(AOF) – Vallourec (-4.70% to 13.37 euros) shows one of the biggest drops in the SBF 120. One month after raising its 2023 targets, the specialist in seamless tubes presented its results for the fourth quarter. The gross operating profit (RBE) amounted to 280 million euros, or a margin of 21.9% of turnover, compared to 312 million euros and a margin of 20.3% of turnover. business in the fourth quarter of 2022.
“This decrease is largely due to lower average selling prices for the tubes segment in North America, offset by improved results for this segment outside of this region,” the company explains.
In the fourth quarter of 2023, Vallourec generated revenue of 1.27 billion euros, down 17% compared to the fourth quarter of 2022 (-15% at constant exchange rates).
The tube manufacturer explains that the drop in revenues over the last three months of 2023 reflects a negative volume effect of 26% mainly linked to the drop in deliveries of the industrial segment in Europe and of tubes for the oil & gas segment in North America . It also reflects a positive price/mix effect of 10%, an impact linked to the favorable Mining and Forestry segment of 1% as well as a negative currency effect of 3% mainly linked to the appreciation of the euro against the US dollar.
In addition, overall cash generation amounts to 149 million euros, compared to 323 million euros over the last three months of 2022, due in particular to restructuring charges and other non-recurring items for 193 million euros. . These expected disbursements are mainly linked to compensation and restructuring costs in Germany.
However, its net profit in the fourth quarter increased year-on-year, going from 78 to 105 million euros.
Return to profits
Faced with its recent difficulties (recovery plan, closure of factories in Germany), over the whole of 2023, Vallourec is smiling again thanks to a solid performance. The company recorded a turnover of 5.11 billion euros, an increase of 5% compared to 2022 (+6% at constant exchange rates). The increase in group revenues reflects a negative volume effect of 14%, mainly due to lower deliveries from the industrial segment in Europe.
In 2023, gross operating profit amounted to 1.19 billion euros, or a margin of 23.4% of turnover, compared to 715 million euros and a margin of 14.6% of turnover. business in 2022.
In 2023, its operating profit is positive at 859 million euros while the company suffered an operating loss of 122 million euros in 2022. In addition, the net profit, group share, was established to 496 million euros in 2023, compared to a net loss of 366 million euros in 2022.
Earnings per diluted share amount to 2.07 euros in 2023, compared to a loss per share of 1.60 euros in 2022. “This increase reflects the increase in net profit as well as an increase in potentially dilutive shares largely linked to part of the company’s outstanding share subscription warrants, which are accounted for using the share repurchase method”, underlines Vallourec.
At the end of 2023, its net debt was divided by 2 over one year, amounting to 570 million euros (compared to 1.13 billion euros in 2022).
Zero debt and dividend return expected for 2025
For the 2024 financial year, taking into account its assumptions and current market conditions, Vallourec anticipates another year of “strong EBITDA”. This will be driven by continued very good performance in the tubes segment resulting from solid prices in the order book and the continued improvement in our operational performance.
In addition, the manufacturer of steel tubes anticipates positive overall cash generation for the whole of 2024. The company also expects a continued reduction in net debt, from the first quarter of 2024, compared to the end of 2023.
“We are on track to achieve zero net debt by the end of 2025, at the latest. Following our reduction in debt, we aim to achieve a significant return to shareholders, potentially as early as 2025,” explains Philippe Guillemot, CEO of Vallourec, at the same time of the presentation of annual results.
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Key points
– Global co-leader, with Tenaris, of the seamless steel tube market (12% market share) and global leader in premium tubular solutions;
– Turnover of €3.4 billion, 95% generated by tubes, with a strong positioning in the oil-gas sector (73%), ahead of industry;
– New economic model in 2 pillars: grouping of production capacities in the 2 Americas, and in Asia and transformation plan towards better competitiveness;
– Non-operable capital due to the presence of the BPI (14.56% of the shares and 14.82% of the voting rights), the employees being 2
th
shareholder (3.03% and 3.30%) Edouard Guinotte, general manager, chairing the board of 9 directors
– Cleaned up balance sheet with equity of €1.7 billion and, at the end of June, cash of €1.5 billion compared to €868 million in net debt.
Challenges
– “New Vallourec” strategy:
– transfer of production sites to North America, South America and Asia and total control of their ownership, only 5 factories being maintained in Europe, including 4 in France,
– improvement of €230 million per year in operating profit,
– total debt reduction in 2025;
– Innovation strategy supported by 5 R&D centers aimed at capitalizing on technological advantage (VAM® threaded connections) and digital solutions distributed to customers via the Smartengo Vallourec.smart platform:
– services and solutions: solutions for energy storage and mobility. grouped under the name Vallourec New Energies and digital solutions within the VAM DATA department,
– industrial market: lightening of cable structures,
– oil and gas: solutions to reduce the total cost of ownership or TCO,
– new energies: solutions for geothermal energy, transport and storage of CO2 and hydrogen with the objective of contributing 10 to 15% to operating income;
– Environmental strategy in 2 stages;
– 2030: 30% reduction compared to 2021 in CO2 emissions for scopes 1 and 2,
– 2035: 35% reduction vs. 2021 in CO2 emissions for the entire value chain;
– Productive quality of the 3 major industrial sites: Youngstone in the United States, hence a competitive advantage for the group favored by the increase in customs duties on steel, VSB in Brazil, and Tianda in China;
– Control of supplies via iron mines and forests, mainly Brazilian for steel processing.
Challenges
– Sensitivity to crude oil and iron ore prices and to the euro versus Brazilian real and dollar parity;
– Completion of the 2 extension projects of the Brazilian iron mine, the finalization of which is expected in 2024 and 2027;
– Strong positive impact of price increases on turnover growth;
– After a 31% jump in sales and a doubling of the operating margin in the 2nd half, 2023 objectives of growth in operating profit between €950 million and €1.1 billion, positive free self-financing and ‘a reduction in debt;
– Return to dividend distribution in 2025, i.e. 85 to 100% of cash generation.
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