French steel pipemaker Vallourec has retained its yearly outlook despite the impact of the COVID-19 pandemic as the North American oil & gas industry set to recover in early 2021.
European industry demand continues to be affected by the pandemic; however, Brazilian industry is expected to remain solid this year as compared to 2019. Iron ore volumes produced in Brazil are projected to increase compared to last year due to the company’s use of mobile processing units. Iron ore prices are expected to see a small decline in Q4. However, due to uncertainty as market volatility remains, Vallourec is planning further restructuring actions along with workforce cuts in France, Germany and Brazil.
The steel tube provider shipped 1.19mn mt in the first nine months of 2020, short by 32.7pc from 1.77mn mt in the same 2019 period. Shipments in Q3 2020 declined by 46.4pc to 319,000mt, compared to 595,000mt in Q3 2019.
The company saw a 23.9pc decline in revenue to €2.4bn ($2.86bn) in Jan-Sep 2020, against €3.2bn in the prior-year period. Revenue in Q3 2020 dropped 32.5pc to €716,000 from €1.06bn in Q3 2019, due to low demand in global oil and gas markets.
Vallourec recorded a decline of 28pc in EBITDA to €182mn in Jan-Sep 2020 compared to €253mn in the same 2019 period. The company’s EBITDA was €71mn in Q3 2020, down 15.5pc from €84mn in Q3 2019.
($1 = €.84)