February 20, 2019 / 6:17 PM / 8 months ago

French steel pipe maker Vallourec launches new savings plan

FILE PHOTO: The logo of Vallourec is pictured at the World Nuclear Exhibition (WNE), the trade fair event for the global nuclear community in Villepinte near Paris, France, June 27, 2018. REUTERS/Benoit Tessier

(Reuters) - France’s Vallourec on Wednesday it would cut about 18 percent of its staff in Germany by 2020 and announced other savings measures, after reporting a sharp rise in full-year earnings.

The steel pipe maker also said it would divest coal assets to make additional gross savings of at least 200 million euros (174 million pounds) by 2020, on top of 445 million euros delivered at the end of 2018.

The company, which supplies the oil and gas industry, has struggled since oil prices crashed in 2015 and has been under pressure from decreasing free cash flow, which stood at a loss of 494 million euros in 2018.

The company reported positive free cash flow in the fourth quarter of 76 million euros, while earnings before interest tax, depreciation and amortisation (EBITDA) rose to 89 million euros in the quarter, compared to 11 million euros a year earlier.

Vallourec said it aimed to take additional actions to improve productivity in Brazil and would seek to find an investor to acquire its coal-fired power plants in Germany and China.

Its full-year EBITDA rose to 150 million euros, up from 2 million euros in 2017.

The company also extended 600 million euros bank facilities that were due in 2020 to 2021. It said it had no major bank lines maturing before 2021.

The company said it expected a strong increase in EBITDA next year and said would respect its banking covenant at the end of the year.

Reporting by Anna Pruchnicka; Editing by Edmund Blair

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