VALLOUREC: Vallourec reports first quarter 2013 results

Thu May 2, 2013 11:46am EDT

* Reuters is not responsible for the content in this press release.

Vallourec reports first quarter

2013 results

 

Boulogne-Billancourt, 2 May 2013 - Vallourec, world leader in premium tubular solutions, today announced its results for the first quarter 2013. The consolidated financial statements were presented today by Vallourec's Management Board to its Supervisory Board. 

 

Vallourec first quarter results in line with expectations:

  • Sales stable versus Q1 2012 at € 1,213 million
  • EBITDA up 26% versus Q1 2012 at € 191 million
  • EBITDA margin up at 15.7% versus 12.7% in Q1 2012
  • Net income, Group share of € 35 million, up 21% from Q1 2012

 

Key figures for the 1st quarter of 2013

  Q1 Q1 Change Q4
In € million 2013 2012 YoY 2012
Sales Volume (k tonnes)           487             504   -3%           535  
Sales        1,213          1,199   +1%        1,465  
EBITDA           191             152   +26%           235  
As % of sales 15.7% 12.7% +3.0pt 16.1%
Operating income             90               80   +13%           142  
Net income, Group share             35               29   +21%             70  

 

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

 

"Vallourec first quarter results are in line with our expectations. The EBITDA margin improvement versus Q1 2012 is essentially a reflection of the higher proportion of Oil & Gas sales in our total sales mix and the maintained efforts to reduce costs. Indeed, we continued to benefit from our strong market position and enhanced premium offering to achieve higher sales especially in the most complex oil and gas basins, such as Brazilian deep offshore or sour environment in the Middle East. In the meantime, Vallourec's other markets continued to face a difficult environment marked by economic uncertainty and low demand in Europe.

The ramping up of our new mill in Youngstown is advancing according to plan, and the new finishing lines are on schedule for commissioning in the second quarter. At VSB, our Brazilian joint venture with NSSMC[1], the ongoing qualification process is advancing as scheduled. In Saudi Arabia, the recent qualification of our finishing mill has allowed us to deliver our first locally threaded premium connections.

The Group remains focused on improving its operating efficiency. Based on the current market conditions and the progressive ramp up of the new mills, the Group confirms its objective of sales to increase and the EBITDA margin to improve in 2013."

 

SALES VOLUME

In Q1 2013, sales volume of rolled tubes amounted to 487 thousand tonnes, slightly below Q1 2012 (-3%). Higher volumes in the Oil & Gas segment, reflecting especially higher sales in Brazil and in the Middle East, were offset by lower volumes in industrial markets, particularly in Europe. 

 

CONSOLIDATED SALES BY MARKET

  Q1 Q1 Change Q4
In € million 2013 2012 YoY 2012
Oil & Gas        768          700   +10%        901  
Power Generation        136          138   -1%        228  
Petrochemicals          76            85   -11%         88  
Total Energy        980          923   +6%     1,217  
% of total sales 81% 77%   83%
        
Mechanical        105          125   -16%        118  
Automotive          54            65   -17%         49  
Construction & Other          74            86   -14%         81  
Total non-Energy        233          276   -16%        248  
% of total sales 19% 23%   17%
        
Total     1,213       1,199   +1%     1,465  

 

Energy

Oil & Gas sales were up 10% in Q1 2013 versus the same period in the prior year to reach € 768 million, i.e. 64% of total sales (vs. 58% in Q1 2012).

In the USA, the lower rig count[2] compared to prior year at 1,758 in average in Q1 2013 vs. 1,990 in Q1 2012, although partly offset by greater efficiency, resulted in a decline in the OCTG consumption. In this environment, Vallourec has been able to maintain flat volumes versus Q1 2012 thanks to its strong market positioning to serve the fast growing shale oil plays. However, Vallourec OCTG sales in the USA were affected by the price adjustments made during the first quarter.

The deliveries from the new plant in Youngstown, Ohio, started in December 2012 and will progressively increase throughout the year.

In the rest of the world, the international rig count[3] at 1,274 rigs on average in Q1 2013 was up 7% versus Q1 2012. Vallourec sales increased in virtually all regions, particularly in the Middle East, the North Sea and Asia, in a stable price environment.

In the Middle East, where Vallourec enjoyed strong bookings throughout H2 2012, sales also benefited from a richer mix, with more premium tubes for sour services.

In Brazil the Oil & Gas market continued to benefit from a strong momentum. Vallourec sales were up when compared to Q1 2012, reflecting Petrobras' increased demand for offshore premium grade pipes and connections.

 

Power Generation sales amounted to € 136 million in Q1 2013, down 1% when compared to Q1 2012 and represented 11% of the total consolidated sales.

Sales for conventional power plants were virtually flat when compared to Q1 2012. They are mainly concentrated in Asia and in Europe and are still affected by a competitive environment and a low level of projects in Europe.

Sales for nuclear power plants were at the same level as in Q1 2012 and were mostly concentrated in France, China and South Korea.

 

Petrochemicals sales amounted to € 76 million in Q1 2013, down 11 % versus Q1 2012 and suffered from low project activity and reduced inventories from distributors.

The Group is positioned to supply a number of projects in the USA, the Middle East, Asia and China. Nevertheless, the market is very competitive and short lead times provide limited visibility.

             

Non-energy

Non-Energy sales amounted to € 233 million in Q1 2013, down 16 % when compared to Q1 2012 and represented 19% of the total consolidated sales in Q1 2013 (compared to 23% in Q1 2012).

Q1 2013 sales were impacted by the continued global economic weakness and specifically the decline in industrial production in Europe and in Brazil. In addition, prices were still under pressure.

In Brazil, Non-Energy sales were also impacted by the decline in the iron ore contract price during 2012 and in Q1 2013, before a rebound to take place in the second quarter of 2013.

 

 

RESULTS

Summary consolidated income statement

  Q1 Q1 Change Q4
In € million 2013 2012 YoY 2012
Sales Volume (k tonnes) 487 504 -3.4% 535
Sales        1,213          1,199   +1.2%        1,465  
Cost of sales[4] - 886   -905 -2.1% - 1,072  
(as % of sales) 73.0% 75.4% -2.4pt 73.2%
SG&A costs[4] -132 -144 -8.3% -146
(as % of sales) -10.9% -12.0% -1.1pt 10.0%
EBITDA 191 152 +25.7% 235
As % of sales 15.7% 12.7% +3.0pt 16.1%
Operating income 90 80 +12.5% 142
Net income, Group share 35 29 +20.7% 70

 

Consolidated sales in Q1 2013 amounted to € 1,213 million, virtually flat when compared to Q1 2013, reflecting lower volumes (-4%) and negative currency impact (-4%), offset mostly by a positive mix effect.

The cost of sales of € 886 million represented 73% of sales in Q1 2013, and improved compared to Q1 2012 (75.4% of sales). This improvement mainly resulted from a better mix with a higher proportion of Oil & Gas sales, a more favourable currency hedging for European exports, and continued cost reductions. 

The sales, general and administrative costs (SG&A) were reduced by 8.3% to reach € 132 million, representing 10.9% of sales versus 12.0% in Q1 2012.

The EBITDA for Q1 2013 was up 26% to € 191 million, representing 15.7% of sales vs. 12.7% in Q1 2012. The Group profitability was improved mainly thanks to a better sales mix and efficient cost control.

Operating income amounted to € 90 million in Q1 2013, up 13% over the same period last year. Better EBITDA was partly offset by a higher level of depreciation and amortization reflecting higher industrial assets. Exceptional items include a provision of € 20.6 million accrued for a fraud on international transfers suffered by a subsidiary of Vallourec. This has an impact of € 13.5 million on the net income. The Group has initiated litigation action seeking compensation for the damage suffered.

Net income, Group share amounted to € 35 million, 21% above prior year, the operating income improvement being partly offset by increased interest expenses with higher debt partly compensated by the lower average cost of debt. Average tax rate reached 35.5% due to non recognition of differed tax assets.

Earnings per share amounted to €0.28 compared to €0.24 in Q1 2012.

 

Summary of cash and balance sheet items

(in € million) Q1'13 Q1'12 Q4'12
Gross cash flow from operations +130 +53 +174
Change in gross WCR -131 -132 +98
[+ decrease, - increase]
Operating cash flows -1 -79 +272
Gross capital expenditure -98 -140 -309
Other -22   -4 +66
Change in net debt      
[+decrease, -increase] -121 -223 +29
Net debt (end of period) 1,735 1,416 1,614

 

Operations generated gross cash flow of € 130 million in Q1 2013 compared to € 53 million in Q1 2012. This improvement mainly resulted from a better mix in sales and EBITDA. Over the quarter, gross working capital requirements increased by € 131 million reflecting particularly the ramping up of the new mills.

Gross capital expenditure for the quarter amounted to € 98 million, down € 42 million year on year. Capex for 2013 is still expected to be around € 650 million.

During the quarter, net debt increased by € 121 million to reach € 1,735 million as of 31 March 2013, representing 32% of consolidated equity (€ 5,351 million). As of 31 March 2013, Vallourec had around € 3.2 billion of committed financings, which include undrawn confirmed credit lines of € 1.6 billion.  

 

 

OUTLOOK 

Looking forward, indicators for the global Oil & Gas markets remain well oriented, while the economic environment continues to be challenging for other markets, with limited visibility.

Based on these conditions and thanks to the progressive ramp up of the new mills, the Group continues to expect volumes and sales to grow and the EBITDA margin to improve in 2013.

 

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 presence in more than 20 countries, Vallourec offers its customers innovative global solutions to meet the growing energy challenges of the 21st century.

Listed on NYSE Euronext in Paris (ISIN code: FR0000120354, Ticker VK) and eligible for the Deferred Settlement System, Vallourec is included in the following indices: MSCI World Index,
Euronext 100 and CAC 40.

In the United States, Vallourec has a sponsored Level 1 American Depository Receipt (ADR) program (ISIN code: US92023R2094, Ticker: VLOWY). The ratio of Vallourec ADR to ordinary shares is 5:1. 

 

www.vallourec.com

 

PRESENTATION OF Q1 2013 RESULTS

Thursday 2 May 2013

  • Analyst conference call at 6:30 pm (CET) to be held in English.

To participate in the call, please dial:

0800 694 0257 (UK),

0805 632 056 (FR),

1 866 966 9439 (USA),

+44 1452 555 566 (other countries)

Conference code: 35244216

Slides in English will be available on the website at:  http://www.vallourec.fr/en/finance/investor-relations/

  • A replay of the conference call is available until 8 May 2013

To listen to the replay, please dial:

0800 953 1533 (UK), 0805 111 337 (FR), 1 866 247 4222 (USA)

+44 1452 550 000 (other countries)

Access code: 35244216

 

CALENDAR 2013

  • 30 May: Shareholders' General Assembly
  • 30 July: Release of Q2 and Half-Year 2013 Results
  • 26-27 September: Investor Day in Pittsburgh, USA
  • 7 November: Release of Q3 2013 Results

 

FOR FURTHER INFORMATION, PLEASE CONTACT

 

Investor Relations                     

Etienne BERTRAND                   

Tel: +33 (0)1 49 09 35 58            

E-mail: etienne.bertrand@vallourec.fr
Press Relations

Caroline PHILIPS

Tel: +33 (0)1 41 03 77 50

E-mail: caroline.philips@vallourec.fr

 

 

APPENDICES

 

Documents accompanying this release:

  • Sales volume (metric tonnes)
  • Sales by geographic region
  • Summary consolidated income statement
  • Summary consolidated balance sheet
  • Summary consolidated cash flow statement

 

 

Sales volume

 

Sales volume corresponds to the volume in metric tonnes of hot-rolled tubes produced and delivered by Vallourec's rolling mills.

 

In thousands of tonnes 2013 2012 Change
Q1 487 504 -3.4%
Q2   528  
Q3   525  
Q4   535  
Total   2,092  

 

Sales by geographic region

 

  Q1 As % of Q1 As % of Change
In € million 2013 sales 2012 sales YoY
Europe        258   21%     301   25% -14%
North America        310   26%     365   31% -15%
South America        308   25%     278   23% +11%
Asia & Middle East        247   20%     167   14% +48%
Rest of World          90   8%       88   7% +3%
         
Total     1,213   100%  1,199   100% +1%

 

Summary consolidated income statement

VALLOUREC Q1 2013 Q1 2012 Change Q4 2012 Change
(in € million)     Q1'13 /   Q1'13 /
      Q1'12   Q4'12
           
Sales       1,213         1,199   +1.2%       1,465   -17.2%
           
           
Cost of sales[4] - 886   -905   -2.1% -1,072   -17.4%
Selling, general and administrative costs[4] -132   -144   -8.3% -146   -9.6%
Other income (expense), net -4                2   na  -12   na 
           
EBITDA           191             152   +25.7%          235   -18.7%
EBITDA as % of sales      15.7%   12.7%     16.1%    
           
Depreciation of industrial assets -64   -55   +16.4% -71   -9.9%
Other (amortization, exceptional items, impairment & restructuring)  

-37  
 

-17  
 

na 
 

- 22  
 

na 
OPERATING INCOME            90              80   +12.5%          142   -36.6%
Financial income -28   -24   +16.7% -27    +3.7%
INCOME BEFORE TAX            62              56   +10.7%          115   -46.1%
Income tax -22   -17     -34    
Net income of equity affiliates              4                1                  2    
CONSOLIDATED NET INCOME            44              40   +10.0%            83   -47.0%
Minority interests - 9   -11     -13    
NET INCOME, GROUP SHARE            35              29   +20.7%            70   -50.0%
EARNING PER SHARE (in €) 0.28  0.24    0.57   

Summary consolidated balance sheet

 

VALLOUREC    
(in € million)  
31/03/13 31/12/12   31/03/13 31/12/12
Intangible assets, net 218.5 223.5 Shareholders' equity  (1) 4,913.9 4,795.6
Goodwill 524.3 511.4 Minority interests 436.9 417.0
Net tangible fixed assets 4,486.1 4,320.1

Total equity

5,350.8 5,212.6
Biological assets 208.4 196.1

 

Investments in equity affiliates 169.7 162.0

 

Other non-current assets 445.7 408.1  
Deferred tax assets 199.0 182.1 Bank loans and other borrowings 1,429.7 1,410.3

Total non-current assets

6,251.7 6,003.3 Employee benefits 215.6 115.4
  Deferred tax liabilities 155.9 189.7
  Other long-term liabilities 241.4 209.7
 

Total non-current liabilities

2,042.6 1,925.1
   
Inventories and work-in-progress 1,559.2 1,429.7 Provisions 180.5 153.3
Trade and other receivables 982.8 969.0 Overdrafts and other short-term bank borrowings 1,193.4 749.8
Derivatives - assets 38.2 59.3 Trade payables 672.6 677.7
Other current assets 246.2 202.6 Derivatives-liabilities 40.4 15.4
Cash and cash equivalents 888.3 546.2 Other current liabilities 486.1 476.2

Total current assets

3,714.7

3,206.8

Total current liabilities 2,573.0 2,072.4
   
   
TOTAL ASSETS 9,966.4 9,210.1 TOTAL LIABILITIES  9,966.4 9,210.1
   
   
Net debt 1,734.8 1,613.9 (1) Net income, Group share 34.9 216.8

 

 

 

Summary consolidated cash flow statement

 

(in € million) Q1'13 Q1'12 Q4'12
      
Gross cash flow from operations           +130   +53 +174
Change in gross WCR -131   -132 +98
[+ decrease, - increase]      
Operating cash flows - 1   -79 +272
       
Gross capital expenditure - 98   -140 -309
Financial Investments               -                 -                 -  
Dividends paid               -                 -   -2
Asset disposals & other elements - 22   -4 +68
      
Change in net debt -121   -223 +29
[+decrease, -increase]

 


[1] NSSMC : Nippon Steel & Sumitomo Metal Corporation

[2] Baker Hughes - March 2013

[3] Baker Hughes International Rig Count excluding the USA and Canada - March 2013

[4] Before amortization

  

Information

Quarterly statements are unaudited.
Unless otherwise specified, the changes indicated are expressed in comparison with the previous year.

 





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Source: VALLOUREC via Thomson Reuters ONE

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