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VALLOUREC

Analysis of Vallourec share price

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If you want to start taking a position on the Vallourec share price online, we advise you to take the time necessary to acquire the necessary knowledge about this stock and its company. This is exactly what we suggest you do right now with our help. In this article, we will explain to you how to best anticipate future changes in this stock by understanding what the company's activities are, its partners or its main competitors, but also what its strengths and weaknesses are.

Elements that can influence the price of this asset:

Analysis N°1

As the oil & gas sector is one of the sectors targeted by Vallourec's sales of products and services, it will be monitored more closely as its financial health will influence demand and therefore the profitability of this group.

Analysis N°2

Attention will also be paid to the development of Vallourec's activities in certain strategic markets such as South America and Asia, as well as in the United States with the current explosion in the shale gas market.

Analysis N°3

The strategies implemented by Vallourec to improve its competitiveness are also important elements to study. In particular, it will be necessary to follow the group's communications on this subject and to check whether it has actually achieved the objectives it has set itself.

Analysis N°4

The competition in this sector of activity is undoubtedly also an interesting element if you wish to detect interesting price variations in the Vallourec share. Particular attention should be paid to the growing competition from China.

Analysis N°5

Finally, it will also be necessary to keep abreast of the group's news regarding its rapprochement with certain other companies through announcements or rumours of partnerships or operations to sell or buy out subsidiaries.

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General presentation of Vallourec

Vallourec is a French industrial group specialising in the production of seamless steel tubes and other specific tubular products which it markets to industrial customers. More specifically, Vallourec is currently the world leader in this very specific sector of activity. However, the company's activities can be grouped into different categories according to the proportion of sales they represent and in this way.

The manufacture and sale of seamless tubes is of course the most important activity of this group since it generates more than 98.1% of the company's total turnover. This includes hot-rolled tubes, tubes and tubes for the oil and gas industry.

The manufacture and sale of special tubes generated 1.9% of sales. These include welded tubes for the secondary cooling circuits of conventional and nuclear power plants, welded stainless steel tubes, seamless and hot-finished tubes, cold-rolled and peeled tubes and welded fittings.

From a geographical point of view, Vallourec is, as you might expect, an international company that operates and sells its products throughout the world. The sector in which the Group generates the most sales is Asia and the Middle East, which accounts for 27.7% of sales. Next comes the North American sector with 32.7% of turnover, South America with 15.9% of turnover, Europe with 15% of turnover and the rest of the world with the remaining 8.7% of turnover.

Analysis of Vallourec share price
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The major competitors of Vallourec

As explained above in the brief presentation of the Vallourec group, this French company is currently the leader in the production and sale of tubular products and solutions. But of course, it is not the only company in this particularly competitive sector. It is very important to know these different players in the industrial tubular products sector but also the strategies put in place by these companies to stand out from the competition. Indeed, most of these players seek above all to differentiate their products by increasing their performance and their overall quality. Thus, while until recently Western companies were the only ones in this market, certain Asian groups are also posing an increasing threat to Vallourec, with their high-performance tube manufacturing techniques and lower production costs, and therefore greater competitiveness. We therefore suggest that you now find out who Vallourec's main competitors are so that you can include them in your future analyses.

Tenaris

First of all, Vallourec's main enemy is the company Tenaris, which has approximately the same market share. Indeed, the two companies are currently vying for the top spot in this sector of activity with approximately 12% market share each.

Global players

Vallourec's global players are those that supply their tubular products and solutions to various sectors of activity such as oil and gas, power generation, petrochemicals, the automotive industry and many others. Vallourec's main competitor, Tenaris, is also among these global players. But other competitors also fall into this category, such as US Steel Tubular Goods.

Niche players

these are companies that specialize in a specific sector. There are also Vallourec's competitors, such as Ovako, which specializes in tubular products for the automotive industry, and Sandvik, which specializes in tubular products for the power generation industry.


The major partners of Vallourec

When you look at the history of the Vallourec group, you will see that this company has often formed strategic partnerships and alliances with other companies in the same or competing sectors of activity, in order to gain in efficiency, profitability or growth. These alliances are therefore extremely important if you want to effectively analyze Vallourec's share price performance. To help you understand what you need to analyse, here are some concrete examples of the group's latest or most important partnerships.

NSSMC

First of all, I would like to mention a partnership that has existed for over 40 years now between Vallourec and a Japanese steel group, Nippon Steel and Sumimoto Metal or NSSMC. This partnership was recently extended with a capital increase of more than one billion euros. The partnership between these two industry giants will therefore be strengthened in the years to come with a significant increase in their cooperation. The aim here is to improve the creation of synergies for both NSSMC and Vallourec, in rather unfavourable market conditions due to the recent fall in the price of a barrel of oil. Among the new objectives of this partnership, cost reduction is of course a central concern in order to effectively boost the operational performance of both companies and improve profitability.

TechnipFMC

In 2016, one of Vallourec's subsidiaries, Serimax, entered into a major partnership with the TechnipFMC group, which is a leader in project management, engineering and construction in the energy sector. The partnership project concerns the welding of subsea pipelines and provides for TechnipFMC to take a minority stake in its subsidiary Serimax. In this way, the two companies will be able to pool their expertise and deploy Serimax's welding technology on TechnipFMC's spoolbases and S-pipe vessels. The objective of this joint venture is to provide competitive state-of-the-art facilities to meet the investment needs of operators on future projects, to invest in joint research and development projects to develop innovative reel lay welding solutions that will raise the level of performance and increase operational efficiencies through better managed productivity and planning.

Interpipe

Finally, one of Vallourec's latest partnerships is with its Ukrainian competitor Interpipe in 2018. This partnership actually consists of a cooperation between the two companies with the aim of producing seamless carbon tubes for the European market. The tubes in question will be rolled by Interpipe and then packaged in a joint finishing plant to be managed by Vallourec and located in Nikopol, Ukraine, which already belongs to Interpipe. The tubes to be produced through this partnership will be intended for a very specific target. They will not be used in the oil and gas industry, but rather in the machine tool and agricultural machinery industries and in the transportation of hydrocarbons. The advantage of this alliance for the Vallourec group is of course the production cost of these tubes, which is lower than its usual cost and will enable it to offer entry-level tubes at extremely competitive prices.

Open Innovation Platform

It should also be noted that in May 2019, Vallourec launched its Open Innovation Platform which, as its name suggests, is a website aimed at enabling new partnerships in the field of its augmented tubes. Thus, start-ups, laboratories or companies wishing to submit their application can do so directly from this site. Initially, Vallourec wishes to bring two new functionalities to its tubes, namely maximizing the flow of fluids inside them and transporting data or energy through these tubes.

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Positive factors for Vallourec shares
The factors in favour of a rise in the Vallourec share price:

First of all, it is important to recall here Vallourec's very interesting position in its sector of activity and on a global scale. Indeed, the French group is in a leading position, almost on a par with its main competitor, Tenaris, and holds almost 12% of the market share for seamless steel tubes. But in certain specific segments, such as premium tubular solutions, it remains the undisputed leader in the international market. This, of course, gives it a high level of recognition.

The geographical distribution of the Group's sales is also a strong point. Vallourec no longer confines its profits to Europe, but has long been active in other major markets such as the US, Asia and the Middle East. This distribution naturally enables the Group to protect itself against the risk of a decline in its activities due to a localized economic crisis.

Still with regard to the Vallourec group's protection against risk, it can also be appreciated that the group has a very strong position in the energy sector.

Vallourec's recent investments and developments in Brazil, the United States and China have also led to the ramping up of three major industrial sites in these countries.

Vallourec's strategy of increasingly positioning itself in the production of electrical equipment for the aerospace industry through its subsidiary Labinal Power Systems and recent partnerships such as with TechnipFMC is also a strong point for Vallourec.

Another major asset of this group is of course its experience and know-how which give it a strong brand image, particularly in the deep offshore and corrosive well sectors.

Finally, the 2016 capital increase resulted in a net increase in this company's equity, which helps to boost shareholder and investor confidence.

Negative factors for Vallourec shares
The factors in favour of a drop in the Vallourec share price:

Firstly, as we have seen from the history of this company, there has been a significant fall in oil and gas prices in recent years, with OPEC having difficulty in curbing world production, which is still in surplus. This situation has led to a fall in the needs of these industries and therefore to a fall in orders for Vallourec.

In addition, there has been an increase in the price of certain raw materials that Vallourec needs for its production. This concerns scrap metal in particular and naturally has repercussions on the Group's production costs and profitability.

Despite the recent capital increase, the company's free cash flow is still very weak, which may be a concern for investors.

Finally, the group's recent financial results, particularly in 2017, have disappointed investors with results below targets despite some occasional rebounds. This could thus weigh on traders' buy or sell decisions on this stock and accentuate a loss of points for this Vallourec share.

The information supplied here is only for indicative purposes and should not be used without the completion of a comprehensive and complete fundamental analysis of this asset notably taking into account exterior data, future publications and announcements and all fundamental events and news that could influence the strengths and weaknesses or make them more or less significant. This information does not in any way constitute recommendations relating to the completion of transactions or a solicitation to buy or sell an asset.

Frequently Asked Questions

What were the key dates in Vallourec's history?

There are several important dates in the history of Vallourec. In particular, it was in the 1890s that the companies that founded Vallourec were created. A few years later, in 1899, the Montbard metallurgical company was listed on the Paris stock exchange. It was not until 1930 that the name Vallourec was created. In 1997, Vallourec & Mannesmann Tubes was created. In 2006, the Group was included in the CAC 40 stock market index before being delisted in 2014.

What are the main subsidiaries held by Vallourec?

The Vallourec group operates through various subsidiaries, including Vallourec Deutschland GmbH, Vallourec Fittings, Vallourec Umbillicals, PT Citra Tubindo, Vallourec Solucoes Tubulares di Brasil, Valinox Nucléaire, Valinos Nucléaire Tubes Guangzhou Co Ltd, Vallourec Bearing tubes, Vallourec Oil and Gas France, Vallourec Oil and Gas UK, Vallourec Oil and Gas Angola, Vallourec Nigeria Ltd, Vallourec O&G Nigeria Ltd, Vallourec Middle East FZE, VAM Changzhou Oil and Gas Premium Equipment, VAM Drilling Products USA, Vallourec Canada, VAM USA, Serimax Vallourec Tube-Alloy.

Who are the major shareholders of the Vallourec group?

The largest shareholders of Vallourec are currently Bpifrance participations with 14.6%, Nippon Steel Corp with 14.6%, SW Mitchell Capital with 4.19%, Dnca Finance with 1.98%, The Vanguard Group with 1.79%, Caisse des dépôts et consignations with 1.66%, Dimensional Fund Advisors with 1.17%, Norges Bank Investment Management with 1.14% and Natixis Investment managers international with 0.89%.

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