Shareholders Meeting. May 28, 2014

Transcription

1 Shareholders Meeting May 28, 2014

2 Information Full year consolidated financial statements at 31 December are audited Quarterly financial statements are unaudited and are not subject to any review Unless otherwise specified, indicated variations are expressed in comparison with the same period of the previous year Information and Forward-Looking Reflections This document contains forward-looking reflections and information. By their nature, these reflections and information include financial forecasts and estimates as well as the assumptions on which they are based, statements related to projects, objectives and expectations concerning future operations, products and services or future performance. Although Vallourec s management believes that these forward-looking reflections and information are reasonable, Vallourec cannot guarantee their accuracy or completeness and investors in Vallourec are hereby advised that these forward-looking reflections and information are subject to numerous risks and uncertainties that are difficult to foresee and generally beyond Vallourec s control, which may mean that the actual results and developments differ significantly from those expressed, induced or forecasted in the forward-looking reflections and information. These risks include those developed or identified in the public documents filed by Vallourec with the AMF, including those listed in the Risk Factors section of the Registered Document filed with the AMF on April 14, 2014 (N D ). Translation This presentation is an English translation of the French version of such presentation and is provided for informational purposes only. This translation is qualified in its entirety by the French version, which is available on the company s website ( In the event of any inconsistencies between the French version of this presentation and the English translation, the French version will prevail. Shareholders Meeting, May 28, 2014 / 2

3 Successes and achievements in 2013 Philippe Crouzet Chairman of the Management Board

4 2013: Growth and improved financial and business performance Resume profit growth Improve margins through Oil & Gas growth Reshape industrial set-up, new capacities Reinforce the Group s basics (safety, quality, costs) Focus on cash generation Shareholders Meeting, May 28, 2014 / 4

5 The keys to performance In 2013, the Group leveraged its strong market positions, new industrial set-up and innovative drive Business successes worldwide New capacities ramp-up Reshaped industrial set-up Constant Research & Development drive Financial discipline following the completion of a substantial investment cycle Shareholders Meeting, May 28, 2014 / 5

6 Vallourec is a key partner for the leading international groups Oil & Gas Power Generation Industry Shareholders Meeting, May 28, 2014 / 6

7 A year packed with business successes Enlarged OCTG offer for unconventional hydrocarbons 1 st umbilicals order Nuclear plant overhauls OCTGs in Saudi Arabia One WTC spire tubes 2014 World Cup stadiums Petrobras service contracts Shuqaiq and Jeddah power plants CLOV offshore project in Angola Tubes for nuclear plants in South Korea and China Offshore project in Brunei Xerelete offshore field in Brazil Tubular solutions that deliver in any environment Shareholders Meeting, May 28, 2014 / 7

8 Oil & Gas The CLOV offshore project with Total in Angola Supplying a wide range of premium offshore solutions 15,000 tons of OCTG tubes and VAM premium connections for 34 subsea wells 28,500 tons of line pipe and bends to transport hydrocarbon to the FPSO 2,400 tons of tubes for the construction of the riser towers Drill strings and connections for the two drilling rigs Coating and welding services by Serimax (a Vallourec subsidiary) Shareholders Meeting, May 28, 2014 / 8

9 Oil & Gas Petrobras service contracts An extended range of services to support Petrobras complex offshore projects The components of the offer: inspection and repair field services rig preparation well coordination logistics traceability management resident engineers accessories rental Shareholders Meeting, May 28, 2014 / 9

10 Oil & Gas The offshore contract with Total in Brunei Particularly complex offshore operating conditions (HP/HT and sour environment) Off the Brunei coast Production 5,000 meters deep Premium pipes with VAM 21 connections Shareholders Meeting, May 28, 2014 / 10

11 Power generation Shuqaiq power plant in Saudi Arabia High product quality, very short lead times The Shuqaiq power plant Supercritical Oil-fired On the Red Sea coast For seawater desalination 10,000 tons of tubes to build the boilers Shareholders Meeting, May 28, 2014 / 11

12 Industry Stadiums for the 2014 FIFA World Cup in Brazil Shareholders Meeting, May 28, 2014 / 12

13 2013: reshaping our industrial organization Europe China North America Brazil ME/Africa/Asia Upgraded Reshaped production capacity to to support support growth growth over years to come Shareholders Meeting, May 28, 2014 / 13

14 2013: new capacities near customers and growing markets Vallourec Saudi Arabia: the largest premium finishing plant in Saudi Arabia Heat treatment and threading for VAM premium connections Deliveries started in H Main customer: Saudi Aramco Abu Dhabi: drill pipe coating Internal coating for drill pipes First tube coated in H China: new Valinox Nucléaire plant Tubes for steam generators Shareholders Meeting, May 28, 2014 / 14

15 2013: the Group continued to boost its R&D capabilities Vallourec Research Riesa Vallourec Research Houston : doubling VAM test center capacity Vallourec Research Düsseldorf : new research center Vallourec Research Aulnoye : doubling VAM test center capacity (in progress) Vallourec Research Belo Horizonte Vallourec Research Rio de Janeiro : new competence center Two new centers in Brazil and Germany Announced plans to increase connection development and testing capacity in France R&D expenses in 2013: ~ 90m Shareholders Meeting, May 28, 2014 / 15

16 Financial results Olivier Mallet Member of the Management Board, Chief Financial Officer

17 2013 financial perfomance Sales EBITDA (1) & EBITDA margin (2) Net income (3) in million in million and % in million 5,326 5, % +170 bp 16.5% % (+9.8% at constant exchange rates) +16.8% +18.6% (1) Earnings Before Interest, Taxes, Depreciation, and Amortization 2012 figures have been restated with the impact of the revised standard IAS19 (2) EBITDA over Sales (3) Net income, Group share 2012 figures have been restated with the impact of the revised standard IAS19 Shareholders Meeting, May 28, 2014 / 17

18 Sales in % 5,326m -5.1% +3.2% +6.6% 5,578m 2012 Effet Currency de Change Volume Price/Mix Prix/mix 2013 Shareholders Meeting, May 28, 2014 / 18

19 Sales breakdown by geographic region 22% 29% 19% 26% 9% ,326m 7% ,578m 18% 22% 26% 22% Europe North America South America Asia & Middle East RoW Expressed in% of consolidated Sales Shareholders Meeting, May 28, 2014 / 19

20 Our markets in 2013 Industry & other -6% Sluggish markets and pressure on prices Recovery in the automotive and agricultural markets in Brazil 1,029 Oil & Gas Improved volumes and mix in the Middle East Higher volume in the US, product mix with more semi-premium and API sales Improved sales in Brazil s domestic market +13% Power generation -11% Conventional power plants: no new projects in the western world and pressure on prices Nuclear power plants: several projects rescheduled for in million 3,669 Petrochemicals Fierce competition -14% Shareholders Meeting, May 28, 2014 / 20

21 Income statement summary in million FY restated (1) YoY change Sales 5,578 5, % Industrial margin 1,543 1, % As % of Sales 27.7% 26.1% +1.6 pt SG&A (560) (576) -2.8% As % of Sales 10.0% 10.8% -0.8 pt EBITDA % As % of Sales 16.5% 14.8% +1.7 pt Depreciation of industrial assets (270) (238) +13.4% Operating profit % Financial income (loss) (91) (93) -2.2% Income tax (148) (115) +28.7% Net income, Group share % (1) Restated for the effects of the IAS19 revision (2) Before depreciation and amortization Shareholders Meeting, May 28, 2014 / 21

22 Focus on Free Cash Flow in million FY restated (1) YoY change Cash flow from operating activities (FFO) (A) Change in Operating WCR (2) increase (decrease) (B) (183) (66) -117 Gross capital expenditure (C) (567) (803) +236 Free Cash Flow (FCF) (A)+(B)+(C) (41) (328) +287 (1) Restated for the effects of the IAS19 revision (2) Before depreciation and amortization Shareholders Meeting, May 28, 2014 / 22

23 Capital expenditures in million Max. 500 ~450 average (est.) 2015 and beyond (est.) Shareholders Meeting, May 28, 2014 / 23

24 Stabilized net debt in million Endettement Net debt as of net au 31 déc. Dec. 31, Free Cash Cash-Flow Flow Disponible Dividends Dividendes paid versés Asset Cessions disposals d'actifs and other et autres elements éléments Endettement Net debt as of net au 31 déc. Dec. 31, (1,614) (41) (63) 87 (1,631) Shareholders Meeting, May 28, 2014 / 24

25 Financial resources as of December 31, 2013 Strong and diversified financial structure Optimized cost of financing Approx. 65% of gross debt raised on capital markets 23% Bank & 23% Other Debt Bond Debt Cost of gross debt approx. 4.5% in % Comm. Paper 85% Variable rate Fixed rate Close to 3bn committed financing In February 2014, Vallourec signed a 1.1bn syndicated credit facility to renew the existing 1bn facility Figures as of December 31, 2013, unless otherwise specified Fixed rate including commercial paper drawn with a 1-12 month maturity Shareholders Meeting, May 28, 2014 / 25

26 Proposed dividend for Option period: June 4-17, 2014 Payment date: June 25, Earnings per share Dividend per share (1) Proposed dividend up 17.4% y-o-y Dividend payable in cash or in shares at shareholders option (1) 2013 dividend is subject to Shareholders Meeting approval Shareholders Meeting, May 28, 2014 / 26

27 Q financial performace Sales EBITDA (1) & EBITDA margin (2) Net income (3) in million in million and % in million 1,213 1, % 15.4% 35 T1 Q T1 Q Q1 T T1 Q Q1 T T1 Q % (+11.7% at constant exchange rates) (1) Earnings Before Interest, Taxes, Depreciation and Amortization (2) EBITDA over Sales (3) Net income, Group share +2.6% +60.0% Shareholders Meeting, May 28, 2014 / 27

28 Recent share price evolution 55 Share price from January 1, 2013 to December 31, Vallourec 45 CAC 40 rebased Jan 1, 2013 Dec 31, 2013 Shareholders Meeting, May 28, 2014 / 28

29 Recent share price evolution 45 Share price from January 1, 2014 to May 26, Vallourec CAC 40 rebased Jan 1, 2014 May 26, 2014 Shareholders Meeting, May 28, 2014 / 29

30 Key market assumptions for FY USA Higher sales and change in mix Positive volume effect - - Increased share of semi-premium and API products in our portfolio Europe Contrasted end markets EU / VSB plants supplying dynamic O&G Middle East markets Low visibility from Industry & Conventional Power generation Nuclear: 2013 projects rescheduled to 2014 Persisting strength of the Euro Brazil Mitigated short term Positive longer term Lower contribution from Brazilian O&G operations in 2014 vs Deliveries to Petrobras in pre-salt basins to increase from Q Major LT growth area for deep offshore + - Asia, Middle East, RoW Dynamic market for O&G Leveraging on local finishing capabilities Middle East continues to benefit from strong MT and LT growth expectations. Based on recent bookings, customer mix and deliveries in EAMEA should be less favourable for year-end 2014 than in 2013 Shareholders Meeting, May 28, 2014 / 30

31 Outlook 2014 Top priorities Focus on Free Cash Flow through financial discipline: Optimize our European cost base Reduce capital expenditures Tightly manage WCR Reinforce cost savings measures in light of the continuing strength of the Euro and a less favourable mix expected in the EAMEA region Targets Based on the trends mentioned previously, and assuming no significant changes in markets and currencies, Vallourec continues to target: Stable to moderate increase in sales and EBITDA Positive Free Cash Flow generation Shareholders Meeting, May 28, 2014 / 31

32 Corporate responsibility Jean-Pierre Michel Member of the Management Board, Chief Operating Officer

33 Safety and health, our top priorities Safety performance The Group is committed and mobilized for the safety and health of its employees LTIR (1) TRIR (2) target 34,000 workstation safety inspections 367 continuous improvement teams focusing on safety 12,000 hours of safety-related training for 2,560 employees (1) Lost Time Injury Rate (per million hours worked) (2) Total Recordable Injury Rate (per million hours worked) Shareholders Meeting, May 28, 2014 / 33

34 The Opinion employee survey meets with success An opinion survey in 2013 All employees, all countries High participation (80%) The main lessons learned: Motivation is high Good working conditions A will to engage A strong sense of belonging to the Group A commitment to the new single brand Vallourec Areas of improvement: Appreciation of efforts Regular feedback on performance Shareholders Meeting, May 28, 2014 / 34

35 Push the frontiers with Innovation HP/HT Extreme conditions Undisputed leader (75% of projects) Unconventional Oil&Gas VAM SG and VAM EDGE connections Drill pipes Pre-salt Partnership with Petrobras 80% of products didn t exist in 2009 Power plants Efficiency Flexibility Reliability Welding Innovative welding solutions Reduced costs, enhanced productivity Facilities R&D and competence centers In Europe, Brazil, the US Shareholders Meeting, May 28, 2014 / 35

36 Limiting the impact of our activities on the environment Reducing our environmental footprint Improving energy efficiency Meeting the most demanding standards Investing in HSE (1) of industrial waste recycled in % 14% 96% 163,000 improvement in our performance since 2008 (aiming for 20% by 2020) of production comes from ISO certified sites hours of HSE (1) training in 2013 (1) Health, Safety and Environment Shareholders Meeting, May 28, 2014 / 36

37 Close relationships with our communities Helping to refurbish Cine Theatro Brasil in Brazil Contributing to health screening in Indonesia Contribution to the Alizé program in France to support the SMEs business development Shareholders Meeting, May 28, 2014 / 37

38 An ambitious strategy Philippe Crouzet Chairman of the Management Board

39 The challenges ahead The demand for energy will remain on a constant upward trend, and fossil fuel energies will continue to predominate The new oil and gas reservoirs will be increasingly complex Our customers requirements are evolving Reliable, environmentally-friendly and innovative products Shorter lead times, lower costs, more local content A more competitive environment Shareholders Meeting, May 28, 2014 / 39

40 Our strategy to rise to those challenges More premium Enhance technology content in our products offer Develop our services offer More local Invest in growing markets, based on their potential Shorten lead times, respond faster Promote local content More competitive Invest in the best technologies Streamline our industrial capacity to reduce costs and shorten lead times Continue to improve the basics Shareholders Meeting, May 28, 2014 / 40

41 The trends and market environments North America A dynamic but competitive Oil & Gas market We are one step ahead and must keep that advantage Europe Markets overcapacity Our export base for high-tech products Consolidate our leadership and improve our competitiveness Brazil Huge potential over the long run Strong local presence (industrial and technology) Services: a great opportunity Asia, Africa, Middle East A dynamic but fragmented and competitive Oil & Gas market Local positions to be built or consolidate Shareholders Meeting, May 28, 2014 / 41

42 Our strengths to tap into new market opportunities and create value Upgraded production capacity to support growth over the years to come Strengthened R&D capabilities An extended range of products and services covering all complex applications Motivated and skilled teams An industrial and commercial excellence plan A new phase for value creation after a substantial investment cycle Shareholders Meeting, May 28, 2014 / 42