(BFM Bourse) – Addressing mainly the energy sector, the manufacturer of tubular solutions jumped on the stock market on the announcement of better than expected 2021 accounts. Vallourec is also aiming for “a strong improvement” in its results in North America this year, even if the rise in the cost of raw materials could slow down the increase in profits in its other markets.
While Vallourec had started the year on a new decline (-23% since the start of the year at the end of Thursday, after having already fallen in 8 of the last 10 years), its share price benefited from a considerable rebound on Friday. from 14.37% to 7.865 euros around 9:45 a.m. given the content of its 2021 accounts.
The manufacturer of seamless tubes, materials that meet strong constraints, particularly in the exploration and exploitation of oil and gas deposits (also used, for around a third of the company’s turnover, in the industry and the construction of power plants), saw its turnover take off by 28.1% in the fourth quarter to 1.064 billion euros against a backdrop of considerable expansion of activity in North America where producers are relaunching their investments to take advantage of the rise in oil prices.
Over the whole of 2021, revenue amounted to 3.442 billion euros, up 6.1% compared to 2020, including a volume effect of +3% and a price effect positive of +7%, all partially curbed by a negative exchange rate effect of 4% mainly due to the decline of the Brazilian real.
Back to profits
Vallourec thus recorded a strong increase in gross operating income (Ebitda) to 492 million euros, up 91%, corresponding to a margin of 14.3% (compared to 8% in 2020). The operating result (Ebit), in deficit of more than one billion euros the previous year, returned to profit for 374 million euros, while a slight profit of 40 million euros (overall higher projections, some analysts were still expecting a slight loss) followed a loss of 1.2 billion.
Cash flow generated by operating activities amounted to €26 million over the year, compared to -€146 million in 2020, due to the increase in gross operating income and lower financial interests disbursed, more than offsetting the increase in tax charges. On the other hand, after the increase in the working capital requirement linked to the resumption of activity and certain non-recurring costs associated with the financial restructuring, the free cash flow remained negative and the net disbursements even increased to -284 million. euros, compared to -€111 million in 2020. Net debt nevertheless fell sharply (from €2.2 billion to €958 million in one year) thanks to this financial restructuring and asset disposals.
Taking advantage of the current fundamentals of the oil and gas markets, the group benefits from a growing order book at the end of 2021 and which will be delivered in 2022. “Over the next few months, the Oil & Gas market should continue to evolve positively, with high prices creating favorable conditions for the activity of E&P operators.Thus, we expect positive momentum in most of our markets, and in particular in North America, despite the consequences of the incident at the With inflation on some of our costs materializing across all regions, this will to some extent offset the positive price trend but ultimately support higher finished product prices,” said CEO Edouard Guinotte.
Vallourec is also continuing to transform its industrial footprint with the sale of its rolling mills in Germany and by focusing on Brazil, “which will simplify its operations, thus lowering the break-even point and allowing it to remain solidly profitable along the cycle”. Once this project is implemented, the company anticipates an annual improvement in its GOI (gross operating income) of 130 million euros and a reduction in capital expenditure of 20 million euros. In this context, the group is aiming for a further increase in EBITDA this year.
Guillaume Bayre – ©2022 BFM Bourse
