France-based pipe manufacturer
Vallourec has announced its financial results for 2014.
In the given period,
Vallourec reported a net loss of €924 million, compared to a net profit of €262 million in the previous year.
Vallourec's sales revenues in the same period amounted to €5.7 billion, rising by 2.2 percent year on year, while it registered an operating loss of €661 million, compared to an operating profit of €534 million in 2013. The company's EBITDA in 2014 decreased by 7.1 percent year on year to €855 million.
Vallourec said that the current environment is marked by a severe oil price drop and major capital expenditure cuts by customers, notably in the US and in the
Europe, Africa, Middle East and Asia (EAMEA) region, while the increase in revenue is supported by a 7.6 percent growth in sales volume, partly offset by a negative price effect.
In the EAMEA region,
Vallourec expects volumes to be significantly down in 2015. The slowdown of orders recorded in 2014 results in a low backlog entering in 2015. Destocking from some customers, in particular Saudi Aramco, is ongoing. Oil price weakness should further weigh on tender activities, and is likely to result in pricing pressure.
On the other hand, in the US, the crude oil price fall is severely impacting the US rig count, which may decline between 40 percent and 50 percent when compared to the end of 2014. This will result in lower OCTG consumption, destocking from distributors, and pressure on prices.
Vallourec expects a sharp drop in its 2015 volumes in the US market.
The company also said that it will implement structural measures including a seven percent reduction in the workforce.