021, the year in which the gross operating profit stood at 492 million euros.
Vallourec said activities at its Pau Branco mine, which gradually restarted after heavy rains in January, would be back to normal no earlier than the second quarter of 2023.
Vallourec’s restructuring plan, launched by new CEO Philippe Guillemot in May, should generate gross operating income of 230 million euros with the closure of sites in Germany, France and Scotland, and the loss of approximately 2,950 jobs
Provisions related to restructuring costs amounted to 456 million euros, which had an impact on the company’s quarterly net result, which resulted in a loss of 415 million euros.
“In the second quarter, free cash flow remained negative, due to investments in inventory to meet the strong demand from our customers”, but it should become positive in the second half, said Philippe Guillemot, quoted in a communicated.
Gross operating income in the second quarter was 160 million euros, against 148 million euros a year earlier, thanks to the good performance of its tubes business in North America, the company said.
“At the same time, we are seeing an increase in activity, price inflation which reflects both the increase in costs, but also the tension between supply and demand”, declared Philippe Guillemot during a conference call with journalists. (Report Elena Vardon; French version Charlotte Lavin, edited by Kate Entringer)