Vallourec targets 2023 earnings growth amid restructuring
By Olivier Sorgho and Vittorio Maresca di Serracapriola
(Reuters) -French steelmaker Vallourec forecast profit growth in 2023 driven by its Tubes division and Mine and Forest business as it posted a jump in fourth-quarter core earnings, sending its shares up about 5% early on Thursday.
"We are confident in the market for 2023," CEO Philippe Guillemot told reporters.
Its fourth-quarter earnings before interest, taxation, depreciation and amortisation (EBITDA) surged 129% to 312 million euros ($331 million). That took its full-year EBITDA to 715 million euros, up 45%.
Its fourth-quarter EBITDA margin rose to 20.2% from 12.8% a year earlier.
Under a restructuring plan launched by Guillemot last year, the company is looking to prioritise margins over volumes and is closing plants in Germany, France and Scotland resulting in thousands of job losses.
Guillemot said in a statement that Vallourec had signed an agreement to sell its Mülheim site in Germany, with proceeds of 40 million euros, while the sale of its larger Duesseldorf-Rath site was progressing.
Vallourec also said it aimed to achieve positive free cash flow this year despite higher-than-usual capital expenditures of around 220 million euros, and one-off cash outflows of about 350 million linked to its restructuring.
"Employees at the sites to be closed or downsized will begin to leave the company in Q1 of 2023 with the last wave of departures in 2024," the company said.
Vallourec expects to resume normal operations at its Pau Branco iron ore mine in Brazil at the beginning of the second quarter. They were temporarily suspended last year due to heavy rainfall and then resumed at a lower capacity.
The company also said it expected to further reduce its net debt this year.
($1 = 0.9420 euros)
(Reporting by Olivier Sorgho and Vittorio Maresca di Serracapriola in Gdansk; editing by Milla Nissi and Jason Neely)