Vallourec (VK) Q2 2024 earnings summary

Executive summary

• Q2 2024 results reflect strong international OCTG demand and benefits from strategic transformation, with group EBITDA at €215m–€250m and a margin of about 20%.

• Net debt reduced to €364m, ahead of deleveraging targets, with positive cash generation for the seventh consecutive quarter.

• Strategic initiatives in Brazil include closing the Barreiro Plug mill and cost reduction efforts targeting over €150/tonne savings by end-2025.

• Shareholder returns to begin in 2025 at the latest, with payout ratio of 80–100% of total cash generation once leverage targets are met.

• International market resilience and robust tendering activity offset US market weakness.

Financial highlights

• Q2 2024 EBITDA was €215m–€250m, with EBITDA per tonne at €599, maintaining strong profitability despite lower US pricing year-over-year.

• Q2 2024 revenues were €1,085m, down 20% YoY; net income, group share, was €111m.

• Net debt decreased by €121m in Q2, with liquidity at €1,498m as of June 30, 2024.

• Tubes segment Q2 EBITDA margin was 20%, with volumes sold at 351,000 tons.

• Adjusted free cash flow in Q2 2024 was €81m; total cash generation was €41m.

Outlook and guidance

• Full-year 2024 group EBITDA expected between €800m and €850m, with H2 decline driven by lower US pricing.

• Q3 EBITDA expected to decline sequentially due to reduced US tubes volumes and pricing, but Q4 may see a slight improvement on higher volumes.

• Full-year mine and forest production expected at 6m tonnes, with Q3 marking the highest production quarter and EBITDA of ~€100m.

• Continued net debt reduction anticipated in H2 2024, even without major asset disposals.