H RESULTS INVESTOR PRESENTATION

Transcription

1 H RESULTS INVESTOR PRESENTATION

2 INFORMATION Quarterly financial statements are unaudited and are not subject to any review Half year financial statements are subject to limited review by statutory auditors Full year consolidated financial statements at 31 December are audited Unless otherwise specified, indicated variations are expressed in comparison with the same period of the previous year FORWARD-LOOKING STATEMENTS This document contains forward-looking statements. These statements include financial forecasts and estimates as well as 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 statements are reasonable, Vallourec cannot guarantee their accuracy or completeness and these forward-looking statements are subject to numerous risks and uncertainties that are difficult to foresee and generally beyond Vallourec s control, which may mean that actual results and developments may differ significantly from those expressed, induced or forecasted in the forward-looking statements. 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 Registration Document filed with the AMF on 21 March

3 H HIGHLIGHTS

4 H AT A GLANCE IMPROVED FINANCIAL PERFORMANCE CONFIRMATION OF MARKET TRENDS IN OIL & GAS Revenue: 1,844m up 7.5% YoY (+17.6% at constant exchange rates) with positive momentum on the US O&G market Demand for OCTG continues to be strong in the U.S. Higher bookings in EA and MEA regions EBITDA: 18m, up 36m YoY Stable drilling activity in Brazil and longstanding partnership with Petrobras reinforced EFFICIENT TRANSFORMATION PLAN STRONG LIQUIDITY Significant gross savings in H Blast furnace and steel mill shut down as planned in Belo Horizonte (Brazil) Closing of the divestitures of Vallourec Drilling Products and Fittings Strong liquidity: 0.9bn of cash and cash equivalent 2.2bn undrawn committed facilities 400m refinancing through bond issuance in April

5 CONTINUING OUR WAY TOWARDS RECOVERY Ongoing savings and enhanced competitiveness through our Transformation Plan: Further significant cost reductions to be generated: Continuous efforts in Europe Additional savings targeted in Brazil Continuous focus on cash management: Capex and WCR discipline Developing our new competitive routes in China and Brazil: Industrial and commercial integration of Tianda successfully progressing Confirmation of VSB becoming highly competitive for export Already resulting in commercial successes on international markets Leveraging the progressive rebound of our main markets: Volumes recovery underway: Strong volume recovery already achieved in the US Higher number of FIDs in EA-MEA regions Positive environment for Industry in Europe and Brazil Price and mix to improve: Well underway in the US Starting to progress on most other markets 5

6 H FINANCIAL RESULTS 6

7 H REVENUE BY MARKET Revenue up 7.5% vs. H % at constant exchange rates Oil & Gas +3.5% 1 (+15.2% 2 ) H revenue in millions of and as a % of revenue Industry & Other +8.6% 1 (+16.9% 2 ) North America: Strong momentum Higher volumes and prices Negative forex impact EA-MEA: Improving activity Volumes up Prices up in Middle-East and South East Asia Partly offset by negative forex and deliveries of lower grade products in H1 Brazil: Slightly down Higher volumes mainly offset by the weakening of the BRL 1, % 1, % Europe: Higher prices for Mechanical Engineering and Automotive Brazil: Higher volumes in Mechanical Engineering and Automotive Strong increase Recovery in the US 1 H versus H At constant exchange rates Petrochemicals +64.2% 1 (+79.8% 2 ) % % Power Generation -4.8% 1 (-3.2% 2 ) Nuclear Lower revenue Conventional Slightly higher revenue 7

8 EFFICIENT IMPLEMENTATION OF THE TRANSFORMATION PLAN Transformation Plan execution on track: H gross savings of 52m Gross savings achieved since the beginning of the Plan: 367m New competitive routes: Rationalization of European footprint implemented as planned and further adjustments in 2018 (Vallourec Drilling Products, Vallourec Fittings, Saint-Saulve boiler line) Continuous deployment of our new competitive manufacturing routes: Tianda and VSB GROSS SAVINGS FROM TRANSFORMATION PLAN (in m) SG&A ADAPTATION SG&A (in m) H H VALLOUREC IS CONFIDENT IT WILL ACHIEVE THE TARGETED 750m 2020 EBITDA CONTRIBUTION FROM ITS TRANSFORMATION PLAN 8

9 H REVENUE AND EBITDA 1,716m 7.3% -10.1% +7.5% +17.6% 10.3% 1,844m Revenue Positive volume and price/mix, essentially in the US Negative forex impact EBITDA improved + 36m YoY H VALLOUREC Currency Translation Volume Price/Mix H H H Change In millions of euros YoY REVENUE 1,844 1, % Cost of sales (1,611) (1,503) 7.2% Industrial margin % (as % of revenue) 12.6% 12.4% 0.2pt SG&A costs (200) (221) -9.5% (as % of revenue) 10.8% 12.9% -2.1pts Other income (expense), net (15) (10) na EBITDA 18 (18) + 36m Industrial margin up 20m Higher activity Savings from the Transformation Plan Partially offset by the increase in raw material prices and unfavorable currencies evolution Lower SG&A costs H SG&A representing 10.8% of revenue vs. 12.9% in H

10 H VS H1 2017: EBITDA TO NET INCOME VALLOUREC H1 H1 Change In millions of euros YoY EBITDA 18 (18) + 36m EBITDA as % of revenue 1.0% -1.0% +2.0pts Depreciation of industrial assets (134) (151) -11.3% Amortization and other depreciation (19) (23) na Impairment of assets (13) - na Asset disposals, restructuring and other (57) 3 na OPERATING INCOME (LOSS) (205) (189) - 16m Net financial income (loss) (105) (101) 4.0% PRE-TAX INCOME (LOSS) (310) (290) - 20m Income tax - 18 na Share in net income (loss) of associates 1 (3) na CONSOLIDATED NET INCOME (LOSS) (309) (275) - 34m Non-controlling interests 2 21 na NET INCOME (LOSS), GROUP SHARE (307) (254) - 53m EARNINGS PER SHARE (in ) (0.7) (0.6) Higher EBITDA 57m of non-recurring asset disposals, restructuring and other : Restructuring measures in Europe and divestiture of the 2 remaining French Drilling Products entities Financial charges: Higher interest charges H financial result included a loss related to the change in fair value of NSSMC shares Income tax: Tax gains reduced mainly as a consequence of the results recovery in North America 10

11 H1 2018: FREE CASH-FLOW Vallourec In millions of euros H H Change ( m) Q Cash-flow from operating activities (FFO) (A) (144) (160) +16 (61) Change in operating WCR (B) [+ decrease, (increase)] (236) (104) -132 (84) Gross capital expenditure (C) (38) (61) +23 (19) Free cash-flow 1 (A)+(B)+(C) (418) (325) -93 (164) Improved cash flow from operating activities: Better EBITDA partly offset by higher financial interests and taxes Increase in Working Capital: Seasonal effect and increased production for H deliveries Temporary increased inventories induced by Section 232 quotas Continuous efficient capex management 1 Free cash flow (FCF) is a non-gaap measure and is defined as cash flow from operating activities minus gross capital expenditure and plus/minus change in operating working capital requirement 11

12 1,271 1,422 1,343 1,665 1,052 1, , STRONG FOCUS ON CASH MANAGEMENT H CASH FLOW FROM OPERATIONS EVOLUTION (in m) (229) (399) (332) (144) H STRICT CAPEX MANAGEMENT (in m) H EVOLUTION OF SALES & OPERATING WCR IN DAYS 1, 800 1, 600 1, 400 1, 200 1, Efficient working capital management: Continuous trend of reducing operating working capital in days of sales Efficient Reinvent program Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Quarterly Sales (in m) Net PRI as days of quaterly sales 20 0 Strict Capex discipline 12

13 H NET DEBT (in millions of ) Net Debt as at 31 Dec (1,542) Cash-flow from operating activities (144) Change in WCR 1 Gross capital expenditure Asset disposals & other items Net Debt as at 30 June (236) (38) 26 (1,934) Free cash-flow = - 418m Mainly disposal of the Drilling Products entities and Forex 1 Change in Working Capital Requirement, + decrease/(increase) 13

14 DEBT AND LIQUIDITY Bank & Other Financing (ST) 319m Commercial Papers (ST) 337m Bank & Other Financing (LT) 84m OCEANE (LT) 225m AVAILABLE LIQUIDITY AS AT 30 JUNE 2018 (in m) 919 GROSS DEBT BREAKDOWN (in m) 30 June ,150 Bonds (LT) 1,888m 3,069 Cash Undrawn Long Term Facilities Total Liquidity MATURITIES OF BONDS 1 (in m) Net debt as at 30 June 2018 Gross Debt: 2,853m Cash & Cash equivalents: 919m Net Debt: 1,934m Liquidity as at 30 June bn of cash 2.2bn undrawn LT committed bank facilities LT committed bank facilities Total 2.2bn, of which: 0.1bn maturing in bn maturing in bn maturing in bn maturing in 2027 Gearing covenant: 100% for , tested every 31/ % at 30 June 2018 OCEANE Bonds & After LT Market Financing represents 96% of Long Term Debt S&P rating: B Outlook negative Liquidity reinforced and maturity extended in April m bonds, due 2023 at 6.375% Coupon 14

15 OUTLOOK

16 OUTLOOK FOR 2018 NORTH AMERICA Demand for tubular products should stay strong: robust drilling activity Vallourec has realized as planned significant OCTG price increases as from H S232 measures should eventually tighten the US OCTG market The Group is actively working on debottlenecking its US finishing capacities and is adapting its production routes to S232 measures, impacting imports to the US from Brazil EUROPE-AFRICA AND MIDDLE-EAST ASIA O&G: Vallourec anticipates higher deliveries from H on Industry: Macro-economic environment expected to stay favorable Power Generation: Declining conventional power plant projects O&G: Drilling activity expected to remain stable. SOUTH AMERICA New long-term contracts signed with Petrobras have entered into force this summer Industry: Progressive recovery of Brazilian economy Transformation Plan will again generate significant savings this year Unfavorable forex and raw material prices vs. 2017, currently stabilized VALLOUREC TARGETS 2018 EBITDA TO IMPROVE VERSUS 2017, WITH H SIGNIFICANTLY HIGHER THAN H

17 EURONEXT PARIS: ISIN CODE: FR , TICKER: VK USA: AMERICAN DEPOSITARY RECEIPT (ADR) - ISIN CODE: US92023R2094, TICKER: VLOWY Investor Relations Contact - Vallourec Group Tel: investor.relations@vallourec.com