Vallourec Sa · EURONEXT:VK
Vallourec Sa — Q2 2019 Earnings Presentation
28 slides from Vallourec Sa's earnings presentation, Jul 24, 2019
Slide 1: Q2 2019 Results Investor Presentation
Q2 2019 RESULTS INVESTOR PRESENTATION July 24, 2019 1
Slide 2: Information and Forward-Looking Statements
INFORMATION ► Quarterly financial statements are unaudited and are not subject to any review ► Half year financial statements are subject to limited review by statutory auditors ► Full year consolidated financial statements at 31 December are audited ► Unless otherwise specified, indicated variation
Slide 3: Table of Contents
TABLE OF CONTENTS 1 Q2 2019 Highlights 2 Q2 2019 Financial Results 3 Outlook 4 Appendices- Finance 5 Other appendices Q2 2019 Results – Investor Presentation 3
Slide 4: Q2 2019 Highlights
1 Q2 2019 HIGHLIGHTS 4
Slide 5: Q2 2019 Key Highlights
Q2 2019 KEY HIGHLIGHTS STRONG YEAR-ON-YEAR INCREASE POSITIVE FREE CASH FLOW IN REVENUE AND EBITDA Q2 revenue of €1,084 million, up 10% year-on-year Positive cash flow from operating activities of €39 million mainly from higher sales in Oil & Gas EA-MEA Reduced net working capital requirement i
Slide 6: Q2 2019 Key Figures
Q2 2019 KEY FIGURES ► Strong year-on-year improvement, mainly driven by the recovery in Oil & Gas EA-MEA VOLUMES (kt) REVENUE (€m) 605 1,084 +8% at +6% +10% constant FX 571 982 Q2 18 Q2 19 Q2 18 Q2 19 EBITDA* (€m) FREE CASH FLOW* (€m) Q2 18 Q2 19 102 16 +€79m 23 +€180m -164 Q2 18 Q2 19 (*) IFRS 16 i
Slide 7: Q2 2019 Financial Results
2 Q2 2019 FINANCIAL RESULTS 7
Slide 8: Q2 2019 Revenue by Market
Q2 2019 REVENUE BY MARKET ► Revenue up 10% vs. Q2 2018 (up 8% at constant exchange rates), strong growth in Oil & Gas and in Industry & Other Oil & Gas Q2 2019 revenue Industry & Other +18% YoY (+14%1) in millions of € +23% YoY (+25%1) and as a % of revenue ► EA-MEA ► Europe • Significant increase i
Slide 9: Q2 2019 Revenue and EBITDA
Q2 2019 REVENUE AND EBITDA Q2 2018 – Q2 2019 REVENUE BRIDGE 23 22 1,084 57 982 ► Revenue at +€1,084m YoY or +10% • Positive volume of +6%, mainly driven by EA-MEA Oil & Gas • Positive price mix of +2% mainly due to OCTG price increase in North America in Q3 2018 Q2 '18 Volume Price / Mix Forex Q2 '1
Slide 10: Q2 2019 EBITDA to Net Income
Q2 2019 EBITDA TO NET INCOME Change In millions of euros Q2 2019 Q2 2018 YoY EBITDA 102 23 +€79m EBITDA as % of revenue 9.4% 2.3% +7.1p.p. Depreciation of industrial assets (60) (64) -6% ► Operating result improved by +€76m YoY, at Amortization and other depreciation (14) (10) na €1m, compared to a
Slide 11: Progress in Working Capital Management Reconfirmed
PROGRESS IN WORKING CAPITAL MANAGEMENT RECONFIRMED QUARTERLY NET WORKING CAPITAL REQUIREMENT DAYS (1) 162 160 154 149 135 148 135 141 133 133 122 121 121 124 Annual 115 114 114 111 112 114 117 113 108 quarterly 100 94 avg. 84 Period Q2.14 Q3.14 Q2.14 Q3.14 Q4.14 Q4.14 Q1.15 Q1.15 Q2.15 Q2.15 Q3.15 Q
Slide 12: Q2 2019 Free Cash Flow
Q2 2019 FREE CASH FLOW ► Positive free cash flow at €16m, up €180m year-on-year, thanks to improved cash flow from operating activities and significantly reduced operating working capital requirement outflow Change Change H1/H1 In millions of euros Q2 2019 Q2 2018 H1 2019 H1 2018 Q2/Q2 (€m) (€m) 1 C
Slide 13: H1 2019 Net Debt
H1 2019 NET DEBT (in millions of €) Net Debt Net Debt Net Debt as at as at as at Dec 31st 2018 Jan 1st 2019 June 30th 2019 Free cash-flow Free cash-flow = (€159)m = €16m Cash Flow IFRS 16 Change from Op. Asset impact (1) in op. Activities Asset Cash Flow Change disposals WCR (2) disposals from Op. i
Slide 14: Sound Liquidity as at June 2019
SOUND LIQUIDITY AS AT 30 JUNE 2019 AVAILABLE LIQUIDITY AS AT 30 June 2019 (€m) ► Net debt of €2,111m 1,831 * 2,560 ► Strong liquidity • Cash on hand: €729m 729 • Undrawn and fully available €1,831m bank facilities ► Sound liquidity profile with no major bank lines maturity before 2021 Cash Undrawn L
Slide 15: Outlook
3 OUTLOOK 15
Slide 16: Transformation Plan on Track
TRANSFORMATION PLAN ON TRACK Gross savings Iron ore mine expansion project ► Target 2019-2020: at least €200m additional gross savings ► Capacity of iron ore production to be increased to around ► H1 2019: €48m gross savings achieved 8.5mt/year as from 2022 ► Focus on European operations, notably Ge
Slide 17: Main Markets Outlook for 2019
MAIN MARKETS OUTLOOK FOR 2019 EUROPE-AFRICA & MIDDLE EAST- ASIA NORTH AMERICA ► O&G: the Group should continue to benefit from the ► Market slowdown with operators maintaining their recovery of its Oil & Gas markets, as well as from the strong cash discipline and distributors adjusting deployment of
Slide 18: Confirmed Outlook for 2019
CONFIRMED OUTLOOK FOR 2019 Based on current economic and market trends1, the Group confirms: ► The recovery in its Oil and Gas activity primarily driven by international markets ► Its targets for 2019, namely: • Strong increase in EBITDA, supported by market trends, additional savings as well as ong
Slide 19: Appendices: Financial Appendices – H1 & Q2 2019
4 APPENDICES FINANCIAL APPENDICES – H1 & Q2 2019 19
Slide 20: H1 2019 P&L
H1 2019 P&L Change In millions of euros H1 2019 H1 2018 YoY REVENUE 2,109 1,844 14% Cost of sales (1,728) (1,611) 7% Industrial margin 381 233 64% (as % of revenue) 18.1% 12.6% +5.5 p.p. SG&A costs (198) (200) -1% (as % of revenue) 9.4% 10.8% -1.4p.p. Other income (expense), net (14) (15) na EBITDA
Slide 21: Q2 2019 Revenue Bridges
Q2 2019 REVENUE BRIDGES Q2 2018 – ’19 REVENUE BRIDGE PER MARKET 109 (23) 46 (30) 1,084 982 Q2 18 O&G Refining & Petrochems Industry & other Power Gen Q2 19 Q2 2018 – ’19 REVENUE BRIDGE BY GEOGRAPHY 73 1,084 5 40 982 (15) (1) Q2 18 North America South America Europe Asia & Middle East Rest of world Q
Slide 22: Revenue Breakdown – Q2 2019
REVENUE BREAKDOWN – Q2 2019 REVENUE BY REGION As % of As % of Change In millions of euros Q2 2019 Q2 2018 revenues revenues YoY Europe 157 15% 158 16% -1% North America 330 30% 325 33% 2% South America 162 15% 177 18% -8% Asia & Middle East 303 28% 263 27% 15% Rest of World 132 12% 59 6% 124% Total
Slide 23: Balance Sheet as at June 30, 2019
BALANCE SHEET AS AT JUNE 30, 2019 Assets (in millions of €) 30 June 2019 1 Jan 2019 31 Dec 2018 Liabilities 30 June 2019 1 Jan 2019 31 Dec 2018 Post IFRS 16 Post IFRS 16 Equity, Group share (1) 1,664 1,802 1,802 Non-controlling interests 521 462 462 Net intangible assets 64 71 71 Total equity 2,185
Slide 24: Lease Debt - IFRS 16
LEASE DEBT - IFRS 16 30 June 2019 Change versus 1 1 Jan 2019 In millions of euros 31-Dec 2018 Jan 2019 post IFRS 16 56 -€3m Financial lease debt (1) 59 59 79 -€7m Operational lease (2) 86 - 135 -€10m Total lease debt (3) 145 - (1) Included in net debt prior to IFRS 16; reclassified to lease debt on
Slide 25: Other Appendices
5 OTHER APPENDICES 25
Slide 26: Three Waves of Recovery of Key O&G Markets
VALLOUREC TO BENEFIT FROM THREE WAVES OF RECOVERY OF ITS KEY O&G MARKETS (%) of Vallourec’s Oil & Gas revenue 2014-2018 (avg.) 36% North America 52% EA-MEA South America 12% 2017 2018 2019 2020 Q2 2019 Results – Investor Presentation 26
Slide 27: New Routes Deployment Yielding Renewed Competitiveness
NEW ROUTES DEPLOYMENT YIELDING RENEWED COMPETITIVENESS ► Share of Europe in rolling capacity reduced from c.45% in 2014 to c.25% in 2018 ► Ongoing transition to new routes offering a step change in competitiveness on recovering international markets ► In 2018, c. 250 kt of Premium products were roll
Slide 28: Investor Relations Contact - Vallourec Group
► Euronext Paris: ISIN code: FR0000120354, Ticker: VK USA: American Depositary Receipt (ADR) - ISIN code: US92023R2094, Ticker: VLOWY ► Investor Relations Contact - Vallourec Group • Tel: +33 1 49 09 39 77 • Email: [email protected] • www.vallourec.com 28