Vallourec (VK): The Silent Fall of the Steel Giant — Hidden Opportunity or Value Trap?

Introduction

What is Vallourec (VK)?

Vallourec’s 2023 Peak and the 2024 Decline

In 2023, Vallourec achieved revenue of €5 billion, supported by strong global demand and the robustness of the oil market.
However, in 2024, the figures show a significant downturn:

• Revenue: €4.0 billion, down 21% compared with 2023
• Net income: €472.9 million, versus €523.9 million in 2023 (a 10% decline)
• Operating margin: 17.4%, down 2 percentage points
• Tube shipments: decreased by approximately 8%

This decline reflects a normalization of the industrial cycle following an exceptionally dynamic year in 2023.

2025 Mid-Year Shock: Revenues, Margins, and Regional Breakdown

The first half of 2025 continued this downward trend:

• Revenue: down 15% compared with H1 2024
• Total tube production: decreased over the year, despite a slightly stronger Q1 than in 2024
• EBITDA and net income: declined sharply

By geographic region:

• Europe: –34%, due to the closure of German rolling mills
• North America: –11%, impacted by the drop in OCTG prices
• South America: –27%, affected by lower production and the depreciation of the Brazilian real
• Middle East: –19%, following an exceptional first half in 2024
• Asia: +14%, supported by a more favorable product mix

By business segment:

• Oil & Gas: –12%, as a result of lower market prices
• Industry: –22%, constrained by declining volumes
• Power Generation and Others: +17%
• Mines & Forests: +36%, driven by the expansion of mining operations in Brazil

Why Vallourec’s Profitability is Falling — The Real Causes

Vallourec’s decline is based on several structural and cyclical factors:

Internal factors:

• Closure of German production sites → reduction in European volumes
• End of exceptional invoicing in 2023–2024 → negative base effect
• Fixed industrial costs remaining high despite lower production levels

External factors:

• Stagnation of Brent crude at 80–85 USD/barrel, reducing new oil investments
• Weaker global steel demand
• Increased competitive pressure from Asian producers in industrial segments

Result: a “scissor effect” between slightly declining selling prices and high fixed costs, weighing on the gross margin and overall operational profitability.

Can Vallourec Bounce Back in 2026? Analyst Forecasts

According to analyses by Société Générale, Oddo BHF, and Kepler Cheuvreux, Vallourec could begin a gradual recovery starting in the second half of 2026, driven by:

• The expansion of LNG (liquefied natural gas) projects,
• The resumption of offshore investments in Latin America and the Middle East,
• And diversification into higher value-added markets such as CO₂ capture, hydrogen, and geothermal energy.

The group’s financial structure remains sound, with ongoing debt reduction and positive cash flow. Therefore, the medium-term fundamentals remain favorable, despite a challenging environment in 2025.

Verdict & FOMO Insight

Vallourec is still going through a transition phase, not a collapse.
The declines observed in 2024 and 2025 reflect industrial adjustment and a post-oil-cycle normalization.

With the stock currently trading around ≈ €15.80, its valuation remains moderate and reflects market caution. For investors willing to take a medium-term view, the rebound potential is still real, supported by energy diversification and upcoming LNG and offshore projects.

Verdict: “Hold / Buy on weakness” — the recovery potential exists, but entry timing should be carefully considered given the current price.

Disclaimer :
This content is for informational purposes only and does not constitute investment advice. All investments carry risk, including the loss of capital. Conduct your own research before making any decision.