French pipemaker Vallourec continues to foresee positive market dynamics thanks to higher drilling and OCTG prices, driven by global demand recovery and the inflationary environment, the company says in an investors’ presentation obtained by Kallanish.
Thanks to continued improvement in its tube division, particularly in North America, which is forecast to offset lower performance at Vallourec’s iron ore mine, the firm is targeting increased Ebitda this year in a range of €650-750 million ($648-748m). However, “with normalised iron ore mine production, Ebitda would have been approximately €1 billion in 2022,” the company says.
Vallourec continues to enact a drastic transformation plan. With its financial restructuring now completed, it reports a €1.7 billion debt reduction and the refinancing of residual debt with five-year maturity. The pipemaker is pursuing a “strategy of value over volume via reduction of 700,000 tonnes of unprofitable rolling capacity in Europe” transferring some of its European output to low-cost production regions, it says.
In 2021 and 2022, Vallourec divested its non-core assets, which include Valinox Nucleaire and Vallourec Bearing Tubes. It rationalised its European output by shutting down its German and some French assets, and transferring its O&G activities to Brazil. It acquired the minority interests in its strategic assets in VSB, Vallourec Star and VAM USA in 2021. Such actions have led to the full ownership of Brazilian and North American assets (see Kallanish passim).
The firm says it now benefits from a “stronger balance sheet and simplified organisation”. By 2024, the firm will reach a 750,000 tonnes/year steel and rolling capacity in North America, and 950,000 t/y steel capacity and 1.1 million t/y re-rolling capacity in South America. In China, it plans to reach 600,000 t/y of re-rolling capacity.
The group’s first-half-year revenue stood at €2 billion, up 33% year-on-year, driven by the price mix effect and sales volume hike in the Oil & Gas division in North America and EA-MEA. H1 Ebitda stood at €205m versus €228m in H1 2021.
Natalia Capra France
