Investing
Vallourec to pay first dividend in 10 years after cutting debt
Global Banking & Finance Review®
Company
By Mathias de Rozario
(Reuters) -French steel tubes maker Vallourec said on Friday it would pay its first dividend in 10 years after cutting its debt further and completing a financial restructuring plan.
The group’s shares were down 3% by 0805 GMT, however, after it also reported a drop in third quarter earnings.
The group said its net debt stood at 240 million euros ($253.42 million) as of Sept. 30, down from a peak of 1.49 billion euros two years ago, and confirmed it was on track to reach zero net debt by the end of 2025.
“As a result, we can confirm that we will announce a dividend resolution proposal in February,” CEO Philippe Guillemot said on a media call.
This will mark a regular return to investors, he said.
During the last three years Vallourec, which provides tubing for oil and gas, low-carbon energy and industrial markets, implemented a financial restructuring plan in agreement with its main creditors.
The company said its third quarter earnings before interest, taxes, depreciation, and amortization totalled 168 million euros, down from 222 million euros a year earlier.
“We are actually on a remarkable performance, despite market conditions that were very different from last year, particularly in the U.S., where volumes were particularly low in Q3 and prices continued to fall,” Guillemot said.
During the quarter, Vallourec signed major contracts with among others TotalEnergies, Petrobras and Eneva and announced its first acquisition since 2016 after buying Thermotite Do Brasil for 17.5 million euros.
The group confirmed its guidance for 2024, and sees improving demand in the U.S. market where data suggested a rise in U.S. spot prices in September and October. It said it could withstand any new U.S. tariffs on steel imports because it produces in the United States.
During his last time in office Donald Trump, now U.S. president-elect, imposed a 25% tariff on imported steel from most countries, saying it was necessary for U.S. national security to maintain healthy domestic production.
What we sell on the U.S. domestic market is produced in the United States, so we are particularly well positioned, especially if import duties continue to rise,” Guillemot said.
Vallourec’s shares have gained 6.4% this year.
($1 = 0.9489 euros)
(Reporting by Mathias de Rozario; Editing by Himani Sarkar and Susan Fenton)
A dividend is a portion of a company's earnings distributed to its shareholders, typically in cash or additional shares, as a reward for their investment.
Debt financing involves borrowing funds to be paid back later, typically with interest, which can be used for various business operations or investments.
Financial restructuring is the process of reorganizing a company's financial obligations and operations to improve its financial stability and efficiency.
Corporate governance refers to the systems and processes that direct and control a company, ensuring accountability and transparency in its operations.
Investment is the allocation of resources, usually money, in order to generate income or profit over time.
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