Vallourec Second Quarter 2024 Results
Meudon (France), July 26th, 2024
Vallourec, a world leader in premium tubular
solutions, announces today its results for the second quarter 2024.
The Board of Directors of Vallourec SA, meeting on July
25th 2024, approved the Group's second quarter 2024
Consolidated Financial Statements.
Second Quarter 2024 Results
- Q2 2024 EBITDA of €215m was
moderately down sequentially, as expected
- Q2 2024 results reflect
strong QoQ recovery in international Tubes volumes, more than
offset by weaker US Tubes prices and volumes
- Several significant
initiatives underway to realize full earnings potential in
Brazil
- International OCTG demand
remains at a healthy level and pricing remains strong
- Net debt reduction remains
ahead of plan; further reduced to €364 million
- Expect further total cash
generation in H2 2024, to be allocated predominantly to shareholder
returns in 2025 at the
latesta
HIGHLIGHTS
Second Quarter 2024 Results
- Group EBITDA of €215 million (down
€20m QoQ) with EBITDA margin of 20%
- Tubes EBITDA per tonne of €599,
above €550 for the seventh straight quarter despite reduced US
pricing
- Tubes EBITDA of €210 million down
4% sequentially and 36% year over year
- Mine & Forest EBITDA of €15
million down 49% sequentially and 69% year over year due to lower
realized prices and lower volumes year over year
- Adjusted free cash flow €81
million; total cash generation €41 million
- Deleveraging remains ahead of plan:
net debt declined €121 million sequentially to €364 million
Third Quarter 2024
Outlookb
- Group EBITDA to decline versus Q2
due to lower overall Tubes volumes and reduced US Tubes
pricing
- Expect positive total cash
generation and further net debt reduction versus the Q2 2024
level
Full Year 2024 Outlook
- Group EBITDA expected to range
between €800 – €850 million due to lower US prices
- Expect positive total cash
generation and further net debt reduction versus the Q2 2024
level
Philippe Guillemot, Chairman of the
Board of Directors and Chief Executive Officer,
declared:
“Our second-quarter results continued to
reflect Vallourec’s significant transformation into a more
profitable, resilient and cash-generative company. Our Tubes EBITDA
margin exceeded 20% for the fifth time in the last six quarters
despite significantly weaker market conditions in the US versus
early 2023. In addition, our total cash generation was positive for
the seventh consecutive quarter, enabling us to remain ahead of
plan in terms of net debt reduction.
“We are convinced that there remain
significant opportunities to improve our Tubes returns independent
of overall OCTG market conditions. In particular, we have several
initiatives underway to drive our Brazilian Tubes operations
towards best-in-class levels of efficiency and profitability.
Today, we announce our plan to close our oldest rolling mill, the
Barreiro Plug millc, which will save
on cost and capex without sacrificing future volume upside. We are
further reducing operating complexity and costs at our remaining
operations with the goal of improving Brazilian Tubes cost per
tonne by over €150 by year-end 2025. We also believe that this
asset base retains the potential to deliver over 100,000 tonnes of
incremental premium volume as we capitalize on future demand and
improve our production efficiency. d
“Also in Brazil, we recently
announced that we have obtained the necessary approvals from
the state environmental authority (COPAM) and federal mining
regulator (ANM) to progress the mine’s Phase 1 extension project.
This project, expected to start in late 2024, will extend the iron
ore mine’s life, improve its reserve quality, and enhance its
profitability. We also are engaging with the relevant parties to
progress the Phase 2 extension, which is still slated for startup
in 2027.
“International OCTG market dynamics remain
strong. Over the past several months, Vallourec has been awarded
several contracts in the Middle East, Brazil and Africa to deliver
premium tubular solutions to top global customers over the coming
years. Additionally, customer tendering activity remains high, and
we are confident in our ability to win attractive new business in
the coming months. Our pricing for new orders remains at a healthy
level, in line with strong global drilling activity
levels.
“In the US market, OCTG prices have remained
pressured by weaker than expected demand in 2024. We have remained
disciplined in our pricing strategy and have taken action to offset
these price headwinds via reduced staffing and sourcing costs. We
see medium-term upside to demand as operators seek to maintain
their currently-high level of oil and gas production in the years
ahead.
“With our balance sheet refinancing
completed and our net debt level now within our target leverage
range, we are in a resilient position for any market environment.
We expect further total cash generation in the second half of 2024,
which will be predominantly allocated to shareholder returns in
2025 at the latest. e”
Key Quarterly Data
|
in € million, unless noted |
Q2 2024 |
Q1 2024 |
Q2 2023 |
QoQ chg. |
YoY chg. |
|
Tubes volume sold (k tonnes) |
351 |
292 |
396 |
59 |
(46) |
|
Iron ore volume sold (m tonnes) |
1.4 |
1.4 |
1.9 |
0.0 |
(0.5) |
|
Group revenues |
1,085 |
990 |
1,358 |
95 |
(273) |
|
Group EBITDA |
215 |
235 |
374 |
(20) |
(159) |
|
(as a % of revenue) |
19.8% |
23.7% |
27.5% |
(3.9) pp |
(7.7) pp |
|
Operating income (loss) |
100 |
174 |
258 |
(74) |
(158) |
|
Net income, Group share |
111 |
105 |
159 |
6 |
(48) |
|
Adj. free cash flow |
81 |
172 |
174 |
(91) |
(93) |
|
Total cash generation |
41 |
102 |
118 |
(61) |
(77) |
|
Net debt |
364 |
485 |
868 |
(121) |
(504) |
CONSOLIDATED RESULTS
ANALYSIS
Second Quarter Results
Analysis
In Q2 2024, Vallourec recorded revenues
of €1,085 million, down (20%) year over year, which was also (20%)
at constant exchange rates. The decrease in Group revenues
reflects:
- (12%) volume decrease mainly driven
by the closure of the European rolling mills and decreased volume
sold in North America
- (7%) price/mix effect
- (1%) Mine & Forest effect
- (0.3%) currency effect
EBITDA amounted to €215 million, or
19.8% of revenues, compared to €374 million (27.5% of
revenues) in Q2 2023. The decrease was largely
driven by lower average selling prices in Tubes in North America,
partially offset by improved Tubes results outside of North America
due to higher market pricing and the benefits of the New Vallourec
plan.
Operating income was €100
million, compared to €258 million in Q2 2023. Operating
income was burdened by (€65) million of asset disposals,
restructuring costs and non-recurring items, largely due to costs
related to the closure of Vallourec’s German operations.
Financial income (loss) was positive at
€57 million, compared to (€24)
million in Q2 2023. Net interest income in Q2 2024 was €37 million
compared to (€28) million in Q2 2023. Vallourec’s balance sheet
refinancing had a net positive impact of approximately €70 million
mainly related to the reversal of fair value accounting on the 2026
senior notes and State-guaranteed loan (PGE), of which €44 million
impacted interest income.
Income tax amounted to (€40)
million compared to (€70) million in Q2 2023.
This resulted in positive net income,
Group share, of €111 million, compared to €159 million in
Q2 2023.
Earnings per diluted share was
€0.46 versus €0.67 in Q2 2023, reflecting the above
changes in net income as well as an increase in potentially
dilutive shares largely related to the Company’s outstanding
warrants, which are accounted for using the treasury share
method.
First Half Results Analysis
In H1 2024, Vallourec recorded revenues
of €2,075 million, down (23%) year over year, which was also (23%)
at constant exchange rates. The decrease in Group revenues
reflects:
- (22%) volume decrease mainly driven
by the decrease in Industry volumes following the closure of the
European rolling mills and by lower volumes in Oil & Gas Tubes
in North America
- 0.4% price/mix effect
- (1%) Mine and Forest effect
- (0.1%) currency effect
EBITDA amounted to €450 million, or
21.7% of revenues, compared to €694 million (25.7% of
revenues) in H1 2023. The decrease was largely
driven by lower average selling prices in Tubes in North America,
partly offset by improved Tubes results outside of North America
due to higher market pricing and the benefits of the New Vallourec
plan.
Operating income was €273
million, compared to €514 million in H1 2023. Operating
income was burdened by (€77) million of asset disposals,
restructuring costs and non-recurring items, largely due to costs
related to the closure of Vallourec’s German operations.
Financial income (loss) was positive at
€37 million, compared to (€70)
million in H1 2023. Net interest income in H1 2024 was €23 million
compared to (€54) million in H1 2023. Vallourec’s balance sheet
refinancing had a net positive impact of approximately €70 million
mainly related to the reversal of fair value accounting on the 2026
senior notes and State-guaranteed loan (PGE), of which €44 million
impacted interest income.
Income tax amounted to (€86)
million compared to (€123) million in H1 2023.
This resulted in positive net income,
Group share, of €216 million, compared to €315 million in
H1 2023.
Earnings per diluted share was
€0.90 versus €1.34 in H1 2023, reflecting the above
changes in net income as well as an increase in potentially
dilutive shares largely related to the Company’s outstanding
warrants, which are accounted for using the treasury share
method.
RESULTS ANALYSIS BY SEGMENT
Second Quarter Results Analysis
Tubes: In Q2 2024, Tubes revenues were
down 19% year over year due to an 11%
reduction in volume sold and a 9% decrease in average selling
price. This decrease in volumes was largely attributable to the
closure of Vallourec’s German rolling operations as a result of the
New Vallourec plan and decreased shipments in North America.
Tubes EBITDA decreased from €330 million in Q2 2023 to €210
million Q2 2024 due to lower profitability in North
America offset by improvements in the rest of the world due to
higher market pricing and the benefits of the New Vallourec
plan.
Mine & Forest: In Q2 2024, iron ore
production sold was 1.4 million tonnes, a decrease of 0.5
million tonnes year over year. In Q2 2024, Mine &
Forest EBITDA reached €15 million, versus €50 million in
Q2 2023, reflecting lower sales volumes, realized price, and
non-cash forest fair value revaluation effects and higher
costs.
First Half Results Analysis
Tubes: In H1 2024, Tubes revenues were
down 23% year over year due to a 22%
reduction in volume sold. This decrease in shipments was largely
attributable to the closure of Vallourec’s German rolling
operations as a result of the New Vallourec plan and decreased
volume sold in North America. Tubes EBITDA decreased from
€609 million in H1 2023 to €430 million H1 2024 due to a
decrease in profitability in North America offset by improvement in
the rest of the world due to higher market pricing and the benefits
of the New Vallourec plan.
Mine & Forest: In H1 2024, iron ore
production sold was 2.8 million tonnes, decreasing by 0.6
million tonnes year over year. In H1 2024, Mine &
Forest EBITDA reached €46 million, versus €98 million in
H1 2023, largely reflecting lower sales volumes, realized price,
and non-cash forest fair value revaluation effects and higher
costs.
CASH FLOW AND FINANCIAL
POSITION
Second Quarter Cash Flow Analysis
In Q2 2024, adjusted operating cash flow
was €96 million versus €232 million in Q2 2023. The
decrease was attributable to lower EBITDA. Financial cash out in
the period included approximately (€10) million of one-time costs
related to the balance sheet refinancing.
Adjusted free cash flow was €81 million,
versus €174 million in Q2 2023. Lower adjusted operating
cash flow was partially offset by reduced capex versus the prior
year period.
Total cash generation in Q2 2024 was €41
million, versus €118 million in Q2 2023. The decrease was
attributable to lower adjusted free cash flow as well as higher
restructuring charges and non-recurring items.
First Half Cash Flow Analysis
In H1 2024, adjusted operating cash flow
was €330 million versus €531 million in H1 2023. The
decrease was attributable to lower EBITDA, partly offset by reduced
financial cash out. Financial cash out in the period included
approximately (€10) million of one-time costs related to the
balance sheet refinancing.
Adjusted free cash flow was €253
million, versus €368 million in H1 2023. Lower adjusted
operating cash flow was partially offset by a release in working
capital and lower capex versus the prior year period.
Total cash generation in H1 2024 was
€143 million, versus €269 million in H1 2023. The decrease
was attributable to lower adjusted free cash flow as well as higher
restructuring charges and non-recurring items.
Net Debt and Liquidity
As of June 30, 2024,
net debtf stood at
€364 million, a significant decrease compared to €868 million on
June 30, 2023. Gross debt was €1,082 million, down from
€1,724 million on June 30, 2023. Long-term debt was €772 million
and short-term debt totaled €310 million. There were €80m of
non-cash reductions to net debt in Q2, which included €44 million
of fair value adjustments related to the April balance sheet
refinancing.
As of June 30,
2024, the liquidity position was very strong at €1,498
million, with €720 million of cash, availability on our
revolving credit facility (RCF) of €550 million, and availability
on an asset-backed lending facility (ABL) of €228
milliong. Both liquidity facilities were upsized and
extended in Vallourec’s April balance sheet refinancing.
THIRD QUARTER AND FULL YEAR 2024
OUTLOOKH
In the third quarter of 2024, based on
our assumptions and current market conditions, Vallourec
expects:
- Group EBITDA to decline versus Q2,
with:
- Tubes volumes to decrease
sequentially driven by lower US volumes and a Q4-weighted
international shipment schedule
- US Tubes prices to be lower in Q3
versus Q2
- Iron ore production sold to
increase sequentially
- Total cash generation to be
positive and net debt to further decline versus the Q2 2024
level
For the full year 2024, based on our
assumptions and current market conditions, Vallourec
expects:
- Group EBITDA to range between €800
– €850 million, driven by:
- A persistently strong international
Tubes market environment, more than offset by lower US Tubes demand
and pricing
- Iron ore production sold of
approximately 6 million tonnes, leading to full year EBITDA of
approximately €100 millioni
- Deleveraging to remain ahead of
schedule with positive total cash generation positive and further
net debt reduction versus the Q2 2024 level
Key items affecting Vallourec’s cash
flow in 2024 are as follows:
- Financial cash out is expected to
be approximately (€100) million
- Tax payments are expected to
reflect a low-to-mid 20% cash tax rate relative to reported pre-tax
income, down from the previous expectation of a mid-to-high 20%
cash tax rate relative to reported pre-tax income
- Capital expenditures are expected
to be less than (€200) million, down from the previous expectation
of approximately (€200) million
- Restructuring charges and
non-recurring items are expected to represent a net cash use of
approximately (€250) million. This estimate has increased from a
previous estimate of a (€200) million cash use and includes
offsetting proceeds from minor equipment sales, changes in cash
collateral and other cash items.j
- The potential positive impact of
major asset sales continues to be excluded from any cash flow or
net debt outlook.
Accounting for the above factors, we
expect positive total cash generation in the second half of 2024,
allowing us to remain ahead of schedule in our net debt reduction
plan.
Information and Forward-Looking Statements
This press release
includes forward-looking statements. These forward-looking
statements can be identified by the use of forward-looking
terminology, including the terms as “believe”, “expect”,
“anticipate”, “may”, “assume”, “plan”, “intend”, “will”, “should”,
“estimate”, “risk” and or, in each case, their negative, or other
variations or comparable terminology. These forward-looking
statements include all matters that are not historical facts and
include statements regarding the Company’s intentions, beliefs or
current expectations concerning, among other things, Vallourec’s
results of operations, financial condition, liquidity, prospects,
growth, strategies and the industries in which they operate.
Readers are cautioned that forward-looking statements are not
guarantees of future performance and that Vallourec’s or any of its
affiliates’ actual results of operations, financial condition and
liquidity, and the development of the industries in which they
operate may differ materially from those made in or suggested by
the forward-looking statements contained in this presentation. In
addition, even if Vallourec’s or any of its affiliates’ results of
operations, financial condition and liquidity, and the development
of the industries in which they operate are consistent with the
forward-looking statements contained in this presentation, those
results or developments may not be indicative of results or
developments in subsequent periods. By their nature,
forward-looking statements involve risks and uncertainties because
they relate to events and depend on circumstances that may or may
not occur in the future. These risks include those developed or
identified in the public documents filed by Vallourec with the
French Financial Markets Authority (Autorité des marches
financiers, or “AMF”), including those listed in the “Risk Factors”
section of the Universal Registration Document filed with the AMF
on March 14, 2024, under filing number n° D. 24-0113.
Accordingly, readers of this document are cautioned against relying
on these forward-looking statements. These forward-looking
statements are made as of the date of this document. Vallourec
disclaims any intention or obligation to complete, update or revise
these forward-looking statements, whether as a result of new
information, future events or otherwise, except as required by
applicable laws and regulations. This press release does not
constitute any offer to purchase or exchange, nor any solicitation
of an offer to sell or exchange securities of Vallourec. or further
information, please refer to the website
https://www.vallourec.com/en .
Presentation of Q2 2024 Results
Conference call / audio webcast on July
26th at 9:30 am CET
- To listen to the audio webcast:
https://channel.royalcast.com/landingpage/vallourec-en/20240726_1/
- To participate in the conference
call, please dial (password: “Vallourec”):
-
+44 (0) 33 0551 0200 (UK)
-
+33 (0) 1 7037 7166 (France)
- +1 786 697 3501 (USA)
- Audio webcast replay and slides
will be available at:
https://www.vallourec.com/en/investors
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 14,000 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: FR0013506730, Ticker VK), Vallourec is part of
the CAC Mid 60, SBF 120 and Next 150 indices and is eligible for
Deferred Settlement Service.
In the United States,
Vallourec has established a sponsored Level 1 American Depositary
Receipt (ADR) program (ISIN code: US92023R4074, Ticker: VLOWY).
Parity between ADR and a Vallourec ordinary share has been set at
5:1.
Financial Calendar
|
November 15th
2024 |
Release of Third Quarter and Nine Month 2024 results |
For further information, please contact:
Investor relations
Connor Lynagh
Tel: +1 (713) 409-7842
connor.lynagh@vallourec.com |
Press relations
Taddeo - Romain Grière
Tel: +33 (0) 7 86 53 17 29
romain.griere@taddeo.fr
|
Individual shareholders
Toll Free Number (from France): 0 805 65 10 10
actionnaires@vallourec.com
|
|
APPENDICES
The Group’s reporting currency is the euro. All
amounts are expressed in millions of euros, unless otherwise
specified. Certain numerical figures contained in this document,
including financial information and certain operating data, have
been subject to rounding adjustments.
Documents accompanying this
release:
- Tubes Sales Volume
- Mine Sales Volume
- Foreign Exchange Rates
- Tubes Revenues by Geographic
Region
- Tubes Revenues by Market
- Segment Key Performance Indicators
(KPIs)
- Summary Consolidated Income
Statement
- Summary Consolidated Balance
Sheet
- Key Cash Flow Metrics
- Summary Consolidated Statement of
Cash Flows (IFRS)
- Indebtedness
- Liquidity
- Definitions of Non-GAAP Financial
Data
Tubes Sales Volume
|
in thousands of tonnes |
2024 |
2023 |
YoY chg. |
|
Q1 |
292 |
431 |
(32%) |
|
Q2 |
351 |
396 |
(11%) |
|
Q3 |
- |
343 |
- |
|
Q4 |
- |
382 |
- |
|
Total |
643 |
1,552 |
- |
Mine Sales Volume
|
in millions of tonnes |
2024 |
2023 |
YoY chg. |
|
Q1 |
1.4 |
1.5 |
(9%) |
|
Q2 |
1.4 |
1.9 |
(25%) |
|
Q3 |
- |
1.8 |
- |
|
Q4 |
- |
1.7 |
- |
|
Total |
2.8 |
6.9 |
- |
Foreign Exchange Rates
|
Average exchange rate |
Q2 2024 |
Q1 2024 |
Q2 2023 |
|
EUR / USD |
1.08 |
1.09 |
1.09 |
|
EUR / BRL |
5.61 |
5.38 |
5.39 |
|
USD / BRL |
5.22 |
4.95 |
4.94 |
Quarterly Tubes Revenues by Geographic
Region
|
in € million |
Q2 2024 |
Q1 2024 |
Q2 2023 |
QoQ
% chg. |
YoY
% chg. |
|
North America |
383 |
450 |
663 |
(15%) |
(42%) |
|
South America |
169 |
153 |
229 |
10% |
(26%) |
|
Middle East |
247 |
162 |
157 |
53% |
57% |
|
Europe |
48 |
51 |
102 |
(5%) |
(53%) |
|
Asia |
108 |
68 |
73 |
57% |
47% |
|
Rest of World |
76 |
48 |
56 |
56% |
36% |
|
Total Tubes |
1,030 |
932 |
1,279 |
11% |
(19%) |
Year-to-Date Tubes Revenues by Geographic
Region
|
in € million |
H1 2024 |
H1 2023 |
YoY
% chg. |
|
North America |
833 |
1,321 |
(37%) |
|
South America |
322 |
418 |
(23%) |
|
Middle East |
409 |
269 |
52% |
|
Europe |
99 |
254 |
(61%) |
|
Asia |
176 |
127 |
38% |
|
Rest of World |
124 |
148 |
(16%) |
|
Total Tubes |
1,963 |
2,537 |
(23%) |
Quarterly Tubes Revenues by Market
|
in € million |
Q2 2024 |
Q1 2024 |
Q2 2023 |
QoQ
% chg. |
YoY
% chg. |
YoY % chg. at Const. FX |
|
Oil & Gas and Petrochemicals |
879 |
762 |
1,039 |
15% |
(15%) |
(15%) |
|
Industry |
100 |
119 |
207 |
(16%) |
(52%) |
(51%) |
|
Other |
52 |
51 |
33 |
3% |
60% |
58% |
|
Total Tubes |
1,030 |
932 |
1,279 |
11% |
(19%) |
(19%) |
Year-to-Date Tubes Revenues by Market
|
in € million |
H1 2024 |
H1 2023 |
YoY
% chg. |
YoY % chg. at Const. FX |
|
Oil & Gas and Petrochemicals |
1,641 |
2,060 |
(20%) |
(20%) |
|
Industry |
219 |
422 |
(48%) |
(48%) |
|
Other |
103 |
55 |
87% |
89% |
|
Total Tubes |
1,963 |
2,537 |
(23%) |
(23%) |
Quarterly Segment KPIs
| |
|
Q2 2024 |
Q1 2024 |
Q2 2023 |
QoQ chg. |
YoY chg. |
Tubes
|
Volume sold* |
351 |
292 |
396 |
20% |
(11%) |
|
Revenue (€m) |
1,030 |
932 |
1,279 |
11% |
(19%) |
|
Average Selling Price (€) |
2,937 |
3,189 |
3,226 |
(8%) |
(9%) |
|
EBITDA (€m) |
210 |
220 |
330 |
(4%) |
(36%) |
|
Capex (€m) |
23 |
46 |
61 |
(50%) |
(63%) |
Mine & Forest
|
Volume sold* |
1.4 |
1.4 |
1.9 |
3% |
(25%) |
|
Revenue (€m) |
69 |
80 |
93 |
(13%) |
(25%) |
|
EBITDA (€m) |
15 |
30 |
50 |
(49%) |
(69%) |
|
Capex (€m) |
5 |
9 |
5 |
(37%) |
14% |
H&O
|
Revenue (€m) |
49 |
45 |
51 |
9% |
(4%) |
|
EBITDA (€m) |
(13) |
(13) |
(5) |
(2%) |
nm |
Int.
|
Revenue (€m) |
(64) |
(67) |
(65) |
(5%) |
(1%) |
|
EBITDA (€m) |
2 |
(2) |
(1) |
nm |
nm |
Total
|
Revenue (€m) |
1,085 |
990 |
1,358 |
10% |
(20%) |
|
EBITDA (€m) |
215 |
235 |
374 |
(9%) |
(43%) |
|
Capex (€m) |
29 |
56 |
66 |
(47%) |
(56%) |
|
* Volume sold in thousand tonnes for Tubes and in million
tonnes for Mine |
|
H&O = Holding & Other, Int. = Intersegment
Transactions |
|
|
nm = not meaningful |
|
|
|
|
|
Year-to-Date Segment KPIs
| |
|
H1 2024 |
H1 2023 |
YoY chg. |
Tubes
|
Volume sold* |
643 |
827 |
(22%) |
|
Revenue (€m) |
1,963 |
2,537 |
(23%) |
|
Average Selling Price (€) |
3,052 |
3,066 |
(0%) |
|
EBITDA (€m) |
430 |
609 |
(29%) |
|
Capex (€m) |
69 |
106 |
(35%) |
Mine & Forest
|
Volume sold* |
2.8 |
3.4 |
(18%) |
|
Revenue (€m) |
149 |
186 |
(20%) |
|
EBITDA (€m) |
46 |
98 |
(53%) |
|
Capex (€m) |
14 |
12 |
14% |
H&O
|
Revenue (€m) |
93 |
97 |
(4%) |
|
EBITDA (€m) |
(27) |
(10) |
nm |
Int.
|
Revenue (€m) |
(130) |
(123) |
6% |
|
EBITDA (€m) |
1 |
(3) |
nm |
Total
|
Revenue (€m) |
2,075 |
2,696 |
(23%) |
|
EBITDA (€m) |
450 |
694 |
(35%) |
|
Capex (€m) |
85 |
119 |
(29%) |
|
* Volume sold in thousand tonnes for Tubes and in million
tonnes for Mine |
|
H&O = Holding & Other, Int. = Intersegment
Transactions |
|
nm = not meaningful |
|
|
|
Quarterly Summary Consolidated Income
Statement
|
€ million, unless noted |
Q2 2024 |
Q1 2024 |
Q2 2023 |
QoQ chg. |
YoY chg. |
|
Revenues |
1,085 |
990 |
1,358 |
95 |
(273) |
|
Cost of sales |
(774) |
(669) |
(890) |
(105) |
116 |
|
Industrial margin |
311 |
321 |
468 |
(10) |
(157) |
|
(as a % of revenue) |
28.6% |
32.4% |
34.5% |
(3.8) pp |
(5.8) pp |
|
Selling, general and administrative expenses |
(91) |
(87) |
(84) |
(4) |
(7) |
|
(as a % of revenue) |
(8.4%) |
(8.8%) |
(6.2%) |
0.4 pp |
(2.2) pp |
|
Other |
(5) |
1 |
(10) |
(6) |
5 |
|
EBITDA |
215 |
235 |
374 |
(20) |
(159) |
|
(as a % of revenue) |
19.8% |
23.7% |
27.5% |
(3.9) pp |
(7.7) pp |
|
Depreciation of industrial assets |
(44) |
(45) |
(45) |
1 |
1 |
|
Amortization and other depreciation |
(8) |
(8) |
(9) |
(0) |
1 |
|
Impairment of assets |
3 |
3 |
(8) |
(0) |
11 |
|
Asset disposals, restructuring costs and non-recurring items |
(65) |
(11) |
(55) |
(54) |
(10) |
|
Operating income (loss) |
100 |
174 |
258 |
(74) |
(158) |
|
Financial income (loss) |
57 |
(20) |
(24) |
77 |
81 |
|
Pre-tax income (loss) |
156 |
154 |
234 |
3 |
(78) |
|
Income tax |
(40) |
(46) |
(70) |
6 |
30 |
|
Share in net income (loss) of equity affiliates |
0 |
1 |
1 |
(1) |
(1) |
|
Net income |
116 |
108 |
164 |
8 |
(48) |
|
Attributable to non-controlling interests |
5 |
3 |
5 |
2 |
0 |
|
Net income, Group share |
111 |
105 |
159 |
6 |
(48) |
|
|
|
|
|
|
|
|
Basic earnings per share (€) |
0.48 |
0.46 |
0.68 |
0.02 |
(0.20) |
|
Diluted earnings per share (€) |
0.46 |
0.43 |
0.67 |
0.03 |
(0.21) |
|
|
|
|
|
|
|
|
Basic shares outstanding (millions) |
230 |
230 |
233 |
– |
(3) |
|
Diluted shares outstanding (millions) |
241 |
244 |
236 |
(3) |
5 |
Year-to-Date Summary Consolidated Income
Statement
|
€ million, unless noted |
H1 2024 |
H1 2023 |
YoY chg. |
|
Revenues |
2,075 |
2,696 |
(621) |
|
Cost of sales |
(1,443) |
(1,816) |
373 |
|
Industrial margin |
631 |
880 |
(248) |
|
(as a % of revenue) |
30.4% |
32.6% |
(2.2) pp |
|
Selling, general and administrative expenses |
(178) |
(163) |
(15) |
|
(as a % of revenue) |
(8.6%) |
(6.0%) |
(2.6) pp |
|
Other |
(3) |
(23) |
20 |
|
EBITDA |
450 |
694 |
(244) |
|
(as a % of revenue) |
21.7% |
25.7% |
(4.1) pp |
|
Depreciation of industrial assets |
(89) |
(85) |
(4) |
|
Amortization and other depreciation |
(17) |
(19) |
2 |
|
Impairment of assets |
6 |
(8) |
13 |
|
Asset disposals, restructuring costs and non-recurring items |
(77) |
(68) |
(9) |
|
Operating income (loss) |
273 |
514 |
(241) |
|
Financial income (loss) |
37 |
(70) |
107 |
|
Pre-tax income (loss) |
310 |
445 |
(134) |
|
Income tax |
(86) |
(123) |
37 |
|
Share in net income (loss) of equity affiliates |
1 |
(0) |
1 |
|
Net income |
224 |
321 |
(97) |
|
Attributable to non-controlling interests |
8 |
6 |
2 |
|
Net income, Group share |
216 |
315 |
(99) |
|
|
|
|
|
|
Basic earnings per share (€) |
0.94 |
1.36 |
(0.42) |
|
Diluted earnings per share (€) |
0.90 |
1.34 |
(0.44) |
|
|
|
|
|
|
Basic shares outstanding (millions) |
230 |
232 |
(2) |
|
Diluted shares outstanding (millions) |
241 |
236 |
5 |
Summary Consolidated Balance
Sheet
|
In € million |
|
|
|
|
|
|
Assets |
30-Jun-24 |
31-Dec-23 |
Liabilities |
30-Jun-24 |
31-Dec-23 |
|
|
|
|
Equity - Group share |
2,311 |
2,157 |
|
Net intangible assets |
37 |
42 |
Non-controlling interests |
77 |
67 |
|
Goodwill |
37 |
40 |
Total equity |
2,388 |
2,224 |
|
Net property, plant and equipment |
1,885 |
1,980 |
Bank loans and other borrowings |
772 |
1,348 |
|
Biological assets |
59 |
70 |
Lease debt |
33 |
40 |
|
Equity affiliates |
17 |
16 |
Employee benefit commitments |
81 |
102 |
|
Other non-current assets |
132 |
159 |
Deferred taxes |
84 |
83 |
|
Deferred taxes |
209 |
209 |
Provisions and other long-term liabilities |
264 |
317 |
|
Total non-current assets |
2,375 |
2,516 |
Total non-current liabilities |
1,234 |
1,890 |
|
Inventories |
1,240 |
1,242 |
Provisions |
181 |
249 |
|
Trade and other receivables |
716 |
756 |
Overdraft & other short-term borrowings |
310 |
122 |
|
Derivatives - assets |
22 |
47 |
Lease debt |
16 |
17 |
|
Other current assets |
251 |
251 |
Trade payables |
817 |
763 |
Cash and cash equivalents
|
720
|
900
|
Derivatives - liabilities |
103 |
79 |
|
Other current liabilities |
278 |
370 |
|
Total current assets |
2,949 |
3,196 |
Total current liabilities |
1,704 |
1,600 |
|
Assets held for sale and discontinued
operations |
1 |
1 |
Liabilities held for sale and discontinued operations |
– |
– |
|
Total assets |
5,325 |
5,713 |
Total equity and liabilities |
5,325 |
5,713 |
Quarterly Key Cash Flow
Metrics
|
In € million |
Q2 2024 |
Q1 2024 |
Q2 2023 |
QoQ chg. |
YoY chg. |
|
EBITDA |
215 |
235 |
374 |
(20) |
(159) |
|
Non-cash items in EBITDA |
(0) |
10 |
(21) |
(10) |
21 |
|
Financial cash out |
(65) |
5 |
(61) |
(70) |
(4) |
|
Tax payments |
(54) |
(15) |
(60) |
(39) |
6 |
|
Adjusted operating cash flow |
96 |
235 |
232 |
(139) |
(136) |
|
Change in working capital |
15 |
(7) |
8 |
22 |
7 |
|
Gross capital expenditure |
(30) |
(56) |
(66) |
26 |
36 |
|
Adjusted free cash flow |
81 |
172 |
174 |
(91) |
(93) |
|
Restructuring charges & non-recurring items |
(71) |
(67) |
(59) |
(4) |
(12) |
|
Asset disposals & other cash items |
31 |
(3) |
3 |
34 |
28 |
|
Total cash generation |
41 |
102 |
118 |
(61) |
(77) |
|
Non-cash adjustments to net debt |
80 |
(17) |
14 |
96 |
66 |
|
(Increase) decrease in net debt |
121 |
85 |
132 |
35 |
(11) |
Year-to-Date Key Cash Flow
Metrics
|
In € million |
H1 2024 |
H1 2023 |
YoY chg. |
|
EBITDA |
450 |
694 |
(244) |
|
Non-cash items in EBITDA |
9 |
(8) |
17 |
|
Financial cash out |
(60) |
(79) |
19 |
|
Tax payments |
(68) |
(76) |
8 |
|
Adjusted operating cash flow |
330 |
531 |
(200) |
|
Change in working capital |
8 |
(44) |
52 |
|
Gross capital expenditure |
(85) |
(119) |
34 |
|
Adjusted free cash flow |
253 |
368 |
(115) |
|
Restructuring charges & non-recurring items |
(138) |
(106) |
(32) |
|
Asset disposals & other cash items |
28 |
7 |
21 |
|
Total cash generation |
143 |
269 |
(126) |
|
Non-cash adjustments to net debt |
63 |
(7) |
70 |
|
(Increase) decrease in net debt |
206 |
262 |
(56) |
Summary Consolidated Statement of Cash
Flows (IFRS)
|
In € million |
H1 2024 |
H1 2023 |
YoY chg. |
|
Consolidated net income (loss) |
224 |
321 |
(97) |
|
Net additions to depreciation, amortization and provisions |
13 |
64 |
(51) |
|
Unrealized gains and losses on changes in fair value |
43 |
1 |
42 |
|
Capital gains and losses on disposals |
(1) |
1 |
(1) |
|
Share in income (loss) of equity-accounted companies |
(1) |
0 |
(1) |
|
Other cash flows from operating activities |
(34) |
(0) |
(34) |
|
Cash flow from (used in) operating activities after cost of
net debt and taxes |
244 |
386 |
(142) |
|
Cost of net debt |
(23) |
54 |
(76) |
|
Tax expense (including deferred taxes) |
86 |
123 |
(37) |
|
Cash flow from (used in) operating activities before costs
of net debt and taxes |
308 |
563 |
(255) |
|
Interest paid |
(70) |
(68) |
(1) |
|
Tax paid |
(68) |
(76) |
8 |
|
Interest received |
18 |
7 |
11 |
|
Other cash flow on financial income |
– |
– |
– |
|
Cash flow from (used in) operating activities |
188 |
425 |
(237) |
|
Change in operating working capital in the statement of cash
flows |
8 |
(44) |
52 |
|
Net cash flow from (used in) operating activies
(A) |
196 |
381 |
(185) |
|
Acquisitions of property, plant and equipment and intangible
assets |
(85) |
(119) |
34 |
|
Disposals of property, plant and equipment and intangible
assets |
21 |
18 |
3 |
|
Impact of acquisitions (changes in consolidation scope) |
3 |
2 |
1 |
|
Impact of disposals (changes in consolidation scope) |
– |
– |
– |
|
Other cash flow from investing activities |
0 |
0 |
0 |
|
Net cash flow from (used in) investing activities
(B) |
(61) |
(99) |
38 |
|
Increase or decrease in equity attributable to owners |
– |
– |
– |
|
Dividends paid to non-controlling interests |
(1) |
(3) |
2 |
|
Proceeds from new borrowings |
790 |
41 |
749 |
|
Repayment of borrowings |
(1,106) |
0 |
(1,107) |
|
Repayment of lease liabilities |
(11) |
(12) |
1 |
|
Other cash flow used in financing activities |
16 |
(1) |
17 |
|
Net cash flow from (used in) financing activites
(C) |
(312) |
27 |
(338) |
|
Impact of reclassification to assets held for sale and
discontinued operations (E) |
– |
(0) |
0 |
|
Change in net cash
(A+B+C+D+E) |
(177) |
308 |
(485) |
|
Opening net cash |
898 |
547 |
|
|
Impact of changes in exchange rates
(D) |
(2) |
(4) |
|
|
Closing net cash |
719 |
851 |
|
|
Change excluding forex impact |
(177) |
308 |
|
Indebtedness
|
In € million |
30-Jun-24 |
31-Dec-23 |
|
8.500% 5-year EUR Senior Notes due 2026 |
– |
1,105 |
|
7.500% 8-year USD Senior Notes due 2032 |
748 |
– |
|
1.837% PGE due 2027 (a) |
193 |
229 |
|
ACC ACE (b) |
109 |
94 |
|
Other |
32 |
42 |
|
Total gross financial indebtedness |
1,082 |
1,470 |
|
Cash and cash equivalents |
720 |
900 |
|
Fair value of cross currency swap (c) |
2 |
– |
|
Total net financial indebtedness |
364 |
570 |
(a) Maturity
prior to refinancing was 2027. Intended repayment
of the remaining amount by Dec. 2024
(b) Refers to ACC (Advances on
Foreign Exchange Contract) and ACE (Advances on Export Shipment
Documents) program in Brazil
(c) Vallourec entered
into 4-year cross-currency swaps (CCS) to hedge the
EUR/USD currency exposure related to its USD 2032 Senior Notes. The
fair value of the CCS related to the EUR/USD hedging of the
principal of the notes is consequently included in the net debt
definition.
Liquidity
|
In € million |
30-Jun-24 |
31-Dec-23 |
|
Cash and cash equivalents |
720 |
900 |
|
Available RCF |
550 |
462 |
|
Available ABL (a) |
228 |
177 |
|
Total liquidity |
1,498 |
1,539 |
(a) This $350m committed
ABL is subject to a borrowing base calculation based on eligible
accounts receivable and inventories, among other items. The
borrowing base is currently approximately $253m. Availability is
shown net of approximately $9m of letters of credit and other
items.
DEFINITIONS OF NON-GAAP FINANCIAL
DATA
Adjusted free cash flow is
defined as adjusted operating cash flow +/- change in operating
working capital and gross capital expenditures. It corresponds to
net cash used in operating activities less restructuring and
non-recurring items +/- gross capital expenditure.
Adjusted operating cash flow is
defined as EBITDA adjusted for non-cash benefits and expenses,
financial cash out and tax payments.
Asset disposals and other cash
items includes cash inflows from asset sales as well as
other investing and financing cash flows.
Change in working capital
refers to the change in the operating working capital
requirement.
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.
EBITDA: Earnings Before
Interest, Taxes, Depreciation and Amortization is calculated by
taking operating income (loss) before depreciation and
amortization, and excluding certain operating revenues and expenses
that are unusual in nature or occur rarely, such as:
- impairment of goodwill and
non-current assets as determined within the scope of impairment
tests carried out in accordance with IAS 36;
- significant restructuring expenses,
particularly resulting from headcount reorganization measures, in
respect of major events or decisions;
- capital gains or losses on
disposals;
- income and expenses resulting from
major litigation, significant roll-outs or capital transactions
(e.g., costs of integrating a new activity).
Financial cash out includes
interest payments on financial and lease debt, interest income and
other financial costs.
Free cash flow, as previously
defined, may continue to be derived as follows: total cash
generation - asset disposals & other cash items. This is also
defined as EBITDA adjusted for changes in provisions, less interest
and tax payments, changes in working capital, less gross capital
expenditures, and less restructuring/other cash outflows.
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.
(Increase) decrease in net debt
(alternatively, “change in net debt”) is defined as total cash
generation +/- non-cash adjustments to net debt.
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 is defined as the
present value of unavoidable future lease payments.
Net debt: Consolidated net debt
(or “net financial debt”) is defined as bank loans and other
borrowings plus overdrafts and other short-term borrowings minus
cash and cash equivalents plus the fair value of the cross-currency
swaps related to the EUR/USD hedging of the principal of the $820
million 7.5% senior notes. Net debt excludes lease debt.
Net working capital requirement
is 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.
Non-cash adjustments to net
debt includes non-cash foreign exchange impacts on debt
balances, IFRS-defined fair value adjustments on debt balances, and
other non-cash items.
Non-cash items in EBITDA
includes provisions and other non-cash items in EBITDA.
Operating working capital
requirement includes working capital requirement as well
as other receivables and payables.
Restructuring charges and non-recurring
items consists primarily of the cash costs of executing
the New Vallourec plan, including severance costs and other
facility closure costs.
Total cash generation is
defined as adjusted free cash flow +/- restructuring charges and
non-recurring items and asset disposals & other cash items. It
corresponds to net cash used in operating activities +/- gross
capital expenditure and asset disposals & other cash items.
Working capital requirement is
defined as trade receivables plus inventories minus trade payables
(excluding provisions).
a Vallourec’s dividend policy would in any event
be conditional upon the Board’s decision taking into account
Vallourec’s results, its financial position including the
deleveraging target and the potential restrictions applicable to
the payment of dividends. Dividends and share repurchases would
also be subject to shareholders’ approval.
b In all cases, total cash generation and net debt guidance
excludes the potential positive impact of major asset sales. See
further details regarding the third quarter and full year 2024
outlook at the end of this press release.
c The Barreiro Plug rolling mill has annual capacity of 150kt.
d The cost reduction target measured relative to the 2023 baseline,
while volume upside is measured relative to H1 24 volumes.
e Vallourec’s dividend policy would in any event be conditional
upon the Board’s decision taking into account Vallourec’s results,
its financial position including the deleveraging target and the
potential restrictions applicable to the payment of dividends.
Dividends and share repurchases would also be subject to
shareholders’ approval.
f Vallourec entered into 4-year cross-currency swaps (CCS) to hedge
the EUR/USD currency exposure related to its USD 2032 Senior Notes.
The fair value of the CCS related to the EUR/USD hedging of the
principal of the notes is consequently included in the net debt
definition.
g As of June 30, 2024, the borrowing base for this facility was
approximately $253 million, and $9 million in letters of credit and
other commitments were issued.
h In all cases, total cash generation and net debt guidance
excludes the potential positive impact of major asset sales.
i Assumes iron ore prices around the current level (as of July 26,
2024).
j The majority of such proceeds are expected to be recorded in
“asset disposals and other cash items.”
- Vallourec Q2 & H1 2024 Results Press Release
