Apr 14, 2008
Vallourec think the ability to pass in its price increases for raw materials
Vallourec think the ability to pass in its price increases for raw materials and energy, but refuses to disclose profit forecasts for the second half of 2008.
The specialist Seamless Steel Tube - intended mainly to the sectors of oil and gas, and electric power - has also detailed its plan Wednesday savings of EUR 200 million minimum for 2010 , he intends to achieve third from 2008.
Vallourec announced Tuesday that despite a context marked by the weakness of the dollar and the sharp rise in the cost of raw materials - including iron ore - he felt that his GOP ratio / turnover is expected to remain at a "high level, around 25% for the 1st semester 2008. "
"We have a very strong desire to raise prices and the market is ready," said at a press conference Pierre Verluca, chairman of the board.
"Competition in the field of premium products, or in electric power is not great," he added.
"Subsequently, the savings plan will bear fruit gradually and, in general, demand in the medium-term remains very strong momentum," stated Pierre Verluca.
The CEO of Vallourec has, however, refused to comment on profit forecasts for the second half, underscoring the uncertainty associated with the decline in the dollar against the euro, while acknowledging the positive impact of the decline in costs and rising prices would be felt over this period.
The price increases will be at a rate that will depend on the contracts between Vallourec and its clients, also emphasized the group. It is also in 2008 revenues at least equal to that of 2007 (on a comparable basis), which reached 6.140,5 million euros (+10.8%).
"REFLECTION ACTIVE" ON ACQUISITIONS
Around 13.55, the title jumped 5.50% to 143.51 euros, with the highest increase in the CAC 40 who earns 1.2%. CA Cheuvreux has raised its recommendation on the value to "outperform".
"After several years during which the price increases have far exceeded those materials costs, allowing a doubling of the level of EBITDA margin, the ease with Vallourec to move further increases is more limited but still real, in the face of Chinese competition that affects only the low-end, "said in a note Jean-Luc Romain, an analyst at CM-CIC Securities.
"The plan of cost reductions will further enhance the level of margins by 2010," he added.
The plan savings of 200 million euros in volumes is constant and does not take into account changes in the cost of raw materials and currency effects. It does not involve restructuring, "said Jean-Pierre Michel, a member of the Executive Board.
In addition to direct action "to optimize procurement and overheads," Vallourec wants to focus on the rate of use of tools, gains on consumption of matter and energy conservation, improving the quality and improved productivity.
The group intends to invest more than 750 million euros in 2008 against 438 million last year.
Pierre Verluca reiterated that Vallourec preferred acquisitions to share buybacks.
"We want to always give priority to growth (...). We are looking always take an active part in possible acquisitions," he said. "Our financial strength enables us to consider major acquisitions if they arise."
Vallourec is being acquired three companies in the American manufacturer of tubing drilling Grant Prideco (Atlas Bradford, and TCA-Alloy Tube) for $ 800 million.
These companies will bring to Vallourec more than $ 200 million in sales and additional "synergies and integration important trade," said Pierre Verluca.
Net cash from Vallourec rose from 41.4 million at the end of 2006 to 242.4 million at December 31, 2007.
Vallourec published Tuesday a net profit of 986.2 million euros (+7.5%), an operating profit of 1.622,6 million (+5.0%) and a gross operating income of 1,750, 8 million
(+5.1%).
His GOP ratio / turnover reached 28.5% compared with 30.1% in 2006. The group will propose to its general assembly a dividend of 7 euros per share for 2007.
"Our strategy is very clear: it's a growth strategy in the high-end products. We all means, remaining alone to achieve it," also said Pierre Verluca Wednesday, while stressing that n there was no "reliable way to 100% in order to prevent a takeover," while Vallourec been recurring rumors of bid.
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