(News Bulletin 247) – The specialist in tubes for the oil and gas industry has announced the sale of its Mülheim site to a real estate developer for a price of 39 million euros. The CEO, Philippe Guillemot, also indicated that the company’s net debt would be less than 741 million euros at the end of the month.

Vallourec ends the year 2023 with a positive announcement. The specialist in the manufacture of tubes for the oil and gas industry launched a plan last year called “New Vallourec”, a restructuring which should allow the company to improve its profitability and reduce its dependence on economic cycles, with a greater emphasis on value than on volumes.

This plan, which should have its full effect from next year, notably involved a transfer from Germany to Brazil of production in the oil and gas sector.

The company’s activities across the Rhine were gradually shut down this year. It remained to be seen what will happen to the land, that is to say the land on the sites that Vallourec owns in Germany. Sales processes had previously been launched.

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A price of 39 million euros

Friday evening, after the close of the Paris Stock Exchange (which was closed from Friday to Tuesday), the group announced the sale of its site in Mülheim to CTP, presented by Vallourec as “the largest European industrial real estate developer listed in Sotck exchange”.

The amount of the transaction amounts to 39 million euros for a property of approximately 330,000 square meters. Of this sale price, 37 million euros will be paid within two weeks, Vallourec said.

“This sale confirms our determination to achieve the objectives of the New Vallourec plan,” declared the group’s CEO, Philippe Guillemot, quoted in a press release. These objectives include in particular an annual gross operating profit (Ebitda) of 850 million euros in “mid-cycle”, that is to say when the economy is neither too buoyant nor too unfavorable.

Debt free by 2025 at the latest

The manager also gave indications on the company’s debt: “for the end of 2023, we anticipate a net debt of less than 741 million euros, excluding proceeds from the sale of assets, which will represent five consecutive quarters of deleveraging,” he added.

To the extent that Vallourec expects an Ebitda of between 1.075 billion and 1.175 billion euros this year, the debt ratio of net debt to Ebitda should logically be lower than 0.69 at the end of December.

“This transaction supports our short-term debt reduction ambitions and our objective of achieving net debt at zero by the end of 2025 at the latest,” added Philippe Guillemot.

During its investor day last September, the company indicated that as soon as its debt was reduced to zero, the company could resume the payment of a dividend, suspended since 2016, for the 2015 financial year.

On the Paris Stock Exchange, Vallourec shares reacted well this Wednesday, gaining 2% to 14.59 euros around 10:30 a.m., which brings its performance over the whole of 2023 to +19.15%. The action may also be driven by the rise in oil prices, with North Sea Brent having gained around 2 dollars during the day on Tuesday to more than 80 dollars per barrel.

“The group is practically no longer burning cash and time has ceased to work against it after the financial restructuring (in 2021, Editor’s note),” the independent research firm AlphaValue assessed last month. “The group moved its production to low-cost countries (Brazil, China, etc.) to the detriment of Europe, which allowed it to improve its competitive position,” added the financial intermediary.