Fourth Quarter and Full Year 2023 Results
Vallourec, a world leader in premium tubular solutions, announces today its results for the fourth quarter and full year 2023. The Board of Directors of Vallourec SA, meeting on February 29th 2024, approved the Group’s fourth quarter and full year 2023 Consolidated Financial Statements.
• Strong full year 2023 EBITDA of €1,196m, above upper end of guidance range
• Sequential EBITDA improvement in Q4 due to strong execution
• International Tubes demand and pricing continue to increase
• US OCTG demand has stabilized, Vallourec shipments increasing
• Net debt halved YoY to €570m; expected to decline further in H1 and Full Year 2024 starting in Q1 2024
HIGHLIGHTS
Strong Q4 and FY 2023 profitability and continued deleveraging:
• Q4 EBITDA of €280 million (up €58 million sequentially and down €32 million YoY) driven by solid Tubes profitability
o Tubes EBITDA of €249 million (up €56 million sequentially and down €36 million YoY) supported by
higher sequential shipments in both North America and Eastern Hemisphere as well as improved
execution in South America
o Mine & Forest EBITDA of €43 million (up 10% sequentially and €21 million YoY): ~0.1 million tonne
sequentially lower mine production sold was offset by favorable iron ore pricing
• Adjusted free cash flow of €275 million, significantly up sequentially
• Net debt halved year-over-year: reduced from €1,130 million to €570 million
First Half 2024 Outlook:
• Group EBITDA to be broadly similar to second half 2023 EBITDA of €502m
• Total cash generation to be positive
• Net debt to decline further versus the year-end 2023 level, starting in the first quarter
Full Year 2024 Outlook:
• Strong EBITDA generation due to robust Tubes pricing in backlog and operational improvement
• Total cash generation to be positive
• Net debt to decline further versus the year-end 2023 level, starting in the first quarter
The New Vallourec plan, announced in May 2022, has been fully implemented, giving birth to a new Vallourec. 2023 was a pivotal year, marked by the closure of European production sites and the corresponding enhancement of our Brazilian capability to enable continued delivery of high-value products to our Oil & Gas customers. In addition, we initiated a substantial strategic shift in our operations in China which is already contributing meaningfully to improved Group results. While these major projects were being executed, we delivered the Group’s best results in nearly 15 years. We have reduced our net debt by €560 million versus the year-end 2022 level, and by over €900 million versus the third quarter 2022 peak. I would like to thank the entire Vallourec team for their hard work towards achieving these results.
Today, we are well advanced in our plans to deliver best-in-class profitability and cycle-proof our business. Yet, we still see further opportunities ahead. In 2024, we plan to deliver further improvements in our operations in Brazil to fully capitalize on our premier asset base in the country. Globally, we remain intensely focused on cost control and disciplined capital allocation.
The overall market remains conducive to our efforts to generate strong cash flows and deleverage our balance sheet. In the US, the rig count has slightly increased since October 2023, imports remain suppressed, and distributor inventories continue to fall. We expect pricing in the region to stabilize imminently.
Outside of the US, we continue to experience demand in excess of our capacity and see strong prices in our new orders. Notwithstanding recent market concerns, we believe the demand environment in the Middle East is among the best we have seen in years. We continue to see a multi-year activity upturn mainly led by major customer drilling programs in Saudi Arabia, the UAE and Iraq. Our commercial intimacy with our customers as well as our local value-added facilities give us comfort that this region should contribute significantly to our results in the coming years.
We are well on track to reach zero net debt by year-end 2025 at the latest. Following our deleveraging, we aim to return significant capital to our shareholders, potentially as early as 2025.
