Full Year 2014 results Investor Presentation 24 February 2015
2014: resilient financial performance and strong operational achievements Sales 5,701m +2.2% Record year in Oil & Gas sales (+3.9% at constant exchange rates) Solid performance in North America EBITDA(1) & 855m EBITDA in line with…
Going forward Short term adaptation to the severe fall in oil prices Valens, a 2-year cash generation and cost reduction plan Strict discipline on capital allocation ROCE target: WACC in 2018, under normalized oil market…
2014 dividend proposed to be maintained at 0.81 per share Dividend 2.1 Proposed dividend to: 1.9(1) be maintained at 1.8 0.81 per share be paid in cash or in shares at 0.81 0.81 shareholders option 0.69 Payment date: 25…
Sales breakdown for 2014 As % of total Group sales, and change in % (comparison year-on-year) Sales by market Sales by region 26.2% +19.5% 30.6% 65.8% +3.5% 66.6% 21.2% -22.4% 16.1% 26.2% -1.9% 25.2% 5.5% -6.5% 5.1% 10.3%…
Sales evolution In millions of , comparison year-on-year +2.2% +7.6% -1.7% -3.7% 5,701 5,578 2013 Volume Currency Price/Mix 2014 Translation /9
EBITDA in line with guidance In millions of , comparison year-on-year Higher sales in line with guidance, offset by: Stable at 10.0% of sales, Negative volume & mix effect in Brazil notwithstanding Negative EUR/USD impact…
Rebasing our assets to their fair economic value Revised prospects for the end-markets served by a number of our assets Severe fall in oil prices Increased discipline in E&P Capex policy for IOCs, mainly impacting O&G sales in…
Net income evolution In millions of , comparison year-on-year 262 -65 +26 -9 239 -1,104 -4 +29 (924) Higher D&A, in line with Improvement mainly recent major investments, resulting from positive offset by Other positive…
Strong free cash flow & net debt reduction In millions of Net Debt as of Net Debt as of Dec. 31, 2013 Dec. 31, 2014 Cash flow from Change in Gross capital Net operating activities WCR(1) Net debt = expenditure debt = 32.7%…
Outlook for 2015
Oil market evolution expected to severely impact Oil & Gas sales Brent / WTI price evolution(1) Brent / WTI 2015 average prices significantly 120 Brent below 100 below 2014 average 110 100 OPEP E&P expenses to decrease in 2015…
Key market assumptions for 2015 USA Europe - Lower OCTG consumption due to shale oil + Weakening of the Euro - drilling severely impacted by WTI price fall Destocking from distributors - Competitive environment in Power…
Fast adaptation to the changing market environment 2015 flexibility levers: most Vallourec sites have the ability to adapt their variable costs to the activity drop Reduction of working hours by approx.15% in the mills, incl. a…
Strategic Update and 2-year competitiveness plan
Oil & Gas market remains an attractive market over MT & LT 2014-20 World Oil Production Evolution breakdown (mb/d)(1) Expected MT & LT growth in World Oil Add. call World Oil Oil & Gas production in the Supply RoW (2) on OPEC…
Reaffirming our long term strategy, while focusing on competitiveness Customer Reaffirming Our achievement so far 2019 target requests our strategy Heat treated deliveries (% of total tons) Leadership on the high MORE…
Reaffirming our long term strategy, while focusing on competitiveness Customer Reaffirming Our achievement so far 2019 target requests our strategy Breakdown of revenues by region (% of sales) Continue to Local rebalance our…
Reaffirming our long term strategy, while focusing on competitiveness Customer 2015-2016 Reaffirming Our achievement so far requests target(1) our strategy Valens Capten savings to MORE COMPETITIVE offset the inflation Our…
Valens: a 2-year global plan to improve competitiveness and drive efficiency Competitiveness plan Valens: 2015-2016 (full year effect in 2017) Costs Cash use Organization reduction optimization efficiency Target vs. 2014(1)…
Valens - Structurally reduce cost base In millions of , comparison year-on-year 2-year cost reduction targets1 5,701 (1,753) 2% 10% 350 30 (2,495) 240 1,540 (568) (30) 855 80 2014 Raw Manufacturing SG&A Other 2014…
Valens - Enforce strict capex discipline Cash use optimization Target Normalized capex at 350m p.a. vs. 450m p.a. previously announced 450 Capex envelope sized for 388 business development, mix improvement, and maintenance…
Capital allocation framework in line with shareholders interests Decision framework Cash generated by operations Capital expenditure to ROCE target 1 maintain and grow the company ROCE above WACC in 2018 under normalized oil…
Vallourec committed to cash generation and return on capital 2015 FCF: Positive Maintain our strategy 2014 dividend: Proposed to be Adapt to the new maintained at 0.81 per share environment Reinforce our focus on…
Appendix
Valens - Reduce added cost base Costs reduction Manufacturing Targets & Direct costs SG&A Total 2015-2016 on sales Base 2014, excl. Raw In % 10% 14% 10% material In m 240m 320m 80m base 2014 (60% variable costs) (50% variable…
Oil & Gas (66.6% of FY 2014 Groups sales) Oil & Gas sales in million 2014 3,796 +3.5%, +4.9% at cc. 2013 3,669 EAMEA: Sales increase, benefiting from the exceptional backlog generated in 2013 Low level of orders since…
Power Generation (10.7% of 2014 Groups sales) Power Generation sales in million 2014 610 +6.6%, +6.8% at cc. 2013 572 Conventional: Continued to benefit from numerous projects but was impacted by sustained pricing…
Industry & Other (17.6% of 2014 Groups sales) Industry & Other sales in million Mechanicals 2014 372 188 447 1,007 Automotive -2.1%, +1.3% at cc. Construction & Other 2013 383 231 415 1,029 In the EU: Higher volumes…
FY / Q4 2014 simplified income statement Change Change In millions of 2014 2013 Q4 2014 Q4 2013 YoY YoY Sales 5,701 5,578 +2.2% 1,665 1,609 +3.5% Industrial margin 1,453 1,543 -5.8% 405 436 -7.1% As % of Sales 25.5% 27.7% -2.2pt…
Adjusted net income, Group share In millions of euros Impairment impacts 2014 2014 2013 Change Actual Impairment Depreciation Deferred Adjusted Actual YoY of current tax assets (incl. Goodwill) assets EBITDA 855 855 920 -7.1%…
Capital Expenditure In millions of 909 873 803 677 567 529 388 350 2008 2009 2010 2011 2012 2013 2014 2015e & beyond / 35
FY 2014 Balance Sheet In millions of 31 Dec. 2014 31 Dec. 2013 In millions of 31 Dec. 2014 31 Dec. 2013 Non current assets 5,077 5,827 Equity, Group share 3,743 4,601 Non-controlling interests 426 385 Inventories and 1,490 1,423…
Financial resources as at 31 December 2014 Strong and diversified financial structure Optimized cost of financing Bank & Other Debt 19% Approx. 71% 81% of gross debt of gross debt is at fixed rate* raised on capital markets…
ROCE definition ROCE = Net Operating Profit Less Adjusted Tax (NOPLAT) / Capital Employed Capital Employed as shown in the denominator is defined as the sum of Net Fixed Asset and Operating Working Capital, minus Goodwill NOPAT as…
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