After cutting debt, Vallourec pays first dividend after 10 years

French steel tube maker Vallourec announced on Friday that it will pay its first dividend for 10 years, after further reducing its debt and completing its financial restructuring plan.

However, the group's shares fell 3% at 0805 GMT after it reported a decline in its third quarter earnings.

The group's net debt was 240 million euros (253.42 millions) on Sept. 30. This is down from 1.49 billion euro two years earlier. It confirmed that it would reach zero net by 2025.

On a conference call with the media, Philippe Guillemot, CEO of Global Financial Services Group (GFSG), said: "As a consequence, we can confirm we will announce a proposal for a dividend in February."

He said that this will be a regular return for investors.

In the last three year, Vallourec has implemented a financial reorganization plan with its principal creditors. The company provides tubing to oil and gas markets, low-carbon energies and industrial markets.

The company reported that its third-quarter earnings before interest taxes, depreciation and amortization were 168 million euro, down from the 222 million euro a year ago.

Guillemot stated that "we are actually on an impressive performance despite the market conditions which were very different than last year. Particularly in the U.S. where volumes were especially low in Q3 while prices continued to drop."

Vallourec announced that it had made its first major acquisition since 2016, when it bought Thermotite Do Brasil from Petrobras for 17.5 millions euros.

The group has confirmed its 2024 guidance and is optimistic about the U.S. Market, where recent data showed a rise in U.S. Spot Prices in September and Octember. It claimed it would be able to withstand any new U.S. steel import tariffs, as it is a U.S. producer.

Donald Trump, the U.S. President-elect elect, has imposed a 25 percent tariff on steel imported from most countries. He said it was needed to maintain a healthy domestic production for U.S. security.

Guillemot stated that "what we sell on the U.S. market is manufactured in the United States. We are therefore well-positioned, particularly if import duty continues to rise."

The shares of Vallourec have increased by 6.4% in the last year.

(source: Reuters)