Saturday, 18 May 2024


Vallourec posts solid Q1 2024 results, eyes debt-free future By

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Vallourec (VK), a global leader in tubular solutions, has reported a strong performance for the first quarter of 2024, with a notable expansion in EBITDA margin and an increase in tubes EBITDA per tonne.

The company generated €172 million in adjusted free cash flow and continued its streak of reducing net debt for the sixth consecutive quarter. Vallourec’s recent partnership with NextChem and comprehensive balance sheet refinancing underscore its strategic focus on the Value over Volume strategy and its goal to achieve a net debt-free status by the end of 2025.

Key Takeaways

  • Vallourec’s EBITDA is expected to align with the €100 million annual run rate, with €102 million in cash generation and a €85 million net debt reduction in Q1.
  • The company completed a balance sheet refinancing, which is anticipated to yield annual savings of €30 million to €35 million.
  • Credit ratings have improved, and the company has effectively managed its currency risk by issuing dollar-denominated bonds and converting them into euros.
  • Vallourec aims to reduce gross debt by over €550 million, targeting a figure below €1 billion by year-end.
  • Plans to return capital to shareholders by 2025, potentially through dividends, share buybacks, or warrants.
  • Increased volumes are expected in Q2, with a strong international market environment projected for the year.
  • A moderate decline in EBITDA is expected in Q2 due to U.S. market dynamics, but a strong EBITDA margin is anticipated for the full year.
  • The company is considering the sale of its land in Dusseldorf and is in discussions with the City of Dusseldorf to align on the sale process.
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Company Outlook

  • Vallourec foresees a strong international market environment and increased tube volumes in the upcoming quarters.
  • The company is focused on markets that value their technology, aligning with their Value over Volume strategy.
  • They are working on improving cost structures and margins, with an emphasis on maintaining a healthy cash balance.

Bearish Highlights

  • Vallourec expects a moderate decline in EBITDA in Q2 due to dynamics in the U.S. market.
  • The company’s volume trajectory is lower than previous years, with a step down from the 1.5 million tonnes reported in 2023.

Bullish Highlights

  • Vallourec’s partnership with NextChem positions the company to capitalize on the growing hydrogen and green ammonia markets.
  • The company’s balance sheet refinancing…

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