Vallourec reports
third quarter and first nine months 2020 results
Boulogne-Billancourt (France), November
18th 2020 – Vallourec, a world leader in premium tubular
solutions, today announces its results for the third quarter and
nine first months of 2020. The consolidated financial information
was presented by Vallourec’s Management Board to its Supervisory
Board on November 17th 2020.
Q3 results: solid EBITDA generation
despite unprecedented drop in O&G market
- Revenue of €716 million, down 32% year-on-year or 22% at
constant exchange rates, mainly driven by lower demand in global
Oil & Gas market
- Strong EBITDA resilience at €71 million with margin up at 9.9%
of sales, versus €84 million in Q3 2019 or 7.9% of sales
- Positive free cash flow of €35 million versus €26 million in Q3
2019
- Net debt unchanged at €2,329 versus end of Q2 2020
- Strong liquidity position at €1,361 million
|
Financial Restructuring engaged
- Financial Restructuring to embrace all borrowings at Vallourec
S.A. level and to reduce debt level significantly as well as its
interest cash burden
- The objective of the Company is to negotiate an agreement with
its creditors on the terms of the Financial Restructuring
- As part of its Mandat Ad Hoc, Vallourec SA confirmed on
November 17, 2020 that it sought to reduce its debt amounting to
€3.5 bn by slightly over 50% by way of a debt-to-equity
conversion
|
Continued commercial momentum
- After extending our historic partnership with Petrobras in
July, our frame-agreement with Total was extended by five
years
|
Launching structural
measures to foster competitiveness
- In Europe, adaptation of the production capacity and SG&A
streamlining with:
- in France, a reduction of c.350 positions including the closure
of Déville heat treatment facility1
- in Germany, further on-going headcount reduction with c.200
positions over 2021-2022, and intensive use of short time work
before implementation of working time reduction up to 20%
- In Brazil: comprehensive savings plan including a structural
reduction of c.500 positions in support functions in 2020
|
2020 Outlook confirmed
- Full year outlook supported by solid resilience levers despite
depressed North America onshore activity:
- EA-MEA: impact of delayed IOCs and NOCs projects offset by
strong deliveries of special alloy tubes
- Brazil: increased pre-salt offshore activity as anticipated and
stable sales to Industry markets
- Increased profitability of our iron ore mine
- Confirmed full year target of €130 million gross savings on top
of the full adaptation of variable costs (including direct
labor)
- Free cash flow targeted positive in H2, including a significant
release of working capital
|
Key figures
9 Months 2020 |
9 Months 2019 |
Change |
In € million |
Q3 2020 |
Q3 2019 |
Change |
1,191 |
1,771 |
-32.7% |
Production shipped (k tons) |
319 |
595 |
-46.4% |
2,412 |
3,169 |
-23.9% |
Revenue |
716 |
1,060 |
-32.5% |
182 |
253 |
-€71m |
EBITDA |
71 |
84 |
-€13m |
7.5% |
8.0% |
-0.5p.p. |
(as a % of revenue) |
9.9% |
7.9% |
+2.0p.p. |
(507) |
(8) |
-€499m |
Operating income (loss) |
7 |
10 |
-€3m |
(636) |
(227) |
-€409m |
Net income, Group share |
(69) |
(60) |
-€9m |
(223) |
(117) |
-€106m |
Free cash-flow |
35 |
26 |
+€9m |
2,329 |
2,104 |
+€225m |
Net debt |
2,329 |
2,104 |
+€225m |
Edouard Guinotte, Chairman of the
Management Board, declared:
While the Covid-19 pandemic continued to
strongly impact the world economy and the activity of our customers
worldwide, we generated over the third quarter a solid EBITDA and a
positive free cash flow, in line with our expectations. This
performance rewards our continuous efforts to improve
competitiveness and the decided execution of strong adaptation
measures launched in 2020 to face this unprecedented crisis.
Our markets remain more volatile than ever and
their evolution highly uncertain, and despite some recent slight
signs of improvement in North America on-shore, we don’t rely on
activity being materially different in the coming quarters.
In this context, Vallourec is launching
structural actions across the Group, including headcount reductions
in France, Germany and Brazil and permanent working time reduction
in Germany. This, combined with the financial restructuring process
aiming at significantly reducing our debt level and addressing
upcoming debt maturities, will enable the Group to roll out its
Strategic roadmap and unleash its full potential.
Finally, I would like to sincerely thank all our
customers and partners, who continue to support us despite this
unprecedented context as well as our teams across all regions for
their continuous and exemplary commitment and dedication.
I - CONSOLIDATED REVENUE BY
MARKET
9 Months 2020 |
9 Months 2019 |
Change |
At constant exchange rates |
In € million |
Q3 2020 |
Q3 2019 |
Change |
At constant exchange rates |
1,641 |
2,280 |
-28.0% |
-24.5% |
Oil & Gas, Petrochemicals |
443 |
755 |
-41.3% |
-33.9% |
601 |
734 |
-18.1% |
-3.7% |
Industry & Other |
208 |
253 |
-17.8% |
4.3% |
170 |
155 |
9.7% |
12.3% |
Power Generation |
65 |
52 |
25.0% |
28.8% |
2,412 |
3,169 |
-23.9% |
-17.9% |
Total |
716 |
1,060 |
-32.5% |
-21.7% |
Over the third quarter of 2020,
Vallourec recorded revenue of €716 million, down 32% compared with
the third quarter of 2019 (-22% at constant exchange rates)
with:
- a volume impact of -46% mainly driven by Oil & Gas in North
America and EA-MEA
- a positive price/mix effect of +25% reflecting a better
price/mix in Oil & Gas in EA-MEA and South America, more than
offsetting lower prices in North America
- a currency conversion effect of -11% mainly related to
EUR/BRL.
Over the first nine months of 2020,
revenue totaled €2,412 million, down 24% versus the first nine
months of 2019 (-18% at constant exchange rate). Volume
effect was -33%, price/mix effect +15% and currency conversion
effect -6%.
Oil & Gas, Petrochemicals (62% of Q3 2020
consolidated revenue)
Oil & Gas revenue reached
€410 million in Q3 2020, a (€261) million
decrease or -39% year-on-year (-31% at constant
exchange rates), reflecting lower revenue in North America
and EA-MEA.
- In North America, Oil & Gas revenue
decrease was driven by lower deliveries due to the unprecedented
decrease in rig count, as well as to lower prices.
- In EA-MEA, Oil & Gas revenue decrease
reflected lower volumes while high alloy deliveries positively
impacted the price/mix
- In South America, Oil & Gas revenue strong
increase reflected the forecast increase in deliveries of premium
OCTG for pre-salt offshore, despite an unfavorable currency
conversion effect.
Over the first nine months of
2020, Oil & Gas revenue totaled
€1,480 million, a (€586) million decrease
or -28% year-on-year (-25% at constant exchange
rates).
Petrochemicals revenue was
€33 million in Q3 2020, down 61% year-on-year
(-54% at constant exchange rates) notably due to lower sales of
line pipes in North America as well as pressure on prices.
Over the first nine months of 2020, Petrochemicals
revenue totaled €161 million, down 25% year-on-year (-21% at
constant exchange rates).
In Q3 2020, revenue for Oil & Gas
and Petrochemicals amounted to €443 million, down 41% compared with
Q3 2019 (-34% at constant exchange rates) due to lower
O&G volumes in North America and EA-MEA. Over the first
nine months 2020, revenue for Oil & Gas and Petrochemicals
totaled €1,641 million, down 28% compared with 9M 2019
(-24% at constant exchange rates).
Industry & Other (29% of Q3 2020 consolidated
revenue)
Industry & Other revenue
amounted to €208 million in Q3 2020, down 18% year-on-year (+4% at
constant exchange rates):
- In Europe, Industry revenue was down year on year reflecting
lower volumes and prices.
- In South America, Industry & Other revenue was up, as a
result of higher revenue from the iron ore mine reflecting both
higher volumes and prices, and of the overall stability of our
sales to the Industry market before unfavorable currency conversion
effect.
Over the first nine months of 2020,
Industry & Other revenue totaled €601 million, down
18% year-on-year (-4% at constant exchange rates)
primarily as a result of unfavorable conversion currency effect and
lower shipments.
Power Generation (9% of Q3 2020 consolidated
revenue)
Power Generation revenue
amounted to €65 million in Q3 2020, up 25% year-on-year (+29% at
constant exchange rates), as a result of timing of project
deliveries.
The closure of the Reisholz site in Germany,
dedicated to coal-fired conventional power plants, is effective
since summer 2020.
For the first nine months of
2020, revenue totaled €170 million, up 10% year-on-year
(+12% at constant exchange rates).
II – CONSOLIDATED RESULTS ANALYSIS
Q3 2020 consolidated results analysis
In Q3 2020, EBITDA reached €71 million
compared with €84 million in Q3 2019, at 9.9% of revenue versus
7.9% in Q3 2019, as a result of:
- An industrial margin of €154 million, compared with €177
million in 2019, at 21.5% of revenue (versus 16.7% year on year),
reflecting the lower activity in Oil & Gas in North America and
to a lower extent in Industry in Europe, partially offset by (i)
savings, (ii) a higher mine contribution and (iii) a positive
contribution of Oil & Gas in South America, while lower Oil
& Gas volumes in EA-MEA were offset by higher price/mix.
- A 17% decrease in sales, general and administrative costs
(SG&A) at €77 million or 10.8% of revenues, reflecting our
strong cost savings measures.
Operating result was positive at €7
million, compared with €10m in Q3 2019, including lower
depreciation and amortization charges.
Financial result was negative at (€64)
million, compared to (€56) million
in Q3 2019, reflecting mainly higher net financial expenses.
Income tax amounted to (€21)
million mainly related to Brazil, compared to (€17)
million in Q3 2019.
This resulted in a net loss, Group
share, of (€69) million, compared to (€60) million in Q3
2019.
9M 2020 consolidated results analysis
For the first nine months of 2020,
EBITDA reached €182 million, a (€71) million decrease year on year,
at 7.5% of revenue versus 8% for the first nine months of
2019, including:
- An industrial margin of €451 million, down (€107) million
compared with 9M 2019, reflecting primarily lower activity in Oil
& Gas in North America, and to a smaller extent in Industry in
Europe. This was partially offset by (i) savings, (ii) a higher
mine contribution, and (iii) a positive contribution of Oil &
Gas in South America, while the impact of lower volumes in O&G
EA-MEA was offset by high alloys deliveries.
- Sales, general and administrative costs (SG&A) down 14% at
€250 million, reflecting our savings and adaptation plan, and
representing 10.4% of revenue.
Operating
result decreased by (€499) million to a loss of (€507)
million, reflecting mainly the impairment charge recorded
in Q2 2020. “Asset disposal, restructuring costs and other” charges
increased by (€49) million and included restructuring provisions
related to the closure of the Reisholz site in Germany, and the
adaptation plans in North America and Brazil. Lower depreciation of
industrial assets was recorded.
Financial result was
negative at (€179) million, stable
compared to (€178) million in 9M 2019. It included higher interest
expenses partially offset by other financial income of which
notably the settlement in Q1 of a dispute in Brazil for €23
million.
Income tax amounted to (€51)
million mainly related to Brazil.
As a result, net loss, Group share,
amounted to (€636) million, compared to (€227) million in
the first nine months of 2019.
III - CASH FLOW & FINANCIAL
POSITION
Cash flow from operating
activitiesIn Q3 2020, cash flow from operating
activities reached (€32) million, compared to (€2) million
in Q3 2019, reflecting mainly the lower EBITDA as well as higher
restructuring cash-out. For the first nine months of 2020,
cash flow from operating activities was negative at (€128)
million compared to €8 million for the first nine months
of 2019, mainly due to the lower EBITDA and to a lesser extent to
higher taxes paid, financial expenses and restructuring cash-out.
Operating working capital
requirementOperating working capital requirement
decreased by €94 million in Q3 2020, versus a decrease of
€71 million in Q3 2019, as a result of activity decline. Net
working capital requirement increased to 120 days of sales,
compared to 105 days in Q3 2019, impacted notably by customer mix
and fixed inventories. For the first nine months of 2020,
operating working capital requirement increased by (€5)
million versus an increase of (€46) million for the first
nine months of 2019.
CapexCapital
expenditure was (€27) million in Q3 2020, compared to
(€43) million in Q3 2019, and was (€90) million for the first nine
months of 2020 compared to (€79) million for the first nine months
of 2019.
Free cash flowAs a result,
in Q3 2020, free cash flow was positive at
€35 million versus €26 million in Q3 2019. Free cash flow
for the first nine months of 2020 was negative at (€223)
million compared with (€117) million for the first nine
months of 2019.
Asset disposals & other
items Asset disposals & other items amounted to (€37)
million in Q3 2020 and were mostly related to negative currency
effects on net debt as well as cash collateral related to bid and
performance bonds. For the first nine months of 2020, they amounted
to (€75) million as a result mainly of negative currency effects on
net debt as well as the repayment of leasing debts (IFRS16), and as
cash collateral related to bid and performance bonds.
Net debt and liquidityAs at
September 30th 2020, net debt stood at €2,329 million, compared
with €2,326 million on June 30th 2020.As at September 30th 2020,
lease debt stood at €112 million, compared with €122 million on
June 30th 2020.Cash as at September 30th 2020 amounted to €1,349
million, and €12 million of the €1,724 million committed bank
facilities were unused.
At the same date, long term debt amounted to
€1,749 million and short-term debt to €1,929 million, including
€1,712 million drawn from the €1,724 million committed banking
facilities maturing in February 2021. In July 2020, €99 million of
drawn banking facilities were repaid at their maturity.
Based on September 30th 2020 financial results,
the banking covenant ratio, as defined in the banking contracts,
would be at 129%. It is tested once a year on December 31st.
IV – LAUNCHING STRUCTURAL MEASURES TO
FOSTER COMPETITIVENESS
In addition to the 1/3 workforce reduction
already implemented in North America, Vallourec launches structural
measures across the Group to foster competitiveness.In Europe, the
Group will pursue the permanent adaptation of its footprint and
streamlining of SG&A:
- In France, this will imply a reduction of c.350 positions in
production facilities as well as in support functions, including
the closure of Déville heat treatment facility. The implementation
of these measures is subject to consultation of the work’s
councils.
- In Germany, on top of the previous plan, the Group will
implement a full set of additional measures including further
on-going headcount reduction with c.200 positions over 2021-2022
and intensive use of short time work before implementation of
working time reduction thanks to an existing company
agreement.
In Brazil, our comprehensive action plan will
result in particular in a structural reduction of c.500 positions
in support functions in 2020, and the insourcing of subcontracted
activities and activity variation, a specific focus on optimization
of steel cost and the redesign of maintenance and S&OP
processes.
V –OUTLOOK CONFIRMED FOR
2020
Oil &
Gas
- In North America, after the sharp drop in
drilling activity of shale operators (rig count down 75% since
December 19), the rig count has bottomed out since mid-August.
Average 2020 OCTG prices, significantly below 2019 levels, are
expected to start recovering in early 2021.
- In EA-MEA, delayed projects mainly from IOCs
and NOCs are offset in 2020 by the positive effect of the backlog
of high alloys products delivered this year.
- In Brazil, the 2020 drilling activity in
pre-salt is increasing yoy, as anticipated.
Industry
& Other
- In Europe, demand from Industry is still
impacted by Covid-19 crisis.
- In Brazil, the overall level of Industry
activity is expected to remain stable in 2020 compared to
2019.
- Volume of iron ore produced in Brazil is
expected to be higher than in 2019, notably thanks to the use of
mobile processing units. Iron ore prices have so far stayed at
favorable levels, but a limited decline is expected in Q4.
Costs savings
-
Confirmation of the full year target of €130 million gross savings
on top of the full adaptation of variable costs (including direct
labor).
-
Strict cash control with capex envelope of c.€160m.
Free cash flow
- Targeted to be
positive in H2, including a significant release of working
capital
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 Universal
Registration Document filed with the AMF on March 20th 2020.
Cautionary Statement
This press release does not, and shall not, in
any circumstances constitute a public offering or an invitation to
the public in connection with any offer.
No communication and no information in respect
of this transaction may be distributed to the public in any
jurisdiction where a registration or approval is required. No steps
have been or will be taken in any jurisdiction (other than France)
where such steps would be required. The issue, the subscription for
or the purchase of Vallourec’s shares may be subject to
specific legal or regulatory restrictions in certain jurisdictions.
Vallourec assumes no responsibility for any violation of any such
restrictions by any person.
This announcement is not a prospectus within the
meaning of Regulation (EU) 2017/1129 of the European Parliament and
the Council of June 14, 2017 (as amended or superseded, the
“Prospectus Regulation”). No securities offering will be opened to
the public in France before the delivery of the visa on a
prospectus prepared in compliance with the Prospectus Regulation,
as approved by the AMF.
In France, an offer of securities to the public
may only be made pursuant to a prospectus approved by the AMF. With
respect to the member States of the European Economic Area (each, a
“relevant member State”), other than France, no action has been
undertaken or will be undertaken to make an offer to the public of
the shares requiring a publication of a prospectus in any
relevant member State. Consequently, the securities cannot be
offered and will not be offered in any member State (other than
France), except in accordance with the exemptions set out in
Article 1(4) of the Prospectus Regulation, or in the other case
which does not require the publication by Vallourec of a prospectus
pursuant to the Prospectus Regulation and/or applicable regulation
in the member States.
This press release does not constitute an offer
of the securities to the public in the United Kingdom. The
distribution of this press release is not made, and has not been
approved, by an authorized person (“authorized person”) within the
meaning of Article 21(1) of the Financial Services and Markets Act
2000. As a consequence, this press release is directed only at (x)
persons who (i) are outside the United Kingdom, (ii) have
professional experience in matters relating to investments falling
within Article 19(5) of the Financial Services and Markets Act 2000
(Financial Promotion) Order 2005, as amended (the “Order”), or
(iii) are high net worth entities falling within Article 49(2) of
the Order and (y) any other persons to whom it may otherwise
lawfully be communicated (all such persons together being referred
to as “Relevant Persons”). The securities are directed only at
Relevant Persons and no invitation, offer or agreements to
subscribe, purchase or acquire the securities may be proposed or
made other than with Relevant Persons. Any person other than a
Relevant Person may not act or rely on this document or any
provision thereof. This press release is not a prospectus which has
been approved by the Financial Conduct Authority or any other
United Kingdom regulatory authority for the purposes of Section 85
of the Financial Services and Markets Act 2000.
This press release does not constitute or form a
part of any offer or solicitation to purchase or subscribe for
securities in the United States. Vallourec shares may not be sold
in the United States absent registration or an exemption from
registration under the U.S. Securities Act of 1933, as
amended. Vallourec does not intend to register in the United States
any portion of the offering mentioned in this press
release or to conduct a public offering of the shares in the
United States.
The distribution of this press release in
certain countries may constitute a breach of applicable law. The
information contained in this press release does not constitute an
offer of securities for sale in the United States, Canada,
Australia or Japan.
Presentation of Q3 & 9M 2020 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/vallourec-en/#!/vallourec-en/20201118_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:
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 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:
FR0013506730, 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
|
|
February 17th 2021 |
Release of 2020 full year results |
For further information, please
contact:
Investor
relations Jérôme FribouletTel: +33 (0)1 49 09 39
77Investor.relations@vallourec.com |
Press relations Héloïse Rothenbühler Tél: +33 (0)1
41 03 77
50 heloise.rothenbuhler@vallourec.com
|
Individual shareholdersToll Free Number
(from France): 0 805 65 10 10 actionnaires@vallourec.com
|
|
Appendices
Due to rounding, numbers presented throughout this and other
documents may not add up precisely to the totals provided and
percentages may not precisely reflect the absolute figures.
Documents accompanying this release:
- Sales volume
- Forex
- Revenue by geographic region
- Revenue by market
- Summary consolidated income statement
- Summary consolidated balance sheet
- Banking covenant
- Free cash flow
- Cash flow statement
- Definitions of non-GAAP financial data
Sales volume
In
thousands of tons |
2020 |
2019 |
Change |
Q1 |
450 |
571 |
-21.2% |
Q2 |
422 |
605 |
- 30.2% |
Q3 |
319 |
595 |
- 46.4% |
Total |
1,191 |
1,771 |
|
Forex
Average
exchange rate |
|
9 Months 2020 |
9 Months 2019 |
EUR /
USD |
|
1.13 |
1.12 |
EUR /
BRL |
|
5.71 |
4.36 |
USD /
BRL |
|
5.08 |
3.88 |
Revenue by geographic region
In €
million |
9 Months 2020 |
As % of revenue |
9 Months 2019 |
As % of revenue |
Change |
Q3 2020 |
As % of revenue |
Q3 2019 |
As % of revenue |
Change |
Europe |
406 |
16.8% |
457 |
14.4% |
-11.2% |
141 |
19.7% |
146 |
13.8% |
-3.4% |
North
America (Nafta) |
581 |
24.1% |
981 |
31.0% |
-40.8% |
99 |
13.8% |
313 |
29.5% |
-68.4% |
South
America |
532 |
22.1% |
508 |
16.0% |
4.7% |
209 |
29.2% |
179 |
16.9% |
16.8% |
Asia
and Middle East |
664 |
27.5% |
883 |
27.9% |
-24.8% |
197 |
27.5% |
334 |
31.5% |
-41.0% |
Rest
of the world |
229 |
9.5% |
340 |
10.7% |
-32.6% |
71 |
9.9% |
88 |
8.3% |
-19.3% |
Total |
2,412 |
100% |
3,169 |
100% |
-23.9% |
716 |
100% |
1,060 |
100% |
-32.5% |
Revenue by market
9 Months 2020 |
As % of revenue |
9 Months 2019 |
As % of revenue |
Change |
In € million |
Q3 2020 |
As % of revenue |
Q3 2019 |
As % of revenue |
Variation |
1,480 |
61.4% |
2,066 |
65.2% |
-28.4% |
Oil & Gas |
410 |
57.3% |
671 |
63.3% |
-38.9% |
161 |
6.7% |
214 |
6.8% |
-24.8% |
Petrochemicals |
33 |
4.6% |
84 |
7.9% |
-60.7% |
1,641 |
68.0% |
2,280 |
71.9% |
-28.0% |
Oil & Gas, Petrochemicals |
443 |
61.9% |
755 |
71.2% |
-41.3% |
220 |
9.1% |
291 |
9.2% |
-24.4% |
Mechanicals |
66 |
9.2% |
90 |
8.5% |
-26.7% |
41 |
1.7% |
92 |
2.9% |
-55.4% |
Automotive |
14 |
2.0% |
29 |
2.7% |
-51.7% |
340 |
14.1% |
351 |
11.1% |
-3.1% |
Construction & Other |
128 |
17.9% |
134 |
12.6% |
-4.5% |
601 |
24.9% |
734 |
23.2% |
-18.1% |
Industry & Other |
208 |
29.1% |
253 |
23.9% |
-17.8% |
170 |
7.0% |
155 |
4.9% |
9.7% |
Power Generation |
65 |
9.1% |
52 |
4.9% |
25.0% |
2,412 |
100% |
3,169 |
100% |
-23.9% |
Total |
716 |
100% |
1,060 |
100% |
-32.5% |
Summary consolidated income
statement
9 Months 2020 |
9 Months 2019 |
Change |
In € million |
Q3 2020 |
Q3 2019 |
Change |
2,412 |
3,169 |
-23.9% |
Revenue |
716 |
1,060 |
-32.5% |
(1,961) |
(2,611) |
-24.9% |
Cost of sales |
(562) |
(883) |
-36.4% |
451 |
558 |
-19.2% |
Industrial Margin |
154 |
177 |
-13.0% |
18.7% |
17.6% |
+1.1p.p. |
(as a % of revenue) |
21.5% |
16.7% |
+4.8p.p. |
(250) |
(291) |
-14.1% |
Sales, general and administrative costs |
(77) |
(93) |
-17.2% |
(19) |
(14) |
na |
Other |
(6) |
- |
na |
182 |
253 |
-€71m |
EBITDA |
71 |
84 |
-€13m |
7.5% |
8.0% |
-0.5p.p. |
(as a % of revenue) |
9.9% |
7.9% |
+2.0p.p. |
(158) |
(183) |
-13.7% |
Depreciation of industrial assets |
(47) |
(57) |
-17.5% |
(37) |
(44) |
na |
Amortization and other depreciation |
(10) |
(15) |
na |
(441) |
(30) |
na |
Impairment of assets |
- |
(9) |
na |
(53) |
(4) |
na |
Asset disposals, restructuring costs and non-recurring items |
(7) |
7 |
na |
(507) |
(8) |
-€499m |
Operating income (loss) |
7 |
10 |
-€3m |
(179) |
(178) |
0.6% |
Financial income/(loss) |
(64) |
(56) |
14.3% |
(686) |
(186) |
-€500m |
Pre-tax income (loss) |
(57) |
(46) |
-€11m |
(51) |
(39) |
na |
Income tax |
(21) |
(17) |
na |
(2) |
(2) |
na |
Share in net income/(loss) of equity affiliates |
(1) |
(1) |
na |
(739) |
(227) |
-€512m |
Net income |
(79) |
(64) |
-€15m |
(103) |
- |
na |
Attributable to non-controlling interests |
(10) |
(4) |
na |
(636) |
(227) |
-€409m |
Net income, Group share |
(69) |
(60) |
-€9m |
(55.6) |
(0.5) |
na |
Net earnings per share (in €) * |
(6.0) |
(0.1) |
na |
na = not applicable* 9M 2020 and Q3 2020 figures adjusted for
new number of shares following reverse stock split effective on May
25 2020
Summary consolidated balance sheet
In € million |
|
|
|
|
|
Assets |
9/30/2020 |
12/31/2019 |
Liabilities |
9/30/2020 |
12/31/2019 |
|
|
|
Equity -
Group share * |
378 |
1,467 |
|
|
|
Non-controlling interests |
354 |
513 |
Net
intangible assets |
53 |
63 |
Total equity |
732 |
1,980 |
Goodwill |
24 |
364 |
Shareholder loan |
8 |
21 |
Net
property, plant and equipment |
2,136 |
2,642 |
Bank
loans and other borrowings (A) |
1,749 |
1,747 |
Biological assets |
43 |
62 |
Lease
debt (D) |
87 |
104 |
Equity
affiliates |
125 |
129 |
Employee
benefit commitments |
213 |
228 |
Other
non-current assets |
99 |
132 |
Deferred
taxes |
19 |
9 |
Deferred
taxes |
205 |
249 |
Provisions and other long-term liabilities |
64 |
61 |
Total non-current assets |
2,685 |
3,641 |
Total non-current liabilities |
2,132 |
2,149 |
Inventories |
855 |
988 |
Provisions |
80 |
121 |
Trade and
other receivables |
533 |
638 |
Overdraft
and other short-term borrowings (B) |
1,929 |
2,077 |
Derivatives - assets |
29 |
7 |
Lease
debt (E) |
25 |
30 |
Other
current assets |
176 |
237 |
Trade
payables |
445 |
580 |
Cash and cash
equivalents (C) |
1,349 |
1,794 |
Derivatives - liabilities |
13 |
18 |
Other
current liabilities |
263 |
329 |
Total current assets |
2,942 |
3,664 |
Total current liabilities |
2,755 |
3,155 |
Total assets |
5,627 |
7,305 |
Total equity and liabilities |
5,627 |
7,305 |
|
|
|
|
|
|
* Net income (loss), Group share |
(636) |
(338) |
|
|
|
|
|
|
|
|
|
Net debt (A+B-C) |
2,329 |
2,031 |
|
|
|
|
|
|
|
|
|
Lease debt (D+E) |
112 |
134 |
|
|
|
Banking
covenant
As defined in the banking agreements, the
“banking covenant” ratio is the ratio of the Group’s consolidated
net debt including the “financial lease debt” and
the shareholder loan in Brazil 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.
Banking covenant (in € million) |
|
9/30/2020 |
12/31/2019 |
Net debt
(excluding financial lease debt) |
|
2,329 |
2,031 |
Financial
lease debt |
|
30 |
50 |
Net
debt |
|
2,359 |
2,081 |
Shareholder loan |
|
8 |
21 |
Restated
net debt (1) |
|
2,367 |
2,102 |
Equity |
|
732 |
1,980 |
Foreign
currency translation reserve - Group share (a) |
|
1,122 |
608 |
Reserves
- changes in fair value of financial instruments (a) |
|
(13) |
(4) |
Equity
restated (2) |
|
1,841 |
2,584 |
Ratio of
banking covenant restated (1)/(2) |
|
128.6% |
81.3% |
(a) Including
minority interests. |
|
|
|
Free cash flow
9 Months 2020 |
9 Months 2019 |
Change |
In € million |
Q3 2020 |
Q3 2019 |
Change |
(128) |
8 |
-€136m |
Cash flow from operating activities (A) |
(32) |
(2) |
-€30m |
(5) |
(46) |
+€41m |
Change in operating WCR [+ decrease, (increase)] (B) |
94 |
71 |
+€23m |
(90) |
(79) |
-€11m |
Gross capital expenditure (C) |
(27) |
(43) |
+€16m |
(223) |
(117) |
-€106m |
Free cash flow (A)+(B)+(C) |
35 |
26 |
+€9m |
Cash flow statement
9 Months 2020 |
9 Months 2019 |
In € million |
Q3 2020 |
Q3 2019 |
(128) |
8 |
Cash flow from operating activities |
(32) |
(2) |
(5) |
(46) |
Change in operating WCR [+ decrease, (increase)] |
94 |
71 |
(133) |
(38) |
Net cash flow from operating activities |
62 |
69 |
(90) |
(79) |
Gross capital expenditure |
(27) |
(43) |
(75) |
12 |
Asset disposals & other items |
(37) |
(19) |
(298) |
(105) |
Change in net debt [+ decrease, (increase)] |
(2) |
7 |
2,329 |
2,104 |
Financial net debt (end of period) |
2,329 |
2,104 |
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 “financial
lease debt” and the shareholder loan in Brazil 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: 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. 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 The implementation of these measures is subject to
consultation of the work’s councils
- Vallourec-press-release-Q3&9M-2020_
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