On Friday, Vallourec, the French group specializing in seamless steel tubes, reported a significant drop in its net profit for the second quarter, falling by 30.2%. This decline is attributed mainly to reduced volumes and prices in the U.S. market.
Quarterly Net Profit Details
From April to June, Vallourec’s net profit amounted to 111 million euros, a decrease from 159 million euros in Q2 2023. This represents a substantial drop in profitability for the company during this period.
For the first half of 2024, Vallourec’s net profit reached 216 million euros, compared to 315 million euros for the same period in 2023, marking a decline of 31.43%. The significant decrease underscores the challenges faced by the company over the past year.
Second Quarter Revenue
In the second quarter of 2024, Vallourec reported revenue of approximately 1.1 billion euros, reflecting a 20% decline from the previous year.
This reduction in sales is attributed primarily to the closure of European rolling mills and a decrease in tube deliveries in North America, as highlighted in a company statement.
Operating Profit Analysis
The company’s gross operating profit for April to June was 215 million euros, down 42.51% from the second quarter of 2023. This decline in operational profitability indicates a challenging period for Vallourec.
CEO’s Statement on Financial Results
Philippe Guillemot, Vallourec’s CEO, commented on the results during a conference call, stating, “These results align with our expectations. They once again demonstrate our resilience, a result of the group’s profound transformation. We remain profitable and cash-generating despite a less favorable U.S. market.”
The company’s significant restructuring has helped it maintain profitability amidst difficult conditions.
Historical Financial Context
Vallourec, a century-old advanced metallurgy company, faced severe financial difficulties starting in 2020 and nearly faced bankruptcy in 2021. The company emerged from the red last year following a drastic restructuring plan, which included closing its German plants and cutting 3,000 jobs.
Debt Reduction and Future Goals
In 2023, Vallourec reported a net profit of 496 million euros compared to a net loss of 366 million euros in 2022. The company has managed to reduce its net debt to 364 million euros, down from 868 million euros as of June 30, 2023. The CEO reiterated the goal of achieving zero debt by the end of 2025.
2024 Outlook
For the fiscal year 2024, Vallourec forecasts an operating profit between 800 and 850 million euros. This projection takes into account the anticipated decline in demand and prices in the U.S., balanced against a positive trend for the tube segment internationally.