"Vallourec's Warning: Lower First-Half Profit Expected as US Prices Weigh"
Stay informed with the latest economic news as Vallourec issues a warning of lower first-half profit, attributing it to the pressures of US prices. Join us as we delve into the factors influencing Vallourec's earnings forecast and explore the implications for the company and the wider market.
French steel tubes maker Vallourec has issued a warning of a cut to its half-year profit forecast due to ongoing challenges in its North American tube-making business, particularly lower prices. The company now forecasts earnings before interest, tax, depreciation, and amortization (EBITDA) of less than 470 million euros for the first half of 2024, down from the previously targeted around 502 million euros.
"In the US, a reset in market expectations has caused some further incremental pricing pressure," stated Vallourec Chairman and CEO Philippe Guillemot. Consequently, the company's shares fell by 5.5% in early trading.
Vallourec, known for providing tubing for oil and gas, low-carbon energy, and industrial markets, reported a 27% year-on-year drop in first-quarter EBITDA to 235 million euros. It anticipates a moderate decline in second-quarter earnings compared to the January-March period.
While precise full-year EBITDA forecast depends on market conditions in the United States, which are expected to stabilize in the second half of the year, Guillemot mentioned during a media call that debt reduction is ahead of schedule, with net debt dropping to 485 million from 570 million at the end of 2023. This reduction has bolstered confidence in the timing of returning capital to shareholders, expected to commence in 2025 at the latest.
"I will remind you that there has been no return to investors in the last ten years," added Guillemot.
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