Vallourec (VK) Q2 2024 earnings summary

Executive summary

• Q2 2024 results reflect strong international OCTG demand and continued deleveraging, with group EBITDA at €215–€250 million and a robust margin of around 20%.

• Net debt reduced to €364 million, ahead of deleveraging targets, with over €1 billion of net debt removed in less than two years.

• Strategic transformation continues, focusing on operational efficiency, cost reduction, and value over volume, especially in Brazil, including closure of the Barreiro Plug mill.

• Shareholder returns are set to begin in 2025 at the latest, as the company has reached its target capitalization.

• Major refinancing completed in April 2024, extending debt maturities and reducing financial costs.

Financial highlights

• Q2 2024 EBITDA was €215–€250 million, with an EBITDA margin of 19.8–20% and EBITDA per ton at €599.

• Q2 2024 revenues were €1,085 million, down 20% year-over-year; net income, group share, was €111 million.

• Net debt at the end of Q2 was €364 million, with liquidity close to €1.5 billion.

• H1 2024 revenues were €2,075 million (down 23% YoY), EBITDA €450 million, and net income €216 million.

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

Outlook and guidance

• Full-year 2024 group EBITDA expected between €800–€850 million, with positive cash generation and further net debt reduction in H2.

• Q3 revenues and EBITDA expected to decrease sequentially due to lower US shipments and pricing; Q4 EBITDA expected to be slightly higher than Q3.

• Full-year mining production sold expected at 6 million tons, with EBITDA around €100 million.

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

• Deleveraging to remain ahead of schedule, with positive total cash generation and further net debt reduction.