Vallourec Despite Weak Outlook, Increases Dividends Thanks to Strong Cash Flow

Investing.com – Vallourec SA (EPA:VK) announced its Q4 results on Friday, showing strong cash generation. Despite providing cautious guidance for the upcoming quarters, the company still declared a dividend higher than expectations.

The French steel pipe manufacturer reported Q4 2025 EBITDA of €214 million, in line with analyst estimates of €213 million and above the midpoint of its guidance range of €195 million to €225 million. This performance was driven by better-than-expected results in the mining and forestry sectors.

Vallourec’s net cash at the end of Q4 was €39 million, surpassing the analyst forecast of €82 million in net debt. The company’s cash position improved by €179 million from the previous quarter, thanks to an €108 million inflow from operating activities.

Based on its strong cash flow, Vallourec proposed an interim dividend of €1.75 per share, payable in August 2026. The dividend yield is 9%, exceeding the analyst expectation of €1.31 per share.

Revenue for the quarter reached €1.043 billion, up 12% from the estimated €932 million. Net profit was €96 million, below the market consensus of €113 million, impacted by restructuring costs and non-recurring items.

The pipe segment’s EBITDA was €183 million, with an EBITDA per ton of €548, down 12% from €621 in Q3. The average selling price of pipes increased by 6%, from €2,807 per ton in the previous quarter to €2,984 per ton. Pipe sales volume reached 335,000 tons, an 11% increase from 303,000 tons in Q3.

Mining and forestry EBITDA was €38 million, up 9% from €35 million in Q3. Production volume reached 1.5 million tons, exceeding the guidance of 1.4 million tons.

For Q1 2026, Vallourec provided an EBITDA guidance range of €165 million to €195 million, with a midpoint 3% below the analyst consensus of €186 million.

The company expects the pipe segment’s EBITDA per ton to remain roughly at Q4 levels, though sales volume is expected to decline. Mining and forestry sales volume is projected to reach about 1.4 million tons.

Looking ahead to the full year 2026, Vallourec stated it expects to gain market share in North America, which should support sales.

However, the company noted that prices in the U.S. market have recently declined slightly but believes supply and demand are expected to improve within the year.

International market sales are expected to be relatively weak in the first half of 2026, with a recovery in the Middle East anticipated in the second half. Overall prices are expected to remain stable in the second half of 2026.

Iron ore sales volume is projected to decline slightly year-over-year to about 5.5 million tons, due to improved production processes and a focus on value rather than volume.

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