Vallourec, Boulogne-Billancourt

Vallourec reports 2nd quarter and 1st half 2015 results

Vallourec announces its results for the second quarter and first half of 2015. The consolidated financial statements were presented by Vallourec’s Management Board to its Supervisory Board on 30 July 2015. H1 2015 financial results continue to be affected by reduced demand: Revenues at €2,070 million, down 23.1% year-on-year (down 28.7% at constant exchange rates); Ebitda at €66 million, compared to €444 million in H1 2014; Positive free cash flow of €3 million in H1 2015 and €33 million in Q2 2015, better than anticipated. Valens and short-term measures on track: 2/3rd of the 450+ Valens initiatives started; Global staff reduction of 1 600 over the first half of 2015, including close to 1 000 permanent jobs; €112 million working capital reduction in Q2 2015; Capital expenditure revised down to around €300 million in 2015. Outlook: Further deterioration in H2 2015; Vallourec continues to target a positive free cash flow generation in 2015.

Commenting on these results, Philippe Crouzet, Chairman of the Management Board, said: "The severe downturn in the Oil & Gas markets persists. The resulting decline in drilling activity since the beginning of the year, particularly in North America and the EAMEA region, led to a sharp fall in our sales and increased pressure on prices in the first semester. As a result, our mills have been operating well below capacity, leading to inefficiencies typically associated with low load. Vallourec's management remain fully committed to confront this depressed environment, which will further affect the remainder of 2015.

We have implemented drastic flexibility measures to adapt our mills to the low load, and have removed approximately 80% of the variable costs associated with the lost volume. In parallel, we are deploying Valens in strict accordance with the plan, and are on track to gradually deliver the targeted savings.

Finally, and more than ever under such circumstances, we maintain a strong focus on cash, through tight working capital management and strict discipline on capex:  we therefore reiterate our positive free cash flow generation target for 2015.

I am convinced that the vigorous actions we have taken, combined with our unique technologies, talented people and key local positions, will enable us to respond to the challenging environment and keep meeting our customers' expectations."

Vallourec, Boulogne-Billancourt