VALLOUREC: Vallourec Investor Day 2013

                    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."



TRADING UPDATE

In the Oil & Gas sector, the market conditions in the EAMEA^[1] 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 
    this area.

  *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 
    semi-premium connections. 

  *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^[2] (tubes  for 
    oil production)  and  less casing^[3]  (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.

ACQUISITION

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 
mid-term strategy.

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 
(15-25%).

  *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 
    for example. 

  *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 
2013.

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.

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, 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.

www.vallourec.com

Eventcasting



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.

Calendar

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
etienne.bertrand@vallourec.fr   caroline.philips@vallourec.fr

[1]EAMEA: Europe, Africa, Middle East, Asia
[2]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.
[3]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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