Vallourec: Vallourec continues to reduce debt and sells land in Germany

(BFM Bourse) – The pipe specialist for the oil and gas industry has announced the sale of its site in Mülheim to a real estate developer for €39 million. CEO Philippe Guillemot also said the company’s net debt would be below 741 million euros at the end of the month.

Vallourec ends 2023 on a positive note. The oil and gas pipe specialist launched a plan called “New Vallourec” last year, a restructuring that should allow the company to improve profitability and reduce dependence on economic cycles with a greater emphasis on value than volumes.

This plan, which should take full effect from next year, included in particular the transfer of production in the oil and gas sector from Germany to Brazil.

The company’s activities across the Rhine were gradually shut down this year. It remains to be seen what will happen to the land, i.e. the land on the land that Vallourec owns in Germany. Sales processes have already been launched.

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The price is 39 million euros

On Friday evening, after the close of the Paris Stock Exchange (which was closed from Friday to Tuesday), the group announced the sale of its Mülheim site to CTP, which Vallourec presented as “Europe’s largest industrial real estate developer listed on the Sotck Stock Exchange. “.

The transaction amount is 39 million euros for a property with an area of ​​approximately 330,000 square meters. Of this sale price, 37 million euros will be paid within two weeks, Vallourec said.

“This sale confirms our determination to achieve the objectives of the New Vallourec plan,” said group CEO Philippe Guillemot, quoted in a press release. These goals include, in particular, an annual gross operating profit (Ebitda) of 850 million euros in the “medium cycle”, i.e. when the economy is neither too dynamic nor too unfavorable.

Debt-free by 2025 at the latest

The manager also hinted at the company’s debt: “At the end of 2023, we expect net debt of less than 741 million euros, excluding proceeds from asset sales, which will be five consecutive quarters of deleveraging,” he added.

To the extent that Vallourec expects Ebitda between €1.075bn and €1.175bn this year, the debt-to-net-debt-to-Ebitda ratio should logically be below 0.69 at the end of December.

“This transaction supports our short-term debt reduction ambitions and our goal of reaching zero net debt by the end of 2025 at the latest,” added Philippe Guillemot.

During its investor day last September, the company said that once its debt is reduced to zero, the company could resume paying a dividend, which has been suspended since 2016, for the 2015 financial year.

Vallourec shares responded well on the Paris Stock Exchange this Wednesday, gaining 2% to €14.59 around 10:30am, taking its performance for the full year 2023 to +19.15%. The action may also be due to a rise in oil prices, with North Sea Brent crude gaining about $2 intraday on Tuesday to more than $80 a barrel.

“The group practically no longer burns cash, and after the financial restructuring (in 2021, editor’s note) time has stopped working against it,” the independent research firm AlphaValue assessed last month. “The group moved its production to low-cost countries (Brazil, China, etc.) at the expense of Europe, which allowed it to improve its competitive position,” the financial intermediary added.

Julien Marion – ©2023 BFM Bourse

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