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Vallourec sees 64% drop in profit but strengthens operating margin

Despite a sharp decline in sales and prices, Vallourec improved its profitability and issued an upward forecast for its gross operating income in the second half of 2025.

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French industrial company Vallourec, which specialises in seamless steel tubes for drilling and energy markets, posted a net profit of €40mn ($43.5mn) in the second quarter of 2025, down 64% from the previous year. The decline is attributed to weaker demand in the Eastern Hemisphere combined with pricing and volume pressures.

Revenue declines despite productivity gains

Revenue fell by 20.5% during the period to €863mn ($939mn), driven by an 11% drop in prices and a 17% fall in volumes. The tubes segment, which constitutes the bulk of the group’s business, was particularly impacted by lower deliveries to Asia, the Middle East and Africa.

Despite this contraction, Vallourec improved its profitability. The gross operating margin rose to 22%, compared to 20% in the second quarter of 2024, supported by stronger performance at its North and South American production facilities. These regions benefited from cost optimisation and better capacity utilisation rates.

Shareholder returns and improved outlook

The group, which recently completed a financial restructuring process, paid its first dividend in a decade. In the second quarter, €370mn ($402mn) was returned to shareholders via dividends and share buybacks, including a €1.50 per share payout and the repurchase of 1.2 million shares.

For the second half of the year, Vallourec expects a significant increase in gross operating income, forecasting between €195mn and €225mn ($212mn to $245mn) in the third quarter alone. The outlook is based on higher international pricing and continued internal cost reductions.

Tariff changes and CEO reappointment

In North America, Vallourec’s largest market, trade conditions may improve due to a projected decline in imports following a revision of customs tariffs announced in early June. This development is expected to benefit local producers, according to the group’s management.

The board of directors also announced its intention to extend Philippe Guillemot’s term as Chief Executive Officer for another four years. The proposal will be submitted to shareholders at the next annual general meeting, scheduled for 2026. Vallourec returned to profitability in 2023 after several years of heavy losses and significant debt reduction.

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