VALLOUREC: Vallourec's First Quarter 2014 Results

GlobeNewswire Europe

Press Release
May 2014
www.vallourec.com

Vallourec`s First Quarter 2014 Results

Boulogne-Billancourt (France), 7 May 2014 - Vallourec, world leader in premium tubular solutions, today announces its results for the first quarter of 2014. The consolidated financial statements were presented by Vallourec`s Management Board to its Supervisory Board.

FIRST QUARTER 2014 RESULTS:

  • Sales of € 1,271 million, up 4.8% year-on-year (up 11.7% at constant exchange rates)
  • EBITDA of € 196 million, up 2.6% year-on-year, with a 15.4% EBITDA margin
  • Net income, Group share of € 56 million, up 60.0% year-on-year
  • Net debt stable at € 1,628 million as of March 31, 2014

KEY FIGURES

Q1 Q1 Change
In € million 2014 2013 YoY
Sales      1,271        1,213   +4.8%
EBITDA         196           191   +2.6%
As % of sales 15.4% 15.7% -0.3pt
Operating profit         109              90   +21.1%
Net income, Group share            56              35   +60.0%
Free Cash Flow1            36   -99           +€135m  
  1. Free Cash Flow (FCF) is a non-GAAP measure and is defined as cash flow from operating activities minus capital expenditures and plus/minus change in operating working capital requirement

Commenting on these results, Philippe Crouzet, Chairman of the Management Board, said:

"We are pleased to report that our first quarter 2014 results are in line with our expectations, with an improved overall financial performance. Indeed, the first quarter sales are up 4.8% (up 11.7% at constant exchange rates), EBITDA is up 2.6% and the net income Group share increased by 60.0%. These figures reflect the growth in our Oil & Gas sales, while Vallourec`s other markets did not benefit from noticeable changes.

In light of the continuing strength of the Euro and a less favourable mix expected in the EAMEA region, we have reinforced our cost savings measures. Assuming no significant changes in markets and currencies, Vallourec continues to target stable to moderate increase in sales and EBITDA, and a positive Free Cash Flow generation in 2014."


I - CONSOLIDATED SALES BY MARKET

For the first quarter of 2014, Vallourec recorded sales of € 1,271 million, up 4.8% compared with the first quarter of 2013 (up 11.7% at constant exchange rates). Higher volumes (+13.3%) were partly offset by an overall negative price and product mix effect (-1.6%) and a negative currency translation effect (-6.9%) due to the weakened Brazilian real and US dollar against the Euro.

Q1 Q1 Change
In € million 2014 2013 YoY
Oil & Gas         822           768   +7.0%
Petrochemicals            66              75   -12.0%
Oil & Gas, Petrochemicals         888           843   +5.3%
% of total sales 69.9% 69.5%  
  
Power Generation         135           136   -0.7%
% of total sales 10.6% 11.2%  
  
Industry & Other         248           234   +6.0%
% of total sales 19.5% 19.3%  
  
Total      1,271        1,213   +4.8%

Oil & Gas, Petrochemicals

For the first quarter of 2014, Oil & Gas sales were up 7.0% (up 14.6% at constant exchange rates) compared with the first quarter of 2013, to € 822 million. This increase was primarily driven by a favourable mix in the Middle East, alongside higher volumes in the USA, and despite a lower mix in Brazil. Overall, prices remained broadly stable year-on-year. Oil & Gas sales represented 64.7% of the Group`s total consolidated sales.

  • In the USA, higher volumes are reflecting the commercial success of Vallourec`s enlarged offer. As forecasted, the product mix showed an increase of sales of semi-premium and API products. During the first quarter of 2014, the market was supported by a 1.2% year-on-year increase in the average active rig count associated with an increased efficiency.
     
  • In the EAMEA[1] region, sales in the first quarter of 2014 significantly increased, benefiting from a particularly strong customer mix, essentially in the Middle East. While the tendering activity in that area remains substantial, the level of bookings in Saudia Arabia has decreased.

            As an illustration of Vallourec`s ability to provide with the most advanced premium tubular solutions, Total has awarded the Group a significant $ 100 million contract for ML-South Offshore Project in Brunei with deliveries expected to start in the second half of 2015.
             

  • In Brazil, as expected, sales decreased in the first quarter of 2014 as they were impacted by the temporary decline in tonnages of OCTG casing tubes delivered to the pre-salt basins and by the negative Brazilian real translation effect. Deliveries of casing tubes to Petrobras will increase as from the second quarter of 2014, earlier than initially anticipated.

For the first quarter of 2014, Petrochemicals sales were € 66 million, down 12.0% year-on-year (down 8.0% at constant exchange rates) mainly affected by a very competitive environment. They represented 5.2% of the Group`s total consolidated sales.

Power Generation

For the first quarter of 2014, Power Generation sales were € 135 million, stable year-on-year (flat at constant exchange rates), representing 10.6% of the Group`s total consolidated sales.
Conventional power generation market remained competitive with a lack of new projects.

Industry & Other

For the first quarter of 2014, Industry & Other sales were € 248 million, up 6.0% year-on-year (up 15.4% at constant exchange rates), and represented 19.5% of the Group`s total consolidated sales.

  • In Europe, sales were broadly stable, slightly higher volumes being offset by lower prices. The market environment remains very competitive.
  • In Brazil, the first quarter of 2014 sales improved year-on-year mainly driven by higher iron ore sales. Over the full year, iron ore prices are expected to be lower than in 2013.

II - FINANCIAL RESULTS

Summary consolidated income statement

Q1 Q1 Change
In € million 2014 2013 YoY
Sales Volume (k tonnes) 551             487   +13.3%
Sales      1,271        1,213   +4.8%
Industrial margin         330           327   +0.9%
(as % of sales) 26.0% 27.0% -1pt
SG&A costs1 -130   -132   -1.5%
(as % of sales) 10.2% 10.9% -0.7pt
EBITDA         196           191   +2.6%
As % of sales 15.4% 15.7% -0.3pt
Operating profit         109              90   +21.1%
Net income, Group share            56              35   +60.0%
  1. Before depreciation and amortization

For the first quarter of 2014, EBITDA was € 196 million, up 2.6% year-on-year. EBITDA margin decreased by 30 bp compared with the first quarter of 2013 to 15.4% of sales.

The robust performance in Oil & Gas operations especially in EAMEA was partly offset by a lower contribution from Brazilian Oil & Gas operations while in the USA, volumes increase was offset by the less favourable product mix and higher costs of raw materials. As a consequence, the industrial margin was flat in absolute value and down by 1 point as a percentage of sales, representing 26.0% of sales.
Sales, general and administrative costs (SG&A) decreased by 1.5% to € 130 million or 10.2% of sales compared with 10.9% in the first quarter of 2013.

Operating profit increased by 21.1% year-on-year to reach € 109 million. This performance was achieved despite a slight increase of depreciation of industrial assets. As a reminder, the first quarter of 2013 included a provision of € 20.6 million accrued for a fraud on international transfers.

For the first quarter of 2014, financial result was negative at -€ 20 million and improved compared with the previous year.

Net income, Group share was 56 million, up 60.0% versus last year. The effective tax rate was 31.5% in the first quarter of 2014, compared to 35.5% in the first quarter of 2013.


III - CASH FLOW & FINANCIAL POSITION

Q1 Q1 Change
In € million 2014 2013 YoY
Cash flow from operating activities (FFO) (A)         +160   +130 +30
Change in operating WCR (B) -57 -131 +74
[+ decrease, - increase]   
Gross capital expenditures (C) -67 -98 +31
Free Cash Flow1 (A)+(B)+(C)          +36   -99           +135  
  1. Free Cash Flow (FCF) is a non-GAAP measure and is defined as cash flow from operating activities minus capital expenditures and plus/minus change in operating working capital requirement

For the first quarter of 2014, Vallourec generated a positive free cash flow of € 36 million versus -€ 99 million in the first quarter of 2013. This evolution resulted from the following items:

  • Cash flow from operating activities was up € 30 million in the first quarter of 2014 at € 160 million, largely due to the decrease of income taxes paid.
  • Operating working capital requirement increased by € 57 million in the first quarter of 2014. Its level as of March 31, 2014 was reduced by 4 points of the annualized first quarter sales compared to the end of March 2013.
  • Gross capital expenditures stood at € 67 million in the first quarter 2014, down 31.6% year-on-year, reflecting the strict control of capital expenditures. Looking forward, Vallourec continues to target a maximum capital expenditures level of € 500 million in 2014 and € 450 million on average from 2015 onwards.

As of March 31, 2014, net debt reached € 1,628 million, stable versus year-end 2013, with a gearing ratio of 32.0%.

As of March 31, 2014, Vallourec had approximately € 3 billion of committed financings, which included undrawn confirmed credit lines of € 1.7 billion.

As previously announced, Vallourec signed in February 2014 a multi-currency revolving credit facility for
€ 1.1 billion, maturing in February 2019, plus two one-year extension options, enabling the Group to increase its financial flexibility and to extend the maturity of its financial resources.


IV - MARKET TRENDS & OUTLOOK 2014

In Oil & Gas, Vallourec targets a further increase in sales.
In EAMEA, the sales shall continue to benefit from a dynamic Middle East market, which will be supplied by the Group`s new industrial set-up, combining European mills, VSB and its local finishing units. Nonetheless, based on recent bookings, mix and deliveries in the later part of the year should be less favourable than in 2013. The Middle East market remains the most dynamic area in the EAMEA region and continues to support the medium and long term growth expectations.
In the USA, the Group continues to target higher sales, supported by the recent market developments, associated with an increased share of semi-premium and API products in its portfolio.
In Brazil, deliveries of casing tubes to Petrobras for the pre-salt basins will increase as from the second quarter of 2014 when compared to a low Q1 2014, earlier than initially anticipated. Nevertheless, this does not change full year 2014 expectations for Brazilian Oil & Gas operations of a lower contribution than in 2013.

No change in trends is foreseen in the conventional power generation activity, while sales for nuclear power plants should benefit from the rescheduling of some projects from 2013 to 2014. In Industry & Other, the visibility remains limited due to the still fragile economic recovery.  

The persisting strength of the Euro will continue to impact negatively the profitability of the deliveries from Europe. 

Vallourec is committed to financial discipline and return to shareholders. It will continue to adapt its European cost base, offset inflation on cost through its Capten+ savings program, reduce capital expenditures and tightly manage working capital requirement.
In light of the continuing strength of the Euro and a less favourable mix expected in the EAMEA region, Vallourec has reinforced its cost savings measures.  Assuming no significant changes in markets and currencies, Vallourec continues to target stable to moderate increase in sales and EBITDA, and a positive Free Cash Flow generation in 2014.

                                                  
                                                  


About Vallourec
Vallourec is a world leader in premium tubular solutions primarily serving the energy markets, as well as other industrial applications.

With over 24,000 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 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, SBF 120 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
Follow us on Twitter @VallourecGroup

Presentation of Q1 2014 results

Wednesday 7 May 2014

  • Analyst conference call / audio webcast at 6:00 pm (CET) to be held in English.
To participate in the call, please dial:
0800 279 4992 (UK),  0805 631 580 (France),
1 877 280 2296 (USA), +44 (0)20 3427 0503 (Other countries)
Conference code: 9937130

  • Audio webcast and slides will be available on the website at:
            http://www.vallourec.com/EN/GROUP/FINANCE

  • A replay of the conference call will be available until 14 May 2014.
To listen to the replay, please dial:
0800 358 7735 (UK), 0800 989 597 (France),
1 866 932 5017 (USA), +44 (0)20 3427 0598 (Other countries)
Access code: 9937130

For further information, please contact
Investor relations
Etienne Bertrand
Tel: +33 (0)1 49 09 35 58
etienne.bertrand@vallourec.com  
Press relations
Caroline Philips
Tel: +33 (0)1 41 03 77 50
caroline.philips@vallourec.com

Calendar

  
05/28/2014 Shareholders` General Assembly
07/30/2014 Release of second quarter and first half 2014 results
11/06/2014 Release of third quarter and first nine months 2014 results

Appendices

Documents accompanying this release:

  • Sales volume (k tonnes)
  • Sales by geographic region
  • Sales by market
  • Forex
  • Cash flow statement
  • Summary consolidated income statement
  • Summary consolidated balance sheet

Sales volume

2014 2013 Change
In thousands of tonnes YoY
Q1         551           487   +13.3%
Q2 na          543   na 
Q3 na          545   na 
Q4 na          584   na 
Total         551        2,159   na 

na: not applicable

Sales by geographic region

Q1 As % of Q1 As % of Change
In € million 2014 sales 2013 sales YoY
Europe         264   20.8%         258   21.3% +2.3%
North America         370   29.1%         310   25.6% +19.4%
South America         256   20.1%         308   25.4% -16.9%
Asia & Middle East         305   24.0%         247   20.4% +23.5%
Rest of World            76   6.0%            90   7.3% -15.6%
   
Total      1,271   100.0%      1,213   100.0% +4.8%

Sales by market

Q1 As % of Q1 As % of Change
In € million 2014 sales 2013 sales YoY
Oil & Gas         822   64.7%         768   63.3% +7.0%
Petrochemicals            66   5.2%            75   6.2% -12.0%
Power Generation         135   10.6%         136   11.2% -0.7%
Mechanicals         105   8.3%         104   8.6% +1.0%
Automotive            53   4.2%            54   4.5% -1.9%
Construction & Other            90   7.0%            76   6.2% +18.4%
   
Total      1,271   100.0%      1,213   100.0% +4.8%

Forex

Average exchange rate Q1 2014 Q1 2013
EUR / USD 1.37 1.32
EUR / BRL 3.24 2.64
USD / BRL 2.37 2.00

Cash flow statement

Q1 Q1 Q4
In € million 2014 2013 2013
  
Cash flow from operating activities          +160   +130 +205
Change in operating WCR -57 -131 +130
[+ decrease, - increase]
Net cash flows from operating activities          +103   -1 +335
Gross capital expenditures -67 -98 -250
Financial Investments                 -                   -                   -  
Dividends paid -23                 - -4  
Asset disposals & other elements -10   -22 +57
  
Change in net debt +3 -121 +138
[+decrease, -increase]
Net debt (end of period) 1,628 1,735 1,631


Summary consolidated income statement

VALLOUREC Q1 Q1 Change
In € million 2014 2013 YoY
SALES    1,271      1,213   +4.8%
Cost of sales1 -941   -886   +6.2%
Industrial margin      330        327   +0.9%
(as % of sales) 26.0% 27.0% -1pt
SG&A costs1 -130   -132   -1.5%
Other income (expense), net -4   -4   na 
EBITDA      196        191   +2.6%
EBITDA as % of sales 15.4% 15.7% -0.3pt
Depreciation of industrial assets -71   -64   +10.9%
Other (amortization, exceptional items, impairment & restructuring) -16   -37   na 
OPERATING PROFIT      109          90   +21.1%
Financial income (loss) -20   -28   -28.6%
PROFIT BEFORE TAX        89          62   +43.5%
Income tax -28   -22   +27.3%
Net profit of equity affiliates         -              4   na  
NET INCOME FOR THE CONSOLIDATED ENTITY        61          44   +38.6%
Non-controlling interests -5   -9   na  
NET INCOME, GROUP SHARE        56          35   +60.0%
EARNINGS PER SHARE
(in €)
0.4  0.3   na 
  1. Before depreciation and amortization

na: not applicable


Summary consolidated balance sheet

VALLOUREC
In € million
Assets 31-Mar 31-Dec Liabilities 31-Mar 31-Dec
2014 2013 2014 2013
Equity, Group share     4,698       4,601  
Intangible assets, net        197          206   Non-controlling interests        390          385  
Goodwill        495          495   Total equity     5,088       4,986  
Net property, plant and equipment     4,167       4,151  
Biological assets        192          178   Bank loans and other borrowings     1,386       1,379  
Investments in equity affiliates        172          173   Employee benefits        199          182  
Other non-current assets        429          437   Deferred tax liabilities        217          209  
Deferred tax assets        192          187   Other long-term liabilities        238          225  
Total non-current assets     5,844       5,827   Total non-current liabilities     2,040       1,995  
Inventories and work-in-progress     1,530       1,423   Provisions        151          138  
Trade and other receivables        989       1,099   Overdrafts and other short-term borrowings     1,161          815  
Derivatives - assets          77            92   Trade payables        774          833  
Other current assets        322          297   Derivatives - liabilities          13            24  
Cash and cash equivalents        919          563   Other current liabilities        454          510  
Total current assets     3,837       3,474   Total current liabilities     2,553       2,320  
TOTAL ASSETS     9,681       9,301   TOTAL LIABILITIES     9,681       9,301  
Net debt     1,628       1,631   Net income, Group share          56          262  



[1] EAMEA: Europe, Africa, Middle East, Asia

140507 Vallourec Q1 2014 in PDF



This announcement is distributed by NASDAQ OMX Corporate Solutions on behalf of NASDAQ OMX Corporate Solutions clients.

The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: VALLOUREC via GlobeNewswire

HUG#1783499

Rates

View Comments (0)