Vallourec has successfully reduced its debt for the eighth consecutive quarter, achieving a net debt of 240 million euros as of September 30, 2024. CEO Philippe Guillemot highlighted the company’s strong performance in the U.S. market, reporting 1.16 billion euros in revenue from its tube segment. Despite a 23% decline in overall revenues year-on-year, Vallourec remains optimistic about future growth, bolstered by strategic acquisitions and a focus on value-driven markets.
Vallourec’s Impressive Debt Reduction Journey
Last Friday, Vallourec unveiled its quarterly results, highlighting a remarkable achievement: the company has successfully reduced its debt for the eighth consecutive quarter. This significant milestone marks the end of the safeguard plan that was initiated in 2021. As of September 30, 2024, Vallourec’s net debt stands at a notable 240 million euros, a substantial decrease from 570 million euros recorded at the end of December 2023. CEO Philippe Guillemot emphasized the importance of this debt reduction in the company’s ongoing strategy.
Insights into Vallourec’s U.S. Market Performance
Philippe Guillemot addressed the implications of the recent election of Donald Trump, who intends to implement tariff increases. He noted that Vallourec’s operations in the United States are unaffected by these taxes since the company produces what it sells domestically. This positioning allows Vallourec to thrive in the U.S. oil market, which is increasingly reliant on local production. As demand from clients grows, Vallourec is well-placed to supply premium tubes.
In terms of U.S. market activities, Vallourec has reported impressive revenue figures. Since the beginning of the year, the company has generated 1.16 billion euros in revenue from its tube segment in North America. After a period of market volatility, the OCTG tube market is showing signs of recovery, with increasing demand from key clients and a normalization of inventory levels in the industry. Moreover, a decline in OCTG tube imports and measures against unfair trade practices are expected to bolster domestic suppliers like Vallourec.
Reflecting on the company’s strategy to successfully exit the safeguard plan, Guillemot shared insights into the transformative measures implemented since he took the helm two and a half years ago. The New Vallourec plan was introduced with a clear vision: to establish a sustainable and profitable group, regardless of market fluctuations. This involved streamlining operations for efficiency and aligning industrial capabilities with primary markets in North America, South America, and the Middle East.
Additionally, Vallourec has adopted a value-over-volume approach in its commercial policy, focusing on markets that appreciate the company’s technological expertise. A recent strategic move includes the acquisition of Thermotite do Brasil for $17.5 million, marking Vallourec’s first acquisition since 2016, aimed at enhancing high-end thermal insulation solutions for offshore projects.
In the first nine months of 2024, Vallourec reported revenues of 2.97 billion euros, reflecting a 23% decline year-on-year. However, Guillemot remains optimistic about reversing this trend by the end of 2024 and into 2025. The third-quarter results align with expectations, and the company maintains its annual outlook for an operating profit between 800 and 850 million euros. While a -20% volume effect is attributed to the closure of rolling activities in Germany, the company has demonstrated resilience, generating a higher margin percentage compared to historical results.
On the stock market, Vallourec’s share price has surged nearly 18% since the beginning of the year. While Guillemot refrains from commenting on stock performance, he notes that last year’s exceptional results, alongside the consistent debt reduction, have positively influenced investor sentiment. As Vallourec prepares to propose a dividend during the 2024 annual results communication, it continues to invest in new energy solutions to support clients in their energy transition.
Statements collected by Richard Sengmany
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