VALLOUREC: Vallourec Investor Day 2013
Vallourec Investor Day 2013
Boulogne-Billancourt, 26 September 2013 - Vallourec, world leader in premium
tubular solutions, today held its Investor Day in Pittsburgh, USA. During the
conference, Vallourec presented the recent development in the markets in which
it operates and reaffirmed its long term strategy.
Philippe Crouzet, Chairman of the Management Board, stated: "Medium and
long-term energy requirements will continue to drive Vallourec's business,
notably in the Oil & Gas sector. This is why Vallourec, at the end of a period
of major investments, is reasserting its profitable growth strategy in the
energy markets. It has the ambition and now the opportunity, thanks to its
local presence, of becoming the reference supplier in the key growing markets.
In the Power Generation and Industry segments, Vallourec will continue to
leverage on its technical expertise and innovation capacity to deliver higher
value-added products and services. The Group will pursue its efforts for
operational excellence and costs reduction, particularly in Europe.
Vallourec is now entering a new phase with the ambition to improve its EBITDA
and generate recurring positive cash flows over the long term, in order to
create value in a sustainable way for the benefit of all company's
stakeholders. In 2013, Vallourec continues to target an increase of volume and
sales and an improvement of the EBITDA margin. The recent weakness of the
Brazilian real against other currencies and the temporary reduction of demand
for new wells in Brazil will slightly dampen this improvement."
In the Oil & Gas sector, the market conditions in the EAMEA^ area continue
to be positive. In the United States, gas field drilling activity remains low.
In Brazil, in an environment marked by the depreciation of the Brazilian real,
there is a temporary reduction in OCTG demand for new wells.
*In the EAMEA area, the business activity continues to benefit from a good
order book. The qualification of premium products at VSB is currently
being finalized, according to plan. This is enabling the mill to gradually
ramp up production of premium products to serve the different regions of
*In the United States, the ramp up the new rolling mill is on schedule
allowing the Group to take advantage of the high level of shale oil
drilling. However, shale gas drilling shows no signs of recovery and the
product mix driven by shale oil drilling is evolving towards lower-margin
*In Brazil, in a context where the Brazilian real weakened significantly
during the summer, Petrobras is prioritizing cash generation and
increasing oil production in the short term. For Vallourec, this should
result, from Q4 2013 until mid-year 2014, in more tubing^ (tubes for
oil production) and less casing^ (tubes for the equipment of new
wells), consequently temporarily reducing delivered tonnages of OCTG tubes
on the domestic market.
Vallourec sees no significant signs of recovery in its other markets, with the
exception of the improvement in the Brazilian automotive market since the
beginning of this year.
This summer's weakening of the Brazilian real against other currencies will
have a negative translation impact on the second-half results. However, in
2014, a stabilization of the Brazilian real at current levels should have a
positive impact on the competitiveness of Vallourec's Brazilian business
units, mitigated by the high local inflation on costs.
The Group announced that it has signed an agreement to acquire the assets of
Lupatech's Tubular Services Rio das Ostras Unit, an Oil & Gas services company
based in Rio das Ostras, RJ, Brazil. This acquisition will broaden the range
of services currently offered by the Group in Brazil and will help Vallourec
expand its offering of inspection, maintenance, and tube coating services. The
closing of the transaction is expected within the next few days for a total
amount of around 21 million euros paid in cash.
REAFFIRMING VALLOUREC'S VALUE-CREATION STRATEGY
Today's meeting was also an opportunity for the Group to re-confirm its
In particular, Vallourec reiterated confidence in its ability to take
advantage from the growth of its Oil & Gas activities, whose operating margin
in 2012 was above the Group average, across its three main regions, namely the
EAMEA (40-50% of Oil & Gas sales), the United States (30-40%) and Brazil
*In EAMEA, the Group should benefit from a positive volume effect from
growing investments by incumbent operators, both national oil companies in
the Middle East and international operators in the North Sea, Western and
Eastern Africa. To achieve this, Vallourec will leverage its new Brazilian
rolling mill and its local finishing units, in Saudi Arabia and Nigeria
*In the United States, the markets for shale oil drilling and offshore
exploration look positive. In the longer term, shale gas drilling is
expected to resume, driven by residential consumption, substitution of
coal by gas in power generation, relocation of some petrochemical
industries, and finally the potential liquefied natural gas exports.
*In Brazil, Vallourec will benefit from the development of offshore
pre-salt fields. The Group will benefit from its long term relationship
with Petrobras, whose 2013-2017 strategic plan involves significant
exploration and production investments.
In Power Generation and Industry activities, where 2012 operating margins were
below the Group's average, Vallourec is implementing a series of actions to
increase their competitive differentiation through more premium product and
service offers. The Group is seeing that for these two segments, markets are
stable at current levels.
Thanks to the investments achieved and to the expected increase in Oil & Gas
volumes, Vallourec expects further improvement in its product mix and its
competitiveness. The Group is also pursuing its efforts for operational
excellence, in particular via the CAPTEN+ program launched in 2011, whose aim
is to offset inflation on Group's costs and boost its competitiveness.
Furthermore, additional initiatives have been deployed since 2012 to speed up
cost-cutting, particularly in Europe. These programs will continue beyond
The positive outlook for oil & gas markets should allow a reasonable supply
and demand balance for premium tubes in markets where the Group operates.
Vallourec's premium positioning and its ability to innovate, the ramp-up of
its new production capacities and the expected improvements in operational
efficiency are important factors which should lead to improved profitability.
Vallourec is aiming for a lasting improvement in its EBITDA margin.
The return of industrial investment to a level of around 450 million euros a
year from 2015 will mark the end of an unprecedented period of strategic
investment. Total strategic investments between mid-2007 and mid-2013 amounted
to around 2 billion euros. Coupled with the expected increase of Group's
operating cash flows, this reduction of capital expenditure will contribute to
a return to a recurring generation of positive cash flows.
In summary, in 2013, Vallourec continues to target an increase in volume and
sales and an improvement in EBITDA margin. This improved performance in the
Group results will, however, be slightly affected by the current weakness of
the Brazilian real against other currencies, and by the temporary reduction of
OCTG demand in Brazil.
In the medium and long term, despite these temporary factors that may also
affect the beginning of 2014, the Group confirms its favorable outlook, to
deliver value creation for the benefit of all company's stakeholders.
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, 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 the NYSE 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 CAC 40.
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.
Copies of the presentations are available on the Group's website
atwww.vallourec.com.The video of the event will be available on the Group's
website in the following days.
07/11/2013 Publication of Q3 2013 results
For further information, please contact
Investor relations Press relations
Etienne Bertrand Caroline Philips
Tel: +33 (0)1 49 09 35 58 Tel: +33 (0)1 41 03 77 50
EAMEA: Europe, Africa, Middle East, Asia
Tubing: steel tubes assembled by means of gas-tight threaded connections
to form a production string through which fluids are piped from a well bottom
to the surface.
Casing: tubes assembled by means of leak-tight threaded connections to
form a column consolidating the walls of an oil or gas well.
130926_Vallourec_press release_Investor Day PDF
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Source: VALLOUREC via Thomson Reuters ONE
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