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Share Name | Share Symbol | Market | Type |
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Vallourec | EU:VK | Euronext | Ordinary Share |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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0.00 | 0.00% | 16.355 | 16.465 | 16.20 | 0.00 | 07:37:43 |
Press Release | |
July 2015 www.vallourec.com | |
Vallourec reports second quarter
and first half 2015 results
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Boulogne-Billancourt (France), 30 July 2015 - Vallourec, world leader in premium tubular solutions, today announces its results for the second quarter and first half of 2015. The consolidated financial statements were presented by Vallourec's Management Board to its Supervisory Board on 30 July 2015.
Commenting on these results, Philippe Crouzet, Chairman of the Management Board, said:
"The severe downturn in the Oil & Gas markets persists. The resulting decline in drilling activity since the beginning of the year, particularly in North America and the EAMEA region, led to a sharp fall in our sales and increased pressure on prices in the first semester. As a result, our mills have been operating well below capacity, leading to inefficiencies typically associated with low load.
Vallourec's management remain fully committed to confront this depressed environment, which will further affect the remainder of 2015.
We have implemented drastic flexibility measures to adapt our mills to the low load, and have removed approximately 80% of the variable costs associated with the lost volume.
In parallel, we are deploying Valens in strict accordance with the plan, and are on track to gradually deliver the targeted savings.
Finally, and more than ever under such circumstances, we maintain a strong focus on cash, through tight working capital management and strict discipline on capex: we therefore reiterate our positive free cash flow generation target for 2015.
I am convinced that the vigorous actions we have taken, combined with our unique technologies, talented people and key local positions, will enable us to respond to the challenging environment and keep meeting our customers' expectations."
Key figures
H1 | H1 | Change | In millions of euros | Q2 | Q2 | Change |
2015 | 2014 | YoY | 2015 | 2014 | YoY | |
774 | 1,134 | -31.7% | Sales Volume (k tonnes) | 362 | 583 | -37.9% |
2,070 | 2,693 | -23.1% | Revenues | 1,018 | 1,422 | -28.4% |
66 | 444 | -85.1% | EBITDA | 13 | 248 | -94.8% |
3.2% | 16.5% | -13.3pt | As % of revenues | 1.3% | 17.4% | -16.1pt |
(228) | 265 | na | Operating income (loss)(1) | (193) | 156 | na |
(275) | 144 | na | Net income (loss), Group share | (199) | 88 | na |
+3 | +37 | -€34m | Free cash flow(2) | +33 | +1 | +€32m |
na: not applicable
I - CONSOLIDATED REVENUES BY MARKET
H1 | H1 | Change | In millions of euros | Q2 | Q2 | Change |
2015 | 2014 | YoY | 2015 | 2014 | YoY | |
1,439 | 1,905 | -24.5% | Oil & Gas, Petrochemicals | 720 | 1,017 | -29.2% |
253 | 278 | -9.0% | Power Generation | 110 | 143 | -23.1% |
378 | 510 | -25.9% | Industry & Other | 188 | 262 | -28.2% |
2,070 | 2,693 | -23.1% | Total | 1,018 | 1,422 | -28.4% |
Oil & Gas, Petrochemicals (69.5% of revenues)
Oil & Gas revenues reached €1,331 million in H1 2015, down 25.1% year-on-year (down 32.1% at constant exchange rates):
Petrochemicals revenues were €108 million in H1 2015, down 15.0% year-on-year (down 21.3% at constant exchange rates) due to lower demand in a highly competitive environment.
Power Generation (12.2% of revenues)
Power Generation revenues amounted to €253 million in H1 2015, down 9.0% year-on-year (down 12.6% at constant exchange rates):
Industry & Other (18.3% of revenues)
Industry & Other revenues amounted to €378 million in H1 2015, down 25.9% year-on-year (down 26.7% at constant exchange rates):
H1 2015 iron ore revenues were significantly down year-on-year, due to the 46% drop in iron ore spot prices compared with H1 2014.
II - H1 2015 CONSOLIDATED RESULTS ANALYSIS
EBITDA stood at €66 million in H1 2015, down 85.1% year-on-year. EBITDA margin was 3.2% of revenues in H1 2015 compared with 16.5% in H1 2014. This was due to:
Operating loss was €228 million in H1 2015, compared with a profit of €265 million in H1 2014. This deterioration results from lower EBITDA, and from €145 million of other charges, including €111 million of restructuring charges and impairment related to the implementation of Valens. The depreciation of industrial assets remained broadly stable at €149 million.
For the first half of 2015, financial result was negative at -€37 million versus -€31 million in H1 2014.
The income tax charge amounted to €15 million in H1 2015 compared with €74 million in H1 2014.
Non-controlling interests were a charge of -€5 million in H1 2015, compared with a product of €16 million in H1 2014, explained by the decline in US operations results.
Net loss, Group share was €275 million in H1 2015, compared with a profit of €144 million in H1 2014.
III - CASH FLOW & FINANCIAL POSITION
Vallourec generated a slightly better than anticipated free cash flow at €3 million in H1 2015, compared with a positive free cash flow of €37 million in H1 2014. This was primarily explained by:
In June 2015, the Holding company paid €41.9 million in dividend to its shareholders in cash. The payment of the dividend in shares resulted in the creation of 3,090,460 new shares (i.e. 2.37% of the share capital).
As at 30 June 2015, Group net debt increased by €123 million to €1,670 million compared with the end of 2014. The gearing ratio was 42.5% compared with 37.1% at the end of 2014.
Vallourec's liquidity position is strong. The Group increased its committed financings to approximately €3.6 billion, including €1.8 billion undrawn confirmed credit lines, and no significant repayment until 2017. In June 2015, the Group signed an additional multi-currency revolving credit facility for €90 million, maturing in February 2019, plus two one-year extension options.
IV - SHORT-TERM ADAPTATION AND VALENS PLAN
The Group is adapting to the low load of the mills. Global staff reduction was 1,600 over the first half of 2015 (close to 7% of total headcount), including close to 1,000 permanent jobs.
Action plans have been implemented to adapt the mills' to the reduced activity, and allowed to remove approximately 80% of the variable costs (excluding raw materials) associated with the lost volume.
The Valens plan is well on track with approximately 2/3rd of the 450+ initiatives already started notably on manufacturing costs and SG&A. These initiatives, along with an overall focus on cost reduction, contributed to the reduction of industrial fixed costs and to the improvement of S&GA in H1 2015. The targeted savings of 10% of added costs, with a full year effect in 2017, is confirmed.
The process to structurally reduce our European steel and tube capacity, and our worldwide overhead costs is being deployed according to plan.
V - MARKET TRENDS & OUTLOOK
Vallourec expects its Oil & Gas deliveries and results to be further impacted in H2 2015 by the challenging market trends:
Industry & Other operations in Brazil will continue to suffer in H2 2015 from the deteriorating local macroeconomic environment, while persisting oversupply in the iron ore market will result in significantly lower prices than in 2014.
In Europe, the environment for Power Generation and Industry & Other operations remains very competitive.
Overall, despite the ongoing cost reduction measures, this very challenging environment, notably in the Oil & Gas markets, is expected to lead to Q3 and Q4 2015 deliveries and margins being significantly below the level achieved in Q2, which will likely result in a negative EBITDA for the full year.
The Group maintains a strong focus on cash: the operating working capital requirement will continue to be strongly reduced in H2 2015, and the capital expenditure revised down to around €300 million from €350 million initially planned.
Based on current market conditions and currency trends, Vallourec continues to target a positive free cash flow generation in 2015.
About Vallourec
Vallourec is a world leader in premium tubular solutions primarily serving the energy markets, as well as other industrial applications.
With over 23,000 employees in 2014, integrated manufacturing facilities, advanced R&D and a presence in more than 20 countries, Vallourec offers its customers innovative global solutions to meet the energy challenges of the 21st century.
Listed on Euronext in Paris (ISIN code: FR0000120354, Ticker VK) and eligible for the Deferred Settlement System (SRD), Vallourec is included in the following indices: MSCI World Index, Euronext 100 and SBF 120.
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.
www.vallourec.com
Follow us on Twitter @Vallourec
Presentation of Q2 / H1 2015 results
Thursday 30 July 2015 |
0800 279 5736 (UK), 0805 631 580 (France), 1877 280 1254 (USA), +44(0)20 3427 1916 (Other countries) Conference code: 3861281
0800 358 7735 (UK), 0800 949 597 (France), 1866 932 5017 (USA), +44(0)20 3427 0598 (Other countries) Access code: 3861281 |
Information and Forward-Looking Reflections
This press release contains forward-looking reflections and information. By their nature, these reflections and information include financial forecasts and estimates as well as the 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 reflections and information are reasonable, Vallourec cannot guarantee their accuracy or completeness and investors in Vallourec are hereby advised that these forward-looking reflections and information 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 differ significantly from those expressed, induced or forecasted in the forward-looking reflections and information. These risks include those developed or identified in the public documents filed by Vallourec with the AMF, including those listed in the "Risk Factors" section of the Registration Document filed with the AMF on 10 April 2015 (N° D.15-0315).
Calendar
9 November 2015 | Release of third quarter and first nine months 2015 results |
For further information, please contact | ||
Investor relations Etienne Bertrand Tel: +33 (0)1 49 09 35 58 etienne.bertrand@vallourec.com | Press relations Héloïse Rothenbühler Tel: +33 (0)1 41 03 77 50 heloise.rothenbuhler@vallourec.com | |
Investor relations Alexandra Fichelson Tel: +33 (0)1 49 09 39 76 alexandra.fichelson@vallourec.com | Individual shareholders Florent Chaix Tel: +33 (0)1 41 03 76 53 florent.chaix@vallourec.com | |
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Appendices
Documents accompanying this release:
Sales volume
In thousands of tonnes | 2015 | 2014 | Change |
YoY | |||
Q1 | 412 | 551 | -25.2% |
Q2 | 362 | 583 | -37.9% |
Q3 | 564 | ||
Q4 | 625 | ||
Total | 774 | 2,323 |
Forex
Average exchange rate | H1 2015 | H1 2014 |
EUR / USD | 1.12 | 1.37 |
EUR / BRL | 3.31 | 3.15 |
USD / BRL | 2.97 | 2.30 |
Revenues by geographic region
In millions of euros | H1 | As % of | H1 | As % of | Change |
2015 | revenues | 2014 | revenues | YoY | |
Europe | 461 | 22.3% | 530 | 19.7% | -13.0% |
North America | 656 | 31.7% | 774 | 28.7% | -15.2% |
South America | 383 | 18.5% | 507 | 18.8% | -24.5% |
Asia & Middle East | 404 | 19.5% | 656 | 24.4% | -38.4% |
Rest of World | 166 | 8.0% | 226 | 8.4% | -26.5% |
Total | 2,070 | 100.0% | 2,693 | 100.0% | -23.1% |
Revenues by market
In millions of euros | H1 | As % of | H1 | As % of | Change | Q2 | Change |
2015 | revenues | 2014 | revenues | YoY | 2015 | YoY | |
Oil & Gas | 1,331 | 64.3% | 1,778 | 66.0% | -25.1% | 678 | -29.1% |
Petrochemicals | 108 | 5.2% | 127 | 4.7% | -15.0% | 42 | -31.1% |
Oil & Gas, Petrochemicals | 1,439 | 69.5% | 1,905 | 70.7% | -24.5% | 720 | -29.2% |
Power Generation | 253 | 12.2% | 278 | 10.3% | -9.0% | 110 | -23.1% |
Mechanicals | 204 | 9.9% | 211 | 7.8% | -3.3% | 105 | -0.9% |
Automotive | 65 | 3.1% | 105 | 3.9% | -38.1% | 30 | -42.3% |
Construction & Other | 109 | 5.3% | 194 | 7.3% | -43.8% | 53 | -49.0% |
Industry & Other | 378 | 18.3% | 510 | 19.0% | -25.9% | 188 | -28.2% |
Total | 2,070 | 100.0% | 2,693 | 100.0% | -23.1% | 1,018 | -28.4% |
Cash flow statement
H1 | H1 | In millions of euros | Q2 | Q2 | Q1 |
2015 | 2014 | 2015 | 2014 | 2015 | |
(19) | +360 | Cash flow from operating activities | (38) | +200 | +19 |
+111 | (185) | Change in operating WCR | +112 | (128) | (1) |
+ decrease, (increase) | |||||
+92 | +175 | Net cash flow from operating activities | +74 | +72 | +18 |
(89) | (138) | Gross capital expenditure | (41) | (71) | (48) |
- | - | Financial investments | - | - | - |
(66) | (136) | Dividends paid | (66) | (113) | - |
(60) | (9) | Asset disposals & other items | (34) | +1 | (26) |
(123) | (108) | Change in net debt | (67) | (111) | (56) |
+ decrease, (increase) | |||||
1,670 | 1,739 | Net debt (end of period) | 1,670 | 1,739 | 1,603 |
Free cash flow
H1 | H1 | Change | In millions of euros | Q2 | Q2 | Change |
2015 | 2014 | 2015 | 2014 | |||
(19) | +360 | -379 | Cash flow from operating activities (FFO) (A) | (38) | +200 | -238 |
+111 | (185) | +296 | Change in operating WCR (B) | +112 | (128) | +240 |
[+ decrease, (increase)] | ||||||
(89) | (138) | +49 | Gross capital expenditure (C) | (41) | (71) | +30 |
+3 | +37 | -34 | Free cash flow (A)+(B)+(C) | +33 | +1 | +32 |
Summary consolidated income statement
H1 | H1 | Change | In millions of euros | Q2 | Q2 | Change |
2015(1) | 2014 | YoY | 2015 | 2014 | YoY | |
2,070 | 2,693 | -23.1% | REVENUES | 1,018 | 1,422 | -28.4% |
(1,734) | (1,960) | -11.5% | Cost of sales(2) | (876) | (1,019) | -14.0% |
336 | 733 | -54.2% | Industrial margin | 142 | 403 | -64.8% |
16.2% | 27.2% | -11.0pt | (as % of revenues) | 13.9% | 28.3% | -14.4pt |
(264) | (273) | -3.3% | SG&A costs(2) | (127) | (143) | -11.2% |
(6) | (16) | na | Other income (expense), net | (2) | (12) | na |
66 | 444 | -85.1% | EBITDA | 13 | 248 | -94.8% |
3.2% | 16.5% | -13.3pt | EBITDA as % of revenues | 1.3% | 17.4% | -16.1pt |
(149) | (148) | +0.7% | Depreciation of industrial assets | (73) | (77) | -5.2% |
(145) | (31) | na | Other (amortization, exceptional items, impairment & restructuring) | (133) | (15) | na |
(228) | 265 | na | OPERATING INCOME (LOSS) | (193) | 156 | na |
(37) | (31) | +19.4% | Financial income (loss) | (16) | (11) | +45.5% |
(265) | 234 | na | PRE-TAX INCOME (LOSS) | (209) | 145 | na |
(15) | (74) | -79.7% | Income tax | 2 | (46) | -104.3% |
0 | 0 | na | Share in net income (loss) of associates | (1) | 0 | na |
(280) | 160 | na | NET INCOME (LOSS) FOR THE CONSOLIDATED ENTITY | (208) | 99 | na |
(5) | 16 | na | Non-controlling interests | (9) | 11 | na |
(275) | 144 | na | NET INCOME (LOSS), GROUP SHARE | (199) | 88 | na |
(2.1) | 1.1 | na | EARNINGS PER SHARE (in €) | (1.5) | 0.7 | na |
na: not applicable
Summary consolidated balance sheet
In millions of euros | ||||||||||
Assets | 30-June | 31-Dec | Liabilities | 30-June | 31-Dec | |||||
2015(1) | 2014 | 2015(1) | 2014 | |||||||
Equity, Group share | 3,519 | 3,743 | ||||||||
Net intangible assets | 165 | 166 | Non-controlling interests | 406 | 426 | |||||
Goodwill | 357 | 332 | Total equity | 3,925 | 4,169 | |||||
Net property, plant and equipment | 3,487 | 3,523 | ||||||||
Biological assets | 190 | 214 | Bank loans and other borrowings | 1,778 | 1,782 | |||||
Associates | 194 | 184 | Employee benefits | 205 | 244 | |||||
Other non-current assets | 282 | 435 | Deferred tax liabilities | 254 | 256 | |||||
Deferred tax assets | 207 | 223 | Provisions and other long-term liabilities | 60 | 229 | |||||
Total non-current assets | 4,882 | 5,077 | Total non-current liabilities | 2,297 | 2,511 | |||||
Inventories and work-in-progress | 1,443 | 1,490 | Provisions | 265 | 163 | |||||
Trade and other receivables | 895 | 1,146 | Overdrafts and other short-term borrowings | 867 | 912 | |||||
Derivatives - assets | 26 | 28 | Trade payables | 555 | 807 | |||||
Other current assets | 325 | 343 | Derivatives - liabilities | 206 | 173 | |||||
Cash and cash equivalents | 975 | 1,147 | Tax and other current liabilities | 431 | 496 | |||||
Total current assets | 3,664 | 4,154 | Total current liabilities | 2,324 | 2,551 | |||||
TOTAL ASSETS | 8,546 | 9,231 | TOTAL EQUITY AND LIABILITIES | 8,546 | 9,231 | |||||
Net debt | 1,670 | 1,547 | Net income (loss), Group share | (275) | (924) | |||||
Gearing ratio | 42.5% | 37.1% |
Tube production capacity
In thousands of tonnes | 2017 targeted tube production capacity | 2014 tube production capacity | 2011 tube production capacity |
USA | 750 | 750 | 400 |
Brazil | 800 | 800 | 500 |
Europe | 900 | 1,350 | 1,500 |
Total | ~2,450 | ~2,900 | 2,400 |
[1] EAMEA: Europe, Africa, Middle East, Asia
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