Vallourec reports
first quarter
2021 results
Boulogne-Billancourt (France),
May 20th
2021 –
Vallourec, a world leader in premium tubular solutions, today
announces its results for the first quarter 2021. The consolidated
financial information was presented by Vallourec’s Management Board
to its Supervisory Board on May 19th 2021.
Q1 results:
improved
EBITDA
at €80
million
-
€702 million revenue, down 18% year-on-year (-5% at constant
exchange rates)
-
€80 million EBITDA versus €68 million in Q1 2020 driven by mine
contribution and cost savings
-
EBITDA margin up 3.4p.p. to 11.4% of revenue
-
Free cash flow at (€62) million versus (€181) million in Q1
2020
-
Cash position at €1,242 million as at March 31st 2021
|
Confirmed 2021 Outlook:
-
Increased 2021 outlook released on April 30th based on higher
expected volumes and sales prices for OCTG in North America, and a
higher contribution from the iron ore mine in Brazil
-
EBITDA targeted between €350 and €400 million
-
Free cash flow targeted between (€340) and (€260) million including
the exercise of the repurchase option of a lease contract in
Brazil
-
Continuous cost savings throughout the year
-
Maintained strict cash control, with a capex envelope of c. €160
million
|
Implementation of the financial
restructuring to be completed on June
30th
2021…
-
Safeguard Plan
approved by the Commercial Court of Nanterre on May 19th 2021
-
Launch of the €300m rights issue, backstopped by the Converting
Creditors1, planned beginning of June
-
Closing of the financial restructuring planned to take place on
June 30th (including the capital increase reserved to the
Converting Creditors)
|
… allowing the roll-out of our strategic plan
-
Reinforcing the profitability of Vallourec’s core business by
implementing additional cost savings, maximizing the utilization of
our most competitive routes, and continued innovation to
successfully leverage market recovery
-
Exploiting the full potential of our mine in Brazil, with a new
iron ore treatment line by the end of 2021
-
Innovating in low carbon energy solutions to seize energy
transition growth opportunities
|
Rooted in strong ESG
commitment
-
1.7 ton of CO2 per ton of tubes produced
-
Rated AA by MSCI and n°13 of 128 among companies related to Energy
Sector Services by Sustainalytics
-
25% reduction in the Group's greenhouse gas emissions in
2025 versus 2017, in line with the Paris Agreement as validated by
SBTi in May 2020
|
Key figures
In € million |
Q1 2021 |
Q1 2020 |
Change |
Q4 2020 |
Production shipped (k tons) |
358 |
450 |
-20.4% |
408 |
Revenue |
702 |
853 |
-17.7% |
830 |
EBITDA |
80 |
68 |
17.6% |
76 |
(as a % of revenue) |
11.4% |
8.0% |
+3.4p.p. |
9.2% |
Operating income (loss) |
27 |
(29) |
+€56m |
(495) |
Net income, Group share |
(93) |
(74) |
-€19m |
(570) |
Free cash-flow |
(62) |
(181) |
+€119m |
112 |
Net debt |
2,364 |
2,267 |
+€97m |
2,214 |
Edouard
Guinotte, Chairman of the Management
Board, declared:
Despite the continuing impact of the Covid-19
pandemic all over the world and remaining uncertainties around its
evolution, the acceleration of the vaccination campaign in many
countries provides with reinforced optimism about the global
economic recovery. In past weeks, the Group's prospects have
improved with regard to expected OCTG volumes and prices in North
America, as well as to the iron ore mine contribution in Brazil.
This led us to increase our 2021 outlook.
Our Q1 EBITDA was up year-on-year, as the result
of the savings initiatives deployed across the Group, and the
higher results of the iron ore mine.
Following its approval by our creditors and
shareholders, the financial restructuring plan was approved by the
Commercial Court of Nanterre on May 19th, 2021, which paves the way
for its completion planned on June 30th, 2021.
Completing our financial restructuring will
ensure a leaner financial structure, enabling us, with the support
of our new reference shareholders Apollo and SVPGlobal, to roll out
our strategic plan. First, we aim to reinforce the profitability of
our core business by implementing additional cost savings,
maximizing the utilization of our most competitive routes, as well
as continuing to innovate in our core business. Secondly, we will
create additional value by further exploiting the potential of our
mine in Brazil and innovating in the energy transition.
The launch of a €300m rights issue, planned in
early June, will offer our shareholders the opportunity to
accompany Vallourec on this path to value creation.
I -
CONSOLIDATED REVENUE BY
MARKET
In € million |
Q1 2021 |
Q1 2020 |
Change |
At constant exchange rates |
Q4 2020 |
Oil & Gas, Petrochemicals |
410 |
613 |
-33.1% |
-25.0% |
566 |
Industry & Other |
255 |
193 |
31.9% |
60.6% |
225 |
Power Generation |
37 |
47 |
-21.7% |
-19.1% |
39 |
Total |
702 |
853 |
-17.7% |
-5.2% |
830 |
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.
Over the first quarter
of
2021,
Vallourec reported
a €702
million revenue,
down 18%
compared with
Q1 2020
(- 5%
at constant exchange
rates) with:
- a -20% volume impact mainly driven
by Oil & Gas in North America and, to a lesser extent, in
EA-MEA, while Industry & Other volume were up both in Europe
and Brazil
- a +15% price/mix
effect reflecting a better price/mix in South America and the
higher contribution of our iron ore mine
- a -13% currency conversion effect
mainly related to EUR/BRL.
Oil & Gas, Petrochemicals
(58%
of Q1 2021
consolidated
revenue)
In Q1
2021, Oil &
Gas revenue totaled €364
million, a
(€188)
million decrease
or
-34%
year-on-year (-26% at constant
exchange rates).
- In North America,
Oil & Gas revenue decrease was driven by lower deliveries and
prices compared to Q1 2020.
- In EA-MEA, Oil
& Gas revenue decrease reflected mainly lower volumes.
- In South America,
Oil & Gas revenue increase, despite an unfavorable currency
conversion effect, reflected higher volumes and price/mix.
In Q1
2021,
Petrochemicals revenue was
€46
million, down
24%
year-on-year (-15% at constant
exchange rates) notably due to lower deliveries in North America
and in EA-MEA.
In Q1
2021,
revenue for Oil & Gas and
Petrochemicals amounted to
€410 million, down
33% year-on-year
(-25% at constant exchange rates).
Industry & Other
(36% of Q1
2021 consolidated
revenue)
Industry & Other
revenue amounted to
€255 million
in Q1
2021,
up 32%
year-on-year (+61% at constant exchange rates):
- In Europe, Industry revenue was up,
driven by higher volumes
- In South America, Industry &
Other revenue was up, on account of higher revenue from the iron
ore mine reflecting both higher prices and volumes which reached
1.9Mt (up 28% versus Q1 2020), as well as of higher sales in the
Industry market driven by increased volumes and prices, despite an
unfavorable currency conversion
effect.
Power Generation (5%
of Q1 2021 consolidated
revenue)
Power Generation
revenue amounted to
€37 million in
Q1
2021,
down 22%
year-on-year (-19% at constant exchange rates),
reflecting the closure of the Reisholz facility mid-2020.
II –
Q1 2021 CONSOLIDATED
RESULTS ANALYSIS
In Q1
2021,
EBITDA increased
to €80
million compared
with €68
million in Q1
2020.
EBITDA margin
improved to
11.4% of
revenue versus
8.0% in
Q1
2020, as
a result of:
- A €168 million industrial margin,
slightly up compared with €161 million in Q1 2020, increasing at
23.9% of revenue versus 18.9%. The higher mine contribution,
combined with results from savings initiatives launched across the
Group, more than offset the effect of the decrease in the Oil &
Gas activity in EA-MEA and in North America.
- A 14% decrease in sales, general
and administrative costs (SG&A) at €77 million or 11.0% of
revenues, reflecting our cost savings measures.
At €27
million, operating result
was positive versus a (€29) million loss
of in Q1 2020, reflecting, in addition to higher EBITDA, limited
restructuring charges as well as lower depreciation and
amortization.
Financial result was negative
at
(€82)
million, compared with (€35) million
in Q1 2020 (which was positively impacted by the settlement of a
dispute in Brazil for €26 million). While net interest expenses
remained stable, the financial result recorded the accelerated
amortization of existing bonds costs for (€16) million and (€7)
million of debt restructuring fees incurred to date.
Income tax amounted to
(€40)
million mainly related to activities in Brazil, versus
(€20) million in Q1 2020.
This resulted in a
(€93) million net loss
(Group
share), versus (€74)
million in Q1 2020.
III -
CASH FLOW, NET DEBT AND LIQUIDITY
Cash flow from operating
activitiesIn
Q1
2021,
cash flow from operating activities was positive
at €13
million, compared with (€31)
million in Q1 2020; the improvement reflected mainly the increased
EBITDA and the freeze on payment of financial interests under the
safeguard proceeding period opened on February 4th (for an amount
of €44 million of accrued interests), partly offset by the
non-recurring positive effect in Q1 2020 of the settlement of a
dispute in Brazil for €26 million.
Operating working capital
requirementOperating working
capital requirement
increased by
€47 million in
Q1
2021, versus a €119 million
increase of in Q1 2020, reflecting a good performance in net
working capital management - at 104 days of sales, compared with
119 days in Q1 2020 - and benefiting from NSC’s payment of its
residual fixed costs coverage obligation following the sale of its
share in VSB, in Brazil, for €34 million.
CapexGross
capital expenditure was
(€28)
million in Q1
2021, compared with (€31) million
in Q1 2020, in line with usual capital expenditure
calendarization.
Free cash flowAs a result,
in Q1
2021,
free cash flow was
negative at
(€62)
million versus (€181) million in Q1 2020.
Asset disposals &
other itemsAsset disposals & other items amounted to
(€89) million in Q1 2021, reflecting mainly accrued interests
related to the financial restructuring for (€44) million, the
accelerated amortization of existing bonds costs for (€16) million,
the last reimbursement of NSC shareholder loan to VSB for (€9)
million and the acquisition of NSC shares in VSB for (€7)
million.
Net debt and
liquidityAs at March 31st 2021, net debt stood at €2,364
million, versus €2,214 million as at December 31st 2020.As at March
31st 2021, lease debt stood at €103 million, versus €108 million as
at December 31st 2020.As at March 31st 2021, cash amounted to
€1,242 million, versus €1,390m as at December 31st 2020.
At the same date, long-term debt amounted to €9
million and short-term debt totaled €3,597 million reflecting the
reclassification of bonds from long-term to short-term debt as a
result of the ongoing financial restructuring.
Assets disposal for saleAs at
March 31st 2021, €92 million of assets were recorded for sale and
were mainly related to nuclear activities. The disposal of Valinox
Nucléaire SAS should take place during the first half of 2021.
IV –
2021 OUTLOOK
Oil & Gas
In North America, the OCTG
market is showing a progressive improvement with higher prices and
volumes. In EA-MEA, in addition to the overall
activity still strongly impacted by the pandemic and price/mix
remaining under pressure, the sharp decline in deliveries of high
alloy products will negatively impact revenue and margin.
Nevertheless, resuming tendering activity in 2021 should translate
into higher 2022 activity.In Brazil, Oil & Gas
deliveries are expected to increase compared with 2020.
Industry & Other
In Europe, economic recovery is
underway and should continue having a positive impact on our
activity.In Brazil, the overall level of activity
is expected to continue increasing.A higher contribution is
expected from the iron ore mine, although prices are expected to
gradually decrease along the year.
Cost savings
Cost saving initiatives will enable the Group to
continue to lower its cost base.A strict cash control will be
maintained, with a capex envelope of c.€160 million.
Based on
these perspectives, Vallourec
has released on April
30th an upgraded
outlook for full
year 2021:
- €350 to €400
million targeted
EBITDA
- (€340) to (€260)
million targeted free cash
flow
- The new free cash flow objective
includes a c.€65 million additional cash outflow, resulting from
exercising the repurchase option for the debt of the lease contract
(DBOT) in Brazil.
V –
WRITING A NEW CHAPTER FOR VALLOUREC:
ROBUST STRATEGIC PLAN SUPPORTED BY
STRENGTHENED BALANCE SHEET
Further enhance profitability: cost
measures and value additive services
Maximizing the utilization of our most
competitive routes
Brazilian activities have been streamlined and
major savings have been made. VSB which is our flagship for export,
is qualified by Majors for premium OCTG products. Tianda, acquired
at the end of 2016, is now fully integrated within Vallourec’s
global network. Tianda is now qualified by Majors and national oil
companies for conventional premium and targets premium production
to represent 45% of its total production by 2025, compared with 23%
in 2020.The Group is targeting a utilization rate of new routes2
for premium Oil & Gas demand in the EA-MEA regions of
approximately 74% in 2025.
€400m additional gross
savings by 2025
To strengthen its competitiveness, Vallourec is
targeting €400m additional
gross cost savings by
2025. This cost savings potential is confirmed in the
2021-2025 industrial roadmap relying on more than 250 initiatives
identified and monitored at Group level, including:
- Process
improvement through the deployment of Industry 4.0
tools, data analytics, and intensification of lean
initiatives.
- Sourcing
initiatives including spend control tower and low-cost
countries procurement.
This industrial roadmap is empowered by specific
actions at regional level:
- In Europe, the production capacity
is being adapted to planned demand, including the closure of
Deville site, a social plan across French sites and structural
measures on working time and shift pattern in Germany.
- In Brazil, the execution of the
full cost reduction potential at the steel plant, the optimization
of the production flows within and across the sites and the
internalization of key functions.
- In North America, the maximum use
of the most competitive flows by debottlenecking and
internalization initiatives and the strengthening of the operations
agility to cope with market volatility.
Technological edge
and brand recognition at the heart of Vallourec’s
Strategy
The Group also intends to capture incremental
revenues by leveraging its technological edge and brand recognition
to develop new products and solutions.
Thanks to its proven know-how, supported by five
dedicated R&D centers in Europe, Brazil and the US, and 430
researchers and technicians, the Group enjoys a leading position in
premium OCTG connections with VAM® product family, co-developed
with Nippon Steel.
Vallourec continues to innovate and maintain its
technological leadership: it successfully launched new connections
such as VAM® Sprint-SF, VAM® Sprint-FJ or VAM® SLIJ-3 and developed
new steel grades offering higher corrosion resistance, strong
robustness at low temperatures and exceptional weldability.
Vallourec multiplies collaborations with its
customers and start-ups to develop innovative solutions for them as
recently demonstrated by the first 3D-printed safety-critical
component delivered to Total in the North Sea.
Complemented
by a range of services combining on-site
assistance and digital solutions.
Vallourec’s technical excellence will be
completed by a wide range of services and digital solutions. The
Group’s ambition is to use service as a differentiating factor for
its historical product lines and diversify by developing new
services supported by digital technology and the SmartengoTM brand.
It brings together the physical services offered to our customers:
teams of on-site engineers, customer supply chain optimization
services, and the incubation and development of a complementary and
stand-alone digital offering.
Supportive
medium-term
trends in our core markets
based on clear fundamentals
Oil& Gas
Global oil demand is generally expected to
rebound above 100mb/d, together with stock drawdown and natural
field depletion, and will lead to E&P capex recovery
notably in Vallourec’s key regions: Middle-East, Brazil, United
States and China.
In North America, 2021 drilling
activity recovery (+190 rigs in the US from 08/2020) is expected to
continue in 2022 as inventories and DUCs will decrease. The
drilling recovery is however limited by end user's capital
discipline and drilling efficiencies. Price recovery starting
in 2021 is supported by the balance of domestic supply and demand,
as well as raw materials surge. Additionally, the market is
experiencing a consolidation of competition and distribution. The
reduction of welded pipe capacity should also positively impact the
share of seamless pipe.
In South America, and in
particular in offshore Brazil, Petrobras is focusing its E&P
CAPEX on the development of its core pre-salt projects and demand
is exclusively for high-end premium. The PLP offshore projects
trend is also positive and Guyana development is offering
additional opportunities.
In EA-MEA, the market is
suffering from the strong impact of the crisis in 2020-2021. The
market recovery in volume is expected to take place as from 2022
especially in winning regions (Middle-East and East-Africa) as
E&P Capex are released. The competition intensity should keep
prices under pressure across the regions.
Industry & Other
Brazilian Industry is quickly recovering.
Long-term moderate growth should be supported by competitiveness of
the Brazilian industry. Iron ore prices are currently favorable but
are expected to decrease gradually. The start-up of a new treatment
line is expected by end 2021.
European Industry market collapsed in 2020 but
is following a V-shape recovery in 2021. A moderate growth is
forecasted after restocking in 2021.
Activate additional levers of value
creation
Exploiting
the full potential of our
mine in Brazil:
new iron ore treatment line by the end
of 2021
The expansion of the iron ore mine production
capacity in Brazil for an investment of around €60 million is in
progress, with a start-up expected by the end of 2021. This will
lead to a total production of 8.7 Mt/year as from 2022. With its
very competitive cost structure, the mine is highly profitable.
Innovating in low carbon energy
solutions to seize
energy transition growth opportunities
The Group targets to seize opportunities related
to the energy transition by developing solutions in the following
areas: geothermal, offshore wind, carbon capture utilization and
storage (CCUS), hydrogen and solar power.
Vallourec will draw on its industrial expertise,
innovation capacities, and relationship with customers committed to
the energy transition to take advantage of these opportunities.
Vallourec has set up a dedicated structure to conduct innovative
projects and is already present in each of these identified
segments:
- Regarding geothermal energy,
Vallourec is adapting its Oil & Gas expertise to support the
growth of our geothermal clients in demanding environments
(corrosion, high temperature).
- Regarding wind offshore, Vallourec
provides secondary steel structures foundations for wind turbines
as well as tubular structures for jackets and wind turbine
installation vessels and cranes.
- The Group is contributing to the
safe deployment of CCUS (carbon capture, utilization, and storage)
infrastructure. Vallourec’s line pipes allow for safe transport of
CO2 and its OCTG products are suitable for injecting CO2
underground.
- Regarding hydrogen, Vallourec is
providing tubular solutions for hydrogen projects – transportation,
distribution and storage – that require a high level of water
tightness and corrosion resistance.
- Vallourec assists solar
actors by providing optimized tubular structures of supporting
solar panels for large-scale structures such as parking lots shade
structures and agricultural and industrial hangars.
A leaner financial structure to execute
the strategic plan
This strategic plan will be rolled out within
the framework of a leaner financial structure following the
completion of the financial restructuring. Hence, the debt will be
reduced by €1.8 billion leading to a suitable 2020 proforma net
leverage of c1.6x. Financial charges will be reduced by c.€110m on
a full-year basis resulting from the new debt structure and the
termination of the DBOT lease contract (representing c.€20m
reduction in financial charges). Finally, the new normative Capex
envelope for the coming years will be contained under €200 million
thanks to a state-of-art industrial footprint.
VI
– €300M RIGHTS ISSUE TO ACCOMPANY
VALLOUREC ON THE IDENTIFIED PATH TO VALUE CREATION
As approved by the shareholders during the AGM
and subject to the approval by the AMF of the related prospectus,
Vallourec will launch a €300m rights issue with preferential rights
beginning of June.
The €5.66 subscription price of the rights issue
reflects a 30% discount compared to the price of the capital
increase reserved to the Converting creditors of €8.09 per new
share.
Bpifrance Participations and Nippon Steel
Corporation have already undertaken to subscribe for respectively
€20 million and €35 million.
This rights issue will lead to the issuance of
c. 53 million new shares which will represent c. 23% of the share
capital post financial restructuring before the exercise of
warrants (c. 20% after).
The rights issue will be backstopped by the
Converting Creditors by way of set-off debt against claims and the
cash proceeds will be used to repay a portion of the Converting
Creditors’ claims.
Information and Forward-Looking Statements
This presentation may include 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. 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
Registration Document filed with the AMF on March 29, 2021. 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.
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 approval 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
Q1
2021
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/landingpage/vallourec-en/20210520_1/
- To participate in the conference
call, please dial (password to use is “Vallourec”):
-
+44 (0) 33 0551
0200 (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 17,000 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 SBF 120 index
and is eligible for Deferred Settlement Service Long Only.
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.
Calendar
July
28th
2021 |
Release of second quarter and first half 2021 results |
For further information, please
contact:
Investor
relations Jérôme FribouletTel: +33 (0)1 49 09 39
77Investor.relations@vallourec.com |
Press
relations Héloïse RothenbühlerTel: +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
- Free cash flow
- Cash flow statement
- Definitions of non-GAAP financial
data
Sales volume
In thousands of tons |
2021 |
2020 |
Change |
Q1 |
358 |
450 |
-20.4% |
Q2 |
- |
422 |
- |
Q3 |
- |
319 |
- |
Q4 |
- |
358 |
- |
Total |
358 |
1,599 |
|
Forex
Average exchange rate |
|
Q1 2021 |
Q1 2020 |
EUR / USD |
|
1.20 |
1.10 |
EUR / BRL |
|
6.60 |
4.92 |
USD / BRL |
|
5.48 |
4.47 |
Revenue by geographic
region
In € million |
Q1 2021 |
As % of revenue |
Q1 2020 |
As % of revenue |
Change |
Europe |
113 |
16.1% |
148 |
17.4% |
-23.6% |
North America (Nafta) |
115 |
16.4% |
270 |
31.7% |
-57.4% |
South America |
226 |
32.2% |
152 |
17.8% |
48.7% |
Asia and Middle East |
198 |
28.2% |
226 |
26.5% |
-12.4% |
Rest of the world |
49 |
7.0% |
57 |
6.7% |
-14.0% |
Total |
702 |
100% |
853 |
100% |
-17.7% |
Revenue by market
In € million |
Q1 2021 |
As % of revenue |
Q1 2020 |
As % of revenue |
Variation |
Oil & Gas |
364 |
51.9% |
552 |
64.7% |
-34.1% |
Petrochemicals |
46 |
6.6% |
61 |
7.2% |
-24.6% |
Oil & Gas, Petrochemicals |
410 |
58.4% |
613 |
71.9% |
-33.1% |
Mechanicals |
94 |
13.4% |
79 |
9.3% |
18.7% |
Automotive |
19 |
2.7% |
18 |
2.1% |
5.6% |
Construction & Other |
142 |
20.2% |
96 |
11.2% |
47.7% |
Industry & Other |
255 |
36.3% |
193 |
22.6% |
31.9% |
Power Generation |
37 |
5.2% |
47 |
5.5% |
-21.7% |
Total |
702 |
100% |
853 |
100% |
-17.7% |
Summary consolidated income statement
In € million |
Q1 2021 |
Q1 2020 |
Change |
Revenue |
702 |
853 |
-17.7% |
Cost of sales |
(534) |
(692) |
-22.8% |
Industrial Margin |
168 |
161 |
4.3% |
(as a % of revenue) |
23.9% |
18.9% |
+5.1p.p. |
Sales, general and administrative costs |
(77) |
(90) |
-14.4% |
Other |
(11) |
(3) |
na |
EBITDA |
80 |
68 |
17.6% |
(as a % of revenue) |
11.4% |
8.0% |
+3.4p.p. |
Depreciation of industrial assets |
(43) |
(59) |
-27.1% |
Amortization and other depreciation |
(9) |
(14) |
na |
Impairment of assets |
- |
- |
na |
Asset disposals, restructuring costs and non-recurring items |
(1) |
(24) |
na |
Operating income (loss) |
27 |
(29) |
+€56m |
Financial income/(loss) |
(82) |
(35) |
-€47m |
Pre-tax income (loss) |
(55) |
(64) |
+€9m |
Income tax |
(40) |
(20) |
na |
Share in net income/(loss) of equity affiliates |
(3) |
(1) |
na |
Net income |
(98) |
(85) |
-€13m |
Attributable to non-controlling interests |
(5) |
(11) |
na |
Net income, Group share |
(93) |
(74) |
-€19m |
Net earnings per share (in €) * |
(8.2) |
(0.2) |
na |
na = not applicable* Q1 2021 figures impacted by the new number
of shares following reverse stock split effective on May 25th
2020.
Summary consolidated balance sheet
In € million |
|
|
|
|
|
Assets |
3/31/2021 |
12/31/2020 |
Liabilities |
3/31/2021 |
12/31/2020 |
|
|
|
Equity - Group share * |
(200) |
(187) |
|
|
|
Non-controlling interests |
238 |
321 |
Net intangible assets |
47 |
50 |
Total equity |
38 |
134 |
Goodwill |
24 |
25 |
Shareholder loan |
- |
9 |
Net property, plant and equipment |
1,694 |
1,718 |
Bank loans and other borrowings (A) |
9 |
1,751 |
Biological assets |
32 |
30 |
Lease debt (D) |
78 |
84 |
Equity affiliates |
40 |
42 |
Employee benefit commitments |
182 |
203 |
Other non-current assets |
130 |
128 |
Deferred taxes |
16 |
20 |
Deferred taxes |
180 |
187 |
Provisions and other long-term liabilities |
148 |
142 |
Total non-current assets |
2,147 |
2,180 |
Total non-current liabilities |
433 |
2,200 |
Inventories |
720 |
664 |
Provisions |
69 |
104 |
Trade and other receivables |
539 |
468 |
Overdraft and other short-term borrowings (B) |
3,597 |
1,853 |
Derivatives - assets |
11 |
37 |
Lease debt (E) |
25 |
24 |
Other current assets |
209 |
203 |
Trade payables |
456 |
426 |
Cash and cash equivalents (C) |
1,242 |
1,390 |
Derivatives - liabilities |
12 |
21 |
Other current liabilities |
291 |
241 |
Total current assets |
2,721 |
2,762 |
Total current liabilities |
4,450 |
2,669 |
Assets held for sale and discontinued operations |
92 |
107 |
Liabilities held for sale and discontinued operations |
39 |
37 |
Total assets |
4,960 |
5,049 |
Total equity and liabilities |
4,960 |
5,049 |
|
|
|
|
|
|
* Net income (loss), Group share |
(93) |
(1,206) |
|
|
|
|
|
|
|
|
|
Net debt (A+B-C) |
2,364 |
2,214 |
|
|
|
|
|
|
|
|
|
Lease debt (D+E) |
103 |
108 |
|
|
|
Free cash flow
In € million |
Q1 2021 |
Q1 2020 |
Change |
Cash flow from operating activities (A) |
13 |
(31) |
+€44m |
Change in operating WCR [+ decrease, (increase)] (B) |
(47) |
(119) |
+€72m |
Gross capital expenditure (C) |
(28) |
(31) |
+€3m |
Free cash flow (A)+(B)+(C) |
(62) |
(181) |
+€119m |
Cash flow statement
In € million |
Q1 2021 |
Q1 2020 |
Cash flow from operating activities |
13 |
(31) |
Change in operating WCR [+ decrease, (increase)] |
(47) |
(119) |
Net cash flow from operating activities |
(34) |
(150) |
Gross capital expenditure |
(28) |
(31) |
Asset disposals & other items |
(89) |
(55) |
Change in net debt [+ decrease, (increase)] |
(151) |
(236) |
Financial net debt (end of period) |
2,364 |
2,267 |
Definitions of non-GAAP financial data
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 Converting Creditors means all creditors of Vallourec
S.A.under the RCFs and the Notes, except Commercial Banks
(Commercial Banks means BNP Paribas, Banque Fédérative du Crédit
Mutuel/CIC and Natixis)2 Percentage of premium OCTG and PLP
products rolled at VSB or Tianda, compared to total swing order
deliveries, i.e., orders that may be served interchangeably from
Europe, Brazil or Asia.
- Vallourec-press-release-Q1 2021 - 20 05 2021
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