November 28, 2018 / 2:51 PM / a year ago

Vallourec denies vast redundancy plan in the cards for France

PARIS (Reuters) - Steel pipe maker Vallourec (VLLP.PA) denied on Wednesday it was preparing a vast redundancy plan for France though it said it was working on an action plan to boost competitiveness its German operations.

Vallourec made the comments in a statement issued after French weekly business magazine Challenges said Vallourec planned to cut jobs in France and Germany to reduce costs and its heavy debt burden.

The report had said around 1,800 jobs, 1,200 at three sites in France, and 600 in Germany, could be affected by the cost-cutting measure.

“Vallourec formally refutes the information that it is preparing a vast redundancy plan for France. The plan currently being implemented at the boiler line in Saint-Saulve will be finalized at the end of December 2018,” the statement said.

Vallourec said the action plan for Germany will be submitted “in due time” to consultation and negotiation to staff representatives. It did not give a figure for job cuts in Germany.

The company, which supplies the oil and gas industry, has struggled to recover since oil prices crashed in 2015.

In its third quarter results on Nov. 15, the company said it was continuing its transformation plan and was generating significant cost reductions, but did not give details.

S&P Global Ratings said on Nov. 21 that although it expected Vallourec’s performance to continue to improve in the coming quarters, it believed this will happen at a slower pace than previously anticipated.

S&P lowered Vallourec’s rating to “B-“ from “B” with a negative outlook.

“The negative outlook reflects that we may further lower the rating over the next three to 12 months if improvement in Vallourec’s quarterly profits stalls following setbacks in the company’s cost reduction programs,” it said.

As of Sept. 30, the company had reported net debt of 2.1 billion euros ($2.37 billion), the ratings agency said, adding that Vallourec’s key weakness remains its high cost position, notably in European assets.

Vallourec said after the rating announcement that its liquidity situation was sound.

The company’s shares are down 56.6 percent year-to-date.

Reporting by Bate Felix and Benjamin Mallet, Dominique Vidalon; Editing by Leigh Thomas/Keith Weir

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