Vallourec recently made waves in the industrial sector by revising upwards its financial forecasts for 2023. The change in outlook is the result of an effective reorganization strategy and an impressive third-quarter performance.
Exceptional third-quarter performance
For fiscal 2023, the Group now expects EBITDA of between €1.075 and €1.175 billion, surpassing the initial estimate of €950 million to €1.1 billion. This positive revision stems from a particularly successful third quarter, in which the company posted a net profit of 76 million euros, compared with just 6 million the previous year.
Debt Reduction and Strategic Reorganization
Consolidated EBITDA for the July-September period amounted to 222 million euros, representing 19.4% of sales, a significant increase on the 198 million euros (15.4%) recorded in the third quarter of 2022. This improvement is partly attributable to cost reductions in Germany, where Vallourec closed plants and moved operations to Brazil.
Declining sales and market challenges
However, the third quarter saw an 11% drop in sales to 1.14 billion euros, as well as a fall in tube sales from 462,000 tonnes to 343,000 tonnes. However, this fall was due to a decline in deliveries to the European industry and a drop in tubes for the oil & gas sector in North America, exacerbated by an unfavorable currency effect due to the euro’s appreciation against the US dollar.
Commitment to Renewable Energies and Energy Transition
In the first nine months of the year, Vallourec recorded a 15% increase in sales, reaching 3.83 billion euros. This growth is part of a strategy to diversify into new energies and the energy transition, particularly in the fields of carbon capture and hydrogen. The Group expects these sectors to account for between 10 and 15% of its EBITDA by 2030.
A key element of this diversification strategy is the development of a large-scale liquid hydrogen storage demonstrator at the Aulnaye-Aymeries site in northern France. Scheduled for unveiling in early December, the project will enable the storage of up to 100 tonnes of hydrogen, marking a significant step forward in the field of renewable energy.
Vallourec is firmly on the road to success. With an upwardly revised financial outlook, a significant reduction in debt, and a promising diversification strategy, the company is demonstrating its ability to adapt and prosper in a constantly changing economic environment.
