Vallourec reports second quarter and
first half 2019 results
Boulogne-Billancourt (France), July 24th
2019 – Vallourec, a world leader in premium tubular
solutions, today announces its results for the second quarter and
first half of 2019. The consolidated financial information was
presented by Vallourec’s Management Board to its Supervisory Board
on July 23rd 2019.
Second quarter 2019:
- Revenue: €1,084
million, up 10% year-on-year (+8% at constant exchange
rates)
- EBITDA ([1]): €102 million, versus €23 million in Q2
2018
- Positive free cash flow (1) of €16 million compared to
(€164) million in Q2 2018
- Positive cash flow from operating activities at €39 million
versus (€61) million in Q2 2018
- Slight increase of (€4) million in operating working capital
requirement versus a (€84) million increase in Q2 2018; net working
capital requirement at 108 days of sales versus 114 at end of Q2
2018
|
- Net debt (1) as at 30th June 2019: €2,111
million versus €2,125 million as at March 31st, 2019
|
Confirmed outlook for 2019:
Based on current economic and market
trends ([2]), the Group confirms:
- The recovery in its Oil and Gas activity, primarily driven by
international markets
- Its targets for 2019, namely:
- Strong increase in EBITDA, supported by market trends,
additional savings as well as ongoing deployment from the Group’s
new competitive manufacturing routes
- Continuous improvement in working capital requirement, beyond
usual seasonal movements, with a diminishing number of days of
working capital requirement on both quarterly average and end of
year
- Capex around €180 million, consistent with the needs of its
renewed industrial footprint
- Based on current market trends and on the objectives outlined
above, the Group would respect its banking covenant at the end of
the year.
|
Key
figures (3)
H1 2019 |
H1 2018 |
Change YoY |
In millions of euros |
Q2 2019 |
Q2 2018 |
Change YoY |
1,176 |
1,087 |
8% |
Sales volume (k tons) |
605 |
572 |
6% |
2,109 |
1,844 |
14% |
Revenue |
1,084 |
982 |
10% |
169 |
18 |
€151m |
EBITDA |
102 |
23 |
€79m |
8.0% |
1.0% |
+7.0p.p. |
As % of revenue |
9.4% |
2.3% |
+7.1p.p. |
(167) |
(307) |
€140m |
Net income (loss), Group share |
(77) |
(137) |
€60m |
(143) |
(418) |
€275m |
Free cash-flow |
16 |
(164) |
€180m |
(3) IFRS 16 detailed impacts on EBITDA, net debt, lease debt and
free cash flow are described in consolidated results analysis (page
4&5), financial position (page 6) and in appendices on pages
13, 14, 15 & 16. Net debt |
|
30 June 2019 |
1 Jan 2019Post IFRS 16 |
Change over the period |
In millions of euros |
31 Dec 2018 |
|
2,111 |
1,999 |
€112m |
Net debt * |
2,058 |
|
* Net debt of €2,058 million at the end of December 2018
includes €59 million of financial lease debt
Commenting on these results, Philippe
Crouzet, Chairman of the Management Board, said:
“With double digit revenue growth, continued
rebound in profitability and a positive free cash flow, the second
quarter performance brought new evidence that Vallourec is on the
right path to recovery.
As anticipated, Oil and Gas is key in achieving
these results, with EA-MEA being the main driver. In addition,
Vallourec’s mining operations in Brazil sold higher volumes at
better prices.
We now target the solid EBITDA generation
achieved in the first semester to be confirmed in the second one,
the moderate slowdown expected on the North American Oil and Gas
market being counterbalanced over the semester by an overall good
level of activity in the Group’s other markets and the continuation
of our transformation plan execution.
We remain focused on cash discipline: our new
initiatives to control working capital have already yielded
positive results in the first part of the year, and we remain
committed to achieve further progress going forward.
Looking ahead, we are confident to see in 2020,
following the recovery of EA-MEA Oil and Gas markets in 2019, the
restart of exploration activity in Brazil, where we enjoy strong
positions, as a result of drilling commitments taken by oil
companies following the bidding rounds over the last two
years”.
I - CONSOLIDATED REVENUE BY
MARKET
H1 2019 |
H1 2018 |
Change YoY |
At constant exchange rates |
In millions of euros |
Q2 2019 |
Q2 2018 |
Change YoY |
At constant exchange rates |
1,525 |
1,285 |
19% |
15% |
Oil & Gas, Petrochemicals |
787 |
701 |
12% |
9% |
482 |
379 |
27% |
29% |
Industry & Other |
245 |
199 |
23% |
25% |
102 |
180 |
-43% |
-43% |
Power Generation |
52 |
82 |
-37% |
-37% |
2,109 |
1,844 |
14% |
12% |
Total |
1,084 |
982 |
10% |
8% |
Q2 2019 revenue amounted to €1,084
million, up 10% compared with Q2 2018 (+8% at constant
exchange rates) with a positive volume effect of +6%, a positive
price/mix effect of +2%, and a positive currency effect of +2%.
Over the first half 2019, revenue
totaled €2,109 million, up 14% versus first half 2018
(+12% at constant exchange rates). Volume effect was +8%, price/mix
effect +4% and currency effect +2%.
Oil & Gas, Petrochemicals (72% of consolidated
revenue)
In Q2 2019, Oil & Gas
revenue amounted to €724 million, up 18%
year-on-year (+14% at constant exchange rates).
- In EA-MEA, Oil & Gas revenue
increased significantly year-on-year, fueled mostly by
volumes.
- In North America, Oil & Gas revenue
increased slightly year-on-year thanks to the price increase passed
on Q3 2018, although market prices have started to erode.
- In South America, Oil & Gas revenue was
down year-on-year, reflecting a temporary low point for offshore
OCTG deliveries.
Over the first half 2019,
Oil & Gas revenue totaled €1,395 million,
a strong increase or +26% year-on-year (+22% at
constant exchange rates).
In Q2 2019,
Petrochemicals revenue amounted to €63 million,
down 27% year-on-year (-28% at constant exchange rates) notably due
to lower volumes sold in North America and reallocation to higher
margin products in Middle East Asia.Over the first half
2019, Petrochemicals revenue totaled €130
million, down 27% year-on-year (-30% at constant exchange
rates).
In Q2 2019 revenue for Oil & Gas and
Petrochemicals amounted to €787 million, up 12% compared with Q2
2018 (+9% at constant exchange rates) due to higher
O&G volumes in EA-MEA and positive impact of Q3 2018 OCTG price
increase in North America. Over the first half
2019, revenue for Oil & Gas and Petrochemicals
totalled €1,525 million, up 19% compared with H1 2018
(+15% at constant exchange rates).
Industry & Other (23% of consolidated
revenue)
Q2 2019 revenue of €245 million
increased 23% compared with Q2
2018 (+25% at constant exchange rates).
- In Europe, Industry revenue slightly decreased due to lower
volumes in a challenging economic environment.
- In Brazil, Industry & Other revenue was significantly up,
mainly driven by iron ore.
Over the first half 2019, Industry &
Other revenue totaled €482 million, up 27% year-on-year
(+29% at constant exchange rates) primarily as a result of the
higher revenue from iron ore. Volume of iron ore sold increased by
+35% in H1 2019 compared to H1 2018 thanks to productivity
improvements. Also, revenue growth benefitted from a higher iron
ore price.
Power Generation (5% of consolidated
revenue)
Power Generation revenue
amounted to €52 million in Q2 2019, down 37% compared with Q2 2018
(-37% at constant exchange rates). This decrease was due to the
decline in global demand for coal-fired conventional power
plants.
For the first half 2019, revenue totaled €102
million, down 43% year-on-year (-43% at constant exchange
rates).
II - CONSOLIDATED RESULTS
ANALYSIS
Q2 2019 consolidated results
analysisIn Q2 2019, EBITDA
reached €102 million, improving by €79
million year on year including:
- Industrial margin of €213 million, up €83 million compared with
Q2 2018 (up 6.4p.p.), reflecting primarily higher activity in
EA-MEA Oil & Gas. Together with a higher mine contribution, it
did largely offset lower contribution in Oil & Gas South
America.
- Sales, general and administrative costs (SG&A) at €105
million, up 6%, representing 9.7% of revenue compared with 10.1% in
Q2 2018.
- EBITDA included a positive €8 million IFRS 16 impact and a €3
million net increase in provisions.
Excluding changes in provisions and IFRS 16
impact, Q2 2019 EBITDA amounted to €97 million, to be compared with
€17 million in Q2 2018 and €65 million in Q1 2019.
Operating result improved by €76 million
and turned positive at +€1 million. An
impairment of an asset dedicated to nuclear activity was recorded
in Q2 2019 for an amount of (€21) million. “Assets disposals,
restructuring, and other” charges amounted to (€6) million in Q2
2019 compared to (€24) million in Q2 2018.“Amortization and other
depreciation” included a (€7) million IFRS 16 impact (depreciation
of right-of-use).
Financial result remained stable at
(€61) million versus (€62) million in Q2 2018. It
includes a (€2) million negative IFRS 16 impact (interest
expenses on lease debt).
Income tax was €14
million in Q2 2019, mainly related to tax charges in
Brazil, while there was no tax accounted in Q2
2018.
As a result, net loss, Group share, has
been reduced by €60 million, amounting to (€77) million,
compared to (€137) million in Q2 2018.
H1 2019 consolidated results
analysisIn H1 2019, EBITDA
reached €169 million, improving by €151
million year on year including:
- Industrial margin of €381 million, up €148 million compared
with H1 2018 (up 5.5p.p.) reflecting primarily higher activity in
EA-MEA Oil & Gas. Together with a higher mine contribution, it
did largely offset lower contribution in Oil & Gas South
America.
- Sales, general and administrative costs (SG&A) down 1% at
€198 million, representing 9.4% of revenue compared with 10.8% in
H1 2018, and reflecting tight cost control.
- EBITDA included a positive €16 million IFRS 16 impact and a
(€9) million net increase in provisions.
Excluding changes in provisions and IFRS 16
impact, H1 2019 EBITDA amounted to €162 million, to be compared
with €4 million in H1 2018.
Operating result improved by +187
million to a loss of (€18) million thanks to a higher
EBITDA and lower “asset disposal, restructuring and other” charges
(reduced by €46 million), largely compensating a higher impairment
charge of (€8) million. Impairment charges in H1 2019 included
(€21) million related to an asset dedicated to nuclear activity.
“Amortization and other depreciation” included a (€14) million IFRS
16 impact (depreciation of right-of-use).
Financial result was negative at (€122)
million, compared to (€105) million
in H1 2018, mainly due to higher interest charges as a result of
the €400 million senior notes issued in April 2018, and to the
recognition of a (€5) million IFRS 16 impact (interest expenses on
lease debt).
Income tax amounted to (€22)
million mainly related to Brazil, while there was no tax
recorded in H1 2018.
As a result, net loss, Group share, has
been reduced by €140 million, amounting to (€167) million,
compared to (€307) million in H1 2018.
III – CASH FLOW & FINANCIAL POSITION
Cash flow from operating
activitiesCash flow from operating activities in
Q2 2019 was positive at €39 million compared to (€61)
million in Q2 2018, and positive at €10 million in H1 2019 compared
to (€144) million in H1 2018.
Operating working capital
requirementIn Q2 2019, operating working capital
requirement slightly increased by €4 million versus an increase of
€84 million in Q2 2018. It was improved year-on-year in
days of sales: in line with our objectives, net working capital
requirement was reduced to 108 days of sales, compared to 114 days
at the end of Q2 2018.In H1 2019, operating working capital
requirement increased by €117 million versus an increase of €236
million in H1 2018.
CapexCapital
expenditure in Q2 2019 was stable compared to Q2 2018, at
(€19) million, and stable in H1 2019 compared to H1 2018, at (€36)
million versus (€38) million.
Free cash flowIn Q2
2019 the Group generated a positive free cash flow of €16 million
versus (€164) million in Q2 2018, due to a higher Ebitda
and an improved performance in working capital management. Free
cash flow for H1 2019 was negative at (€143) million, an
improvement of €275 million compared with (€418) million in H1
2018.
Net debt and
liquidityAs at June 30th 2019, net debt was
slightly reduced at 2,111 million, compared with €2,125
million on March 31st 2019. It amounted to €1,999 million on
January 1st 2019. As a reminder, €59 million were reclassified
from net debt to lease debt on January 1st 2019, applying IFRS 16
(see table on page 15).
The Company benefits from a sound liquidity
position. Cash as at June 30th 2019 amounted to €729 million, and
€1,831 million of its €2,128 million committed bank facilities were
unused. At the same date, long term debt amounted to €1,743 million
and short-term debt to €1,097 million, including €400 million of
private bonds, €101 million of commercial paper and €297 million
drawn from the €2,128 million committed banking
facilities.
As at June 30th 2019, the banking covenant
ratio, as defined in the banking contracts (4) and tested once a
year on December 31st, was estimated at 79%. IFRS 16 implementation
has no impact on the banking covenant ratio.
IV – TRANSFORMATION PLAN
Gross savings
New initiatives to further accelerate the path
to recovery were announced in February 2019 and are under
deployment. At least €200 million additional gross savings are
targeted by 2020, with a focus on European operations, notably
Germany, and on Brazil to further reinforce its best-in-class
profile.
In H1 2019 €48 million of gross savings were
achieved, in line with this objective.
Notably in Germany, headcount was reduced during
Q2 by another 106 which came in addition to the 135 already
achieved in Q1, out of a target of 600 by the end of 2020.
Conventional Powergen
business
The new tariffs recently applied by Chinese
authorities on a significant part of the steel pipes produced in
Germany for the Chinese conventional powergen market made the
divestiture of the Group’s conventional power business unlikely.
Discussions are ongoing with German employees representatives to
assess the future of the dedicated operations.
Iron ore mine expansion
project
Following the submission to Minas Gerais
authorities of the project of expansion of its mining operations,
with the construction of a new processing unit, Vallourec has been
granted the required license. The Group should finalize the
investment approval procedure in the coming months.
The project aims at increasing the capacity of
iron ore production to around 8.5 million tons per year as from
2022.
In the meantime, production volumes should
increase to reach between 5.5 and 6.0 million tons in 2019,
compared to 4.7 million in 2018, thanks to productivity
improvements. Iron ore production should stay at similar levels
until completion of the expansion project.
As a reminder, the mine sells the main part of
its production to the local market and supplies Vallourec’s blast
furnace and pellet plant located in Jeceaba, Minas Gerais.
V – MAIN MARKET TRENDS
Oil & Gas
- In EA-MEA, the Group should continue to
benefit from the ongoing recovery of Oil & Gas markets, as well
as from the deployment of its competitive new routes;
- In North America, the market slowdown is
expected to moderately weigh on second half results, with operators
maintaining capex discipline, and distributors adjusting
inventories;
- In South America, a pick-up in deliveries in
Brazil is expected to materialize in the latter part of the year,
and then accelerate into 2020, driven by a significant increase in
exploration drilling in deep off-shore fields.
Industry & Other
·In Europe,
demand remains low with pressure on prices, in particular in
Germany ·In
Brazil, outlook for the mine remains
positive.
Raw materials &
currencies
·Assuming
exchange rates remain at their current level, a favorable currency
impact is expected in
2019. ·Regarding raw materials,
scrap prices decreased in H1 2019 and are gradually
stabilizing.
VII - OUTLOOK 2019
Based on current economic and market trends (5) the Group
confirms:
- The recovery in its Oil and Gas activity primarily driven by
international markets
- Its targets for 2019, namely:
- Strong increase in EBITDA, supported by market trends,
additional savings as well as ongoing deployment from the Group’s
new competitive manufacturing routes
- Continuous improvement in working capital requirement, beyond
usual seasonal movements, with a diminishing number of days of
working capital requirement on both quarterly average and end of
year
- Capex around €180 million, consistent with the needs of its
renewed industrial footprint
- Based on current market trends and on the objectives outlined
above, the Group would respect its banking covenant at the end of
the year.
Information and Forward-Looking Statements
This press release contains forward-looking
statements. These statements include financial forecasts and
estimates as well as assumptions on which they are based,
statements related to projects, objectives and expectations
concerning future operations, products and services or future
performance. Although Vallourec’s management believes that these
forward-looking statements are reasonable, Vallourec cannot
guarantee their accuracy or completeness and these forward-looking
statements are subject to numerous risks and uncertainties that are
difficult to foresee and generally beyond Vallourec’s control,
which may mean that the actual results and developments may differ
significantly from those expressed, induced or forecasted in the
statements. These risks include those developed or identified in
the public documents filed by Vallourec with the AMF, including
those listed in the “Risk Factors” section of the Registration
Document filed with the AMF on March 29th 2019.
Presentation of H1 2019 results
Analyst conference call / audio webcast at 6:30
pm (Paris time) to be held in
English.
- To listen to the audio webcast:
https://channel.royalcast.com/webcast/vallourec-en/20190724_1/
- To participate in the conference call, please dial (password to
use is “Vallourec”):
- +44 (0) 20 3003
2666
(UK)
- +33 (0) 1 7037 7166
(France)
- +1 212 999 6659
(USA)
- Audio webcast replay and slides will be available on the
website at: http://www.vallourec.com/EN/GROUP/FINANCE
About Vallourec
Vallourec is a world leader in premium tubular
solutions for the energy markets and for demanding industrial
applications such as oil & gas wells in harsh environments, new
generation power plants, challenging architectural projects, and
high-performance mechanical equipment. Vallourec’s pioneering
spirit and cutting edge R&D open new technological frontiers.
With close to 19,000 dedicated and passionate employees in more
than 20 countries, Vallourec works hand-in-hand with its customers
to offer more than just tubes: Vallourec delivers innovative, safe,
competitive and smart tubular solutions, to make every project
possible.
Listed on Euronext in Paris (ISIN code:
FR0000120354, Ticker VK) and eligible for the Deferred Settlement
System (SRD), Vallourec is included in the following indices: SBF
120 and Next 150.
In the United States, Vallourec has established
a sponsored Level 1 American Depositary Receipt (ADR) program (ISIN
code: US92023R2094, Ticker: VLOWY). Parity between ADR and a
Vallourec ordinary share has been set at 5:1.
Calendar
|
|
November 14th 2019 |
Release of third quarter results |
For further information, please
contact:
Investor
relations Jean-Marc AgabrielTel: +33 (0)1 49 09 39
77Investor.relations@vallourec.com |
Press relations Héloïse Rothenbühler Tél : +33
(0)1 41 03 77 50heloise.rothenbuhler@vallourec.com |
Individual shareholdersToll Free Number
(from France): 0 800 505 110 actionnaires@vallourec.com |
|
Appendices
Documents accompanying this release:
- Sales volume
- Forex
- Revenue by geographic region
- Revenue by market
- Summary consolidated income statement
- Summary consolidated balance sheet
- Lease debt IFRS 16
- Banking covenant
- Cash flow statement
- Free cash flow
- Definitions of non-GAAP financial data
Sales volume
In thousands of tons |
2019 |
2018 |
Change YoY |
|
|
|
|
Q1 |
571 |
515 |
11% |
Q2 |
605 |
572 |
6% |
Q3 |
|
583 |
|
Q4 |
|
694 |
|
|
|
|
|
Total |
1,176 |
2,364 |
|
Forex
Average exchange rate |
H1 2019 |
H1 2018 |
EUR /
USD |
1.13 |
1.21 |
EUR /
BRL |
4.34 |
4.14 |
USD / BRL |
3.84 |
3.42 |
Revenue by geographic region
In millions of euros |
H1 |
As % of |
H1 |
As % of |
Change |
|
Q2 |
As % of |
Q2 |
As % of |
Change |
|
2019 |
revenue |
2018 |
revenue |
YoY |
|
2019 |
revenue |
2018 |
revenue |
YoY |
|
|
|
|
|
|
|
|
|
|
|
|
Europe |
311 |
15% |
295 |
16% |
5% |
|
157 |
15% |
158 |
16% |
-1% |
North America |
668 |
32% |
604 |
33% |
11% |
|
330 |
30% |
325 |
33% |
2% |
South America |
329 |
15% |
317 |
17% |
4% |
|
162 |
15% |
177 |
18% |
-8% |
Asia & Middle East |
549 |
26% |
527 |
29% |
4% |
|
303 |
28% |
263 |
27% |
15% |
Rest of World |
252 |
12% |
101 |
5% |
150% |
|
132 |
12% |
59 |
6% |
124% |
|
|
|
|
|
|
|
|
|
|
|
|
Total |
2,109 |
100% |
1,844 |
100% |
14% |
|
1,084 |
100% |
982 |
100% |
10% |
Revenue by market
H1 |
As % of |
H1 |
As % of |
Change |
In millions of euros |
Q2 |
As % of |
Q2 |
As % of |
Change |
2019 |
revenue |
2018 |
revenue |
YoY |
|
2019 |
revenue |
2018 |
revenue |
YoY |
|
|
|
|
|
|
|
|
|
|
|
1,395 |
66% |
1,106 |
60% |
26% |
Oil & Gas |
724 |
66% |
615 |
63% |
18% |
130 |
6% |
179 |
10% |
-27% |
Petrochemicals |
63 |
6% |
86 |
9% |
-27% |
1,525 |
72% |
1,285 |
70% |
19% |
Oil & Gas, Petrochemicals |
787 |
72% |
701 |
72% |
12% |
|
|
|
|
|
|
|
|
|
|
|
202 |
10% |
203 |
11% |
-1% |
Mechanicals |
88 |
8% |
110 |
11% |
-20% |
63 |
3% |
78 |
4% |
-19% |
Automotive |
32 |
3% |
40 |
4% |
-20% |
217 |
10% |
98 |
5% |
121% |
Construction & Other |
125 |
12% |
49 |
5% |
155% |
482 |
23% |
379 |
20% |
27% |
Industry & Other |
245 |
23% |
199 |
20% |
23% |
|
|
|
|
|
|
|
|
|
|
|
102 |
5% |
180 |
10% |
-43% |
Power Generation |
52 |
5% |
82 |
8% |
-37% |
|
|
|
|
|
|
|
|
|
|
|
2,109 |
100% |
1,844 |
100% |
14% |
Total |
1,084 |
100% |
982 |
100% |
10% |
Summary consolidated income statement
H1 2019 |
H1 2018 |
Change YoY |
In millions of euros |
Q2 2019 |
Q2 2018 |
Change YoY |
2,109 |
1,844 |
14% |
REVENUE |
1,084 |
982 |
10% |
(1,728) |
(1,611) |
7% |
Cost of sales * |
(871) |
(852) |
2% |
381 |
233 |
64% |
Industrial margin |
213 |
130 |
64% |
18.1% |
12.6% |
+5.5p.p. |
(as % of revenue) |
19.6% |
13.2% |
+6.4p.p. |
(198) |
(200) |
-1% |
SG&A costs * |
(105) |
(99) |
6% |
(14) |
(15) |
na |
Other income (expense), net |
(6) |
(8) |
na |
169 |
18 |
€151m |
EBITDA (6) |
102 |
23 |
€79m |
8.0% |
1.0% |
+7.0p.p. |
EBITDA as % of revenue |
9.4% |
2.3% |
+7.1p.p. |
(126) |
(134) |
-6% |
Depreciation of industrial assets |
(60) |
(64) |
-6% |
(29) |
(19) |
na |
Amortization and other depreciation (7) |
(14) |
(10) |
na |
(21) |
(13) |
na |
Impairment of assets |
(21) |
- |
na |
(11) |
(57) |
na |
Asset disposals, restructuring and other |
(6) |
(24) |
na |
(18) |
(205) |
€187m |
OPERATING INCOME (LOSS) |
1 |
(75) |
€76m |
(122) |
(105) |
16% |
Financial income (loss) (8) |
(61) |
(62) |
-2% |
(140) |
(310) |
€170m |
PRE-TAX INCOME (LOSS) |
(60) |
(137) |
€77m |
(22) |
- |
na |
Income tax |
(14) |
- |
na |
(1) |
1 |
na |
Share in net income (loss) of associates |
- |
1 |
na |
(163) |
(309) |
€146m |
NET INCOME (LOSS) FOR THE CONSOLIDATED ENTITY |
(74) |
(136) |
€62m |
(4) |
2 |
na |
Non-controlling interests |
(3) |
(1) |
na |
(167) |
(307) |
€140m |
NET INCOME (LOSS), GROUP SHARE |
(77) |
(137) |
€60m |
(0.4) |
(0.7) |
€0.3 |
EARNINGS PER SHARE (in €) |
(0.2) |
(0.3) |
€0.1 |
IFRS 16 impacts on P&L
include:
H1
2019
Q2 2019(6) Removal of operational lease expenses from EBITDA:
+€16m
+€8m(7) Depreciation of right-of-use:
-€14m
-€7m(8) Interest expenses on lease
debt:
-€5m
-€2m
na = not applicable(*) Before depreciation and amortization
Summary consolidated balance sheet
In millions of euros |
|
|
|
|
|
|
|
Assets |
30 June |
1 Jan |
31 Dec |
Liabilities |
30 June |
1 Jan |
31 Dec |
2019 |
2019 |
2018 |
2019 |
2019 |
2018 |
|
|
Post IFRS 16 |
|
|
|
Post IFRS 16 |
|
|
|
|
|
Equity,
Group share * |
1,664 |
1,802 |
1,802 |
|
|
|
|
Non-controlling interests |
521 |
462 |
462 |
Net
intangible assets |
64 |
71 |
71 |
Total equity |
2,185 |
2,264 |
2,264 |
Goodwill |
361 |
358 |
358 |
Shareholder loan |
31 |
29 |
29 |
Net
property, plant and equipment |
2,671 |
2,777 |
2,691 |
Bank loans and other borrowings (A) |
1,743 |
1,746 |
1,797 |
Biological assets |
64 |
60 |
60 |
Non current lease debt (D) |
107 |
115 |
- |
Associates |
133 |
134 |
134 |
Employee benefits |
229 |
214 |
214 |
Other
non-current assets |
153 |
156 |
156 |
Deferred tax liabilities |
15 |
15 |
15 |
Deferred
tax assets |
266 |
250 |
250 |
Provisions and other long-term
liabilities |
70 |
50 |
50 |
Total non-current assets |
3,712 |
3,806 |
3,720 |
Total non-current liabilities |
2,164 |
2,140 |
2,076 |
|
|
|
|
|
|
|
|
|
|
|
|
Provisions |
111 |
136 |
136 |
Inventories and work-in-progress |
1,192 |
1,135 |
1,135 |
Overdrafts and other short-term
borrowings (B) |
1,097 |
993 |
1,001 |
Trade
and other receivables |
684 |
599 |
599 |
Current lease debt (E) |
28 |
30 |
- |
Derivatives - assets |
3 |
3 |
3 |
Trade payables |
597 |
582 |
582 |
Other
current assets |
233 |
216 |
216 |
Derivatives - liabilities |
23 |
32 |
32 |
Cash and
cash equivalents (C) |
729 |
740 |
740 |
Tax and other current liabilities |
317 |
293 |
293 |
Total current assets |
2,841 |
2,693 |
2,693 |
Total current liabilities |
2,173 |
2,066 |
2,044 |
|
|
|
|
|
|
|
|
TOTAL ASSETS |
6,553 |
6,499 |
6,413 |
TOTAL EQUITY AND LIABILITIES |
6,553 |
6,499 |
6,413 |
|
|
|
|
|
|
|
|
* Net income (loss), Group
share |
(167) |
|
(502) |
|
|
|
|
|
|
|
|
|
|
|
|
Net debt (A+B-C) |
2,111 |
1,999 |
2,058 (9) |
|
|
|
|
(9)
Net debt of €2,058 million at end of December 2018 includes €59
million of financial lease debt |
|
|
|
|
|
|
|
|
|
|
Lease debt (D+E) |
135 |
145 |
* |
|
|
|
|
*
See detailed explanation in Lease debt IFRS 16 page 15 |
|
|
|
|
Lease debt IFRS 16
30 June 2019 |
Change versus 1 Jan 2019 |
In millions of euros |
1 Jan 2019 post IFRS 16 |
31 Dec 2018 |
56 |
-€3m |
Financial lease debt (10) |
59 |
59 |
79 |
-€7m |
Operational lease (11) |
86 |
- |
135 |
-€10m |
Total lease debt (IFRS 16) (12) |
145 |
- |
(10) Included in Net debt prior to IFRS 16;
reclassified to lease debt on January 1st 2019(11) Operational
lease reported in off balance sheet items prior to IFRS 16;
recognized as lease debt on January 1st 2019(12) - New lines
items (current & non-current lease debts) identified in the
balance sheet under IFRS 16. - At June
30th, 2019, lease debt of €135 million is split into: €107
million of non current lease debt€28 million of current lease debt
Banking
covenant
As defined in the banking agreements, the
“banking covenant” ratio is the ratio of the Group’s consolidated
net debt including the shareholder loan in Brazil and the
“financial lease debt” which was recorded in net debt on December
31st, 2018 (excluding “operational lease”) to the Group’s
equity, restated for reserves of changes in fair value of financial
instruments and foreign currency translation reserve. This
indebtedness ratio is tested once a year on December 31st, and must
be below a limit of 100% on this date.
Figures in million euros |
30 June 2019 |
31 Dec 2018 |
Net
debt |
2,111 |
2,058 |
Financial lease debt (included in net debt on Dec 31st 2018) |
56 |
- |
Shareholder loan |
31 |
29 |
Net debt restated (a) |
2,198 |
2,087 |
Group
Equity |
2,185 |
2,264 |
Foreign
currency translation reserve |
582 |
624 |
Reserves
- changes in fair value of financial instruments |
- |
8 |
Group equity restated (b) |
2,767 |
2,896 |
Banking covenant ratio = (a) / (b) |
79% |
72% |
Cash flow statement
H1 |
H1 |
In millions of euros |
Q2 |
Q2 |
Q1 |
2019 |
2018 |
|
2019 |
2018 |
2019 |
10 |
(144) |
Cash flow from operating activities |
39 |
(61) |
(29) |
(117) |
(236) |
Change in operating WCR [+ decrease, (increase)] |
(4) |
(84) |
(113) |
(107) |
(380) |
Net cash flow from operating activities |
35 |
(145) |
(142) |
(36) |
(38) |
Gross capital expenditure |
(19) |
(19) |
(17) |
31 |
26 |
Asset disposals & other items (13) |
(2) |
13 |
33 |
(112) |
(392) |
Change in net debt [+ decrease, (increase)] |
14 |
(151) |
(126) |
2,111 |
1,934 |
Net debt (end of period) (14) |
2,111 |
1,934 |
2,125 |
(13) On February 19th 2019, Sumitomo Corporation
contributed in cash to a capital increase of Vallourec Star, a
Vallourec's subsidiary in the United States, pro rata its holding
percentage (19.47%), for an amount of $59 million (€51.8
million)
(14) Financial lease debt (€56 million as at June 30th 2019)
previously included in the net debt is now recognized under lease
debt (IFRS 16)
Free cash flow
H1 |
H1 |
Change |
In millions of euros |
Q2 |
Q2 |
Change |
2019 |
2018 |
|
|
2019 |
2018 |
|
10 |
(144) |
€154m |
Cash flow from operating activities (A) |
39 |
(61) |
€100 m |
(117) |
(236) |
€119m |
Change in operating WCR (B) [+ decrease,
(increase)] |
(4) |
(84) |
€80 m |
(36) |
(38) |
€2m |
Gross capital expenditure (C) |
(19) |
(19) |
- |
(143) |
(418) |
€275m |
Free cash flow * (A)+(B)+(C) |
16 |
(164) |
€180 m |
* IFRS 16 impact on:
- H1 2019 FCF: €11 million (EBITDA impact of €16 million minus
interests on lease debt of €5 million)
- Q2 2019 FCF: €6 million (EBITDA impact of €8 million minus
interests on lease debt of €2 million)
Definitions of non-GAAP financial data
Banking
covenant: as defined in the banking
agreements, the “banking covenant” ratio is the ratio of the
Group’s consolidated net debt including the shareholder
loan in Brazil and the “financial lease debt” which was recorded in
net debt on December 31st, 2018 (excluding “operational
lease”) to the Group’s equity, restated for reserves of
changes in fair value of financial instruments and foreign currency
translation reserve. This indebtedness ratio is tested once a year
on December 31st, and must be below a limit of 100% on this
date.
Data at constant exchange
rates: the data presented « at constant exchange
rates » is calculated by eliminating the translation effect
into euros for the revenue of the Group’s entities whose functional
currency is not the euro. The translation effect is eliminated by
applying Year N-1 exchange rates to Year N revenue of the
contemplated entities.
Free cash flow: Free cash-flow
(FCF) is defined as cash flow from operating activities minus gross
capital expenditure and plus/minus change in operating working
capital requirement.
Gross capital expenditure:
gross capital expenditure is defined as the sum of cash outflows
for acquisitions of property, plant and equipment and intangible
assets and cash outflows for acquisitions of biological assets.
Industrial margin: the
industrial margin is defined as the difference between revenue and
cost of sales (i.e. after allocation of industrial variable costs
and industrial fixed costs), before depreciation.
Lease debt: starting January 1st, 2019, is
defined as the present value of unavoidable future lease
payments.
Net debt: consolidated net debt
is defined as Bank loans and other borrowings plus Overdrafts and
other short-term borrowings minus Cash and cash equivalents.
Starting January 1st, 2019 net debt excludes lease debt.
Net working capital
requirement: defined as working capital requirement net of
provisions for inventories and trade receivables; net working
capital requirement days are computed on an annualized quarterly
sales basis.
Operating working capital
requirement: includes working capital requirement as well
as other receivables and payables.
Working capital requirement:
defined as trade receivables plus inventories minus trade payables
(excluding provisions).
([1]) Detailed impacts of IFRS 16 on EBITDA, net debt, lease
debt, and free cash flow are described in consolidated results
analysis (page 4&5), financial position (page 6) and in
appendices on pages 13,14,15 & 16([2]) Cf paragraph Information
and Forward-Looking Statements
(4) Banking covenant: As defined in the
banking agreements, the “banking covenant” ratio is the ratio of
the Group’s consolidated net debt including the
shareholder loan in Brazil and the “financial lease debt” which was
recorded in net debt on December 31st, 2018 (excluding “operational
lease”) to the Group’s equity, restated for reserves of
changes in fair value of financial instruments and foreign currency
translation reserve. This indebtedness ratio is tested once a year
on December 31st, and must be below a limit of 100% on this
date.
(5) Cf paragraph Information and Forward-Looking Statements
- Vallourec-press-release-H1-2019 VDEF
Vallourec (EU:VK)
Historical Stock Chart
From Aug 2024 to Sep 2024
Vallourec (EU:VK)
Historical Stock Chart
From Sep 2023 to Sep 2024