Philippe Crouzet - CEO Olivier Mallet - CFO Nicolas de Coignac - SVP North America Didier Hornet - SVP Development & Innovation

Amy Wong - UBS Kevin Roger - Kepler Cheuvreux Raphael Veverka - Exane Robert Pulleyn - Morgan Stanley Maria-Laura Adurno - Goldman Sachs Vlad Sergievskiy - Barclays Nick Green - Bernstein Jean-Luc Romain - CM-CIC Market Solutions Fiona Maclean - Merrill Lynch

Thank you. Good day, good evening everyone.

Before I start, I'd like to remind to all of you that we will be discussing forward-looking information in the call and that our actual results may vary from those expressed or implied during this call. Over the first nine months of 2017, our financial performance improved quarter after quarter presenting significant progress year-on-year, with a positive 9 million EBITDA into 2017, improving by EUR147 million versus nine first month of 2016.

This very significant improvement results both from the relentless deployment of our transformation plan and from improving market conditions essentially in the US. As market trends in the US and raw material prices have proven to be slightly more favorable than what we initially expected, today revised upwards our full year EBITDA target for 2017 to a range comprised between minus EUR30 million and minus EUR10 million, again for the full year.

Forth mentioning as well, we recently strengthened our liquidity by raising EUR800 million on the bond from convertible bond markets which attests to the confidence of investors in the way we deliver on our strategy. Let's now have a look at market trends and I'm moving to Slide 4 of the presentation.

In the US on the back of a more positive oil market, the active rig count has continued to grow until the end of July and it stays at a level which is more than the double of the trust reached in May 2016. Footage drilled per rig continues to expand driven by technology efficiencies and longer lateral wells, and thanks to those trends, OCTG consumption would equal 2014 levels with approximately 50% less rigs.

Price increases are taking full effect since July, so Q3. We now see the rig count plateauing but at a level which enabled our domestic mills to operate with a high load.

And this included the Houston area during the Hurricane Harvey. So it gives me an opportunity to tell you that operations did not suffer from the hurricane but a number of our employees did personally suffer.

So I want to pay to tribute to all our employees in the US and outside the US, and all our business partners who demonstrated solidarity to those of our employees was personally were personally affected by the flood. As four international OCTG markets, national companies tendering activity remains sustained in Q3.

While IOCs are progressively starting to sanction a new project, with a focus on onshore, subsea tieback and shallow waters in the Middle East and North Sea especially. Nevertheless, large projects FIDs remain limited in 2017, although the number is obviously much higher than in 2016.

Prices seems to have bottomed out in H1 2017 and some price increases are gradually being negotiated with customers, especially those whom price - for which price concessions were the largest during the trust. So these are the most important market trends and I now hand over to Olivier for some comments on how those trends are being reflected in our results.

Thank you, Philippe, good evening everyone. So on slide 5 first, this improving market environment is reflected in our values shipped.

As you can see the increased both year-on-year and sequentially with 588,000 tons shipped over the third quarter. Over nine months, we recorded a 77% increase year-over-year or 31% at constant scope.

On the next slide, moving to our nine months, our new evaluation, it increased by 26% compared to the first nine months of 2017 [ph]. The positive volume and scope effects mostly volume partly offset by a negative price mix resulting largely from deliveries which had been booked in 2016 at low prices for oil and gas in EMEA and delivered in 2017 and as well to some extend from a change in the geographical mix with the rebound taking place largely in the US.

On the next slide, if we look at our revenue by activity, focusing on constant exchange rate and scope. Oil and gas, our largest business over the nine months was 13%.

This cost was mainly driven by the recovery of US volumes and to some extent by higher decrease in Brazil notably in Q1 for deliverable and this despite negative price mix impacts on the backlog delivered in EMEA. Industry and other was up 19.7%, benefiting from increased volume for mechanical mostly in Europe and from higher revenue in automotive in Brazil.

Also revenue generated by our mine in Brazil was up year-on-year thanks to increased iron ore prices. Power generation revenue was down 15.8% impact by lower activity in Asia both in the nuclear and conventional power.

Turning to Slide 8, let's look at the key points on our Q3 P&L. first we registered industry margin of EUR114 million, doubled compared to a Q3 '16, which reflects higher revenue.

The savings and scoop impact from our transformation plan and favorable change in our provisions. Our SG&As were down 3.3% despite some negative scope products and inflation negative impact.

And this led to a positive EUR9 million of EBITDA, up EUR61 million year-over-year. The net income result group share remained negative territory, but improving by EUR41 million year-on-year.

On slide 9, concerning now the first nine months of 2017, trends relatively comparable to the ones committed for the third quarter. EBITDA was nearly at breakeven at minus EUR9 million mainly thanks to a higher industrial margin and reduced SG&A.

The operating result improved by EUR284 million thanks to the higher EBITDA of course as well to lower restructuring and impairment charges compared to last. The function result was negative minus EUR140 million versus EUR99 million in nine months 2016 resulting mainly from the evolution of some results along with a changed fair value of our Nippon Steel shares and higher interest charges.

Net result group share was a loss of EUR337 million over nine months 2017, improved by EUR202 million compared to last year. Moving to cash on Slide 10, Vallourec generated a negative free cash flow of minus EUR72 million in Q3 '17 and over nine months the negative free cash amounted to minus EUR397 relatively comparable to minus EUR392 million in nine months 2016.

This is mainly explained by first, better cash flow from operating activities at minus EUR2018 million versus minus EUR275 million in 2016. The better EBITDA was partly offset by a decrease in non-cash provisions and higher financial interest paid over the P&L.

Second, that strict CapEx management with EUR86 million spend over nine months 2017 compared to EUR100 million last year. And third, this was achieved despite an increase in working capital that took place in Q1 2017 before a complete stabilization in Q2 and Q3.

The activity recovery in the US was partly offset by better efficiencies in operating working capital management over the period, notably through our rate exempt reduced inventory. Turning to Slide 11, a few words on our balance sheet, liquidity at the end of September was made of EUR1 billion of cash and EUR1.4 billion on long-term bank facilities.

And at that time our short-term debt amounted to EUR900 million. Excluding of course drawings on our long-term revolving facilities mainly made up of EUR600 million of commercial paper.

As you know we're strongly reinforced our liquidity profile in October, but diversified it, extended its maturity with the issuance of EUR800 million, bonds and convertible bonds. I will now hand over back to Philippe who will tell you more about our outlook.

Thank you, Olivier, we're moving to Slide 12. So basically in the months to come we expect continuity in most of the trends that we've commented so far.

We expect the recount in the US to plateau assuming of course no significant change in the WTI prices and this would allow us to maintain a high load of our domestic facilities. In Brazil, we anticipate Petrobras drilling acutely to remain stable.

In industry markets - in Brazilian industry markets there is definitely a better momentum and it is expected to be confirmed although these markets remain quite competitive. In the EMEA regions, IOCs are progressively starting to sanction new projects, but this should not impact of course our 2017 deliveries, while national oil companies' operations should remain sustained.

Lastly, power generation is expected to be progressively impacted by fall in new conventional power plant projects in particularly China and Korea. Lastly, let me remind you that the group results are also dependent notably on the evolution of raw material prices and on foreign exchange, both should remain volatile.

And it depends as well on the implementation of our transformation plan which will continue to generate significant savings. Therefore on the back of those various elements, we've revised updates our EBITDA target for 2017 to a level of between minus EUR13 million and minus EUR10 million for the full year taking into account a mix for the Q4 deliveries in the Middle East and Brazil, which will be less favorable than during the first quarters of the year.

We are done with this introduction and very happy to answer your question.

Two questions from me, please. The first question relates to your US business, can you give us a sense of what utilization you're running at for your plants in the US.

And would we expect that to increase in - well, we expect the volumes to increase sequentially quarter-on-quarter into the fourth quarter. And then my second question relates to EMEA region, you mentioned that the prices have bottomed in the first half '17.

And there are some price increases that are gradually being negotiated with customers. Can you give us some guidance on one those pricing increases that you're at negotiating now will start to be realized in your kind of come through in your shipments and your P&L please?

Maybe I'll leave the floor to Nicolas, can you answer on the North American market.

On the load, here in our US operations we are running currently at very high load. We have reached nearly the mass capacity of all of our finishing lines and we still expect to remain at least at the same level.

And we're still working also on more efficiency on our finishing lines. But we're running at a diverse high load today.

Thank you, Nicholas. Also the challenge now is to debottleneck what can be bottlenecked.

Maybe Didier on the rest of the world and specifically price increases.

Price increases will lead to P&L and will lead to 2018, so first semester 2018 for the customers where we have frame agreements. And on the spot business it's a bit early to tell because it depends on whether we win or lose what we are coating, what's in this - what's in our turning activity, so spot business is more uncertain.

Can I just have some clarity on the US markets, so running at capacity in the third quarter? It sounds like you're still expecting some volume increases in the fourth quarter.

Would you be starting to need to import pipes from other regions into the US.

Yes Amy, definitely, that's what we've already gone and we will continue if needed.

In terms maybe of price increase and additional comment, as we said where pricings have taken place around this year, it's mostly about one or two clients vis-à-vis whom the price concessions had been the most severe in 2015 and 2016. So we cannot at this time speak about global price increase move applying to everybody in this part of the world.

It's more specific to a limited number of clients at this stage. The other comment that you certainly reminded that I can make again, when we speak about orders resisting from tenders, the average given time is close to nine months, so that any change in volume or price impacts your P&L with some delay.

This is why I was referring in 2017 from a negative price effect in this part of the world coming from orders taken in 2016 and this is why price increases that we could pass through current tenders will impact our P&L with some delay.

A question on your guidance please, because if we come back at the beginning of the year [indiscernible] that you beat the expectation that it's revise of the guidance. And each time sequentially you explain us that the next quarter will be lower due to a mix in the Middle East and in Brazil.

This is again the fact for Q4. What will be the main differentiating element this time to make us think that it really be the case this quarter, Q4 that it be lower than Q3 and even in Q2?

Second question is related to Petrobras, with the framework agreements, any update on this renegotiation, please. And last one if I may what have been the impact of the restructuring plan in terms of saving in Q3, please.

On the first point Kevin, in the current environment we have quite limited visibility. So some factors have impact our forecast even short term on the back of an improving turn, no doubt, but this is this is the problem of targeting on a quarterly basis.

I think we mentioned this time the reasons why we adjusted upwards our forecast, certainly definitely better market conditions in North America where as you know the visibility from a sales standpoint is very short, short delivery times, very short delivery times. And slightly better situation on the iron ore price as well in Brazil which as well is completely unpredictable as we speak, it went up and by the way it's going down again.

So these are minor factors but, adding them it's true that quarter after quarter we are delivering a slightly better performance. What we mentioned regarding Q4 is that we already know that in terms of mix, Q4 will be not as good as first three quarters especially in Brazil and in the Middle East as well.

So it's mostly a matter of mix, nothing else. Your second point on Petrobras, while discussions are still ongoing and progressing, but we are not in a position yet to make any more specific comment at this stage.

And there was a third question about savings.

So on savings as you know we comment on the figures every semester, not every quarter. what I can just say more is qualitative mode is that our transformation plan is not supposed to stop after having delivered nice savings for the last years or almost two years now.

So we are continuing semester and semester to delivery high level of savings. In particular, but it's not only about that in '17, we get a lot of synergies and probably more than expected from the merger between the [indiscernible] Brazil where we rationalize quite a lot support functions in particular like industrial support functions that can run independently.

So this has participated even nice figure for H1 and we expect savings to continue in H2 and again in 2018.

You may have seen as well as Kevin that the SG&A as a percentage of sales are now below 11%, so adding to 10%. So back to the situation before the crisis and this has driven many of our fixed costs requests by the way.

And just if I can, can you remember the commission date of the - from agreement with Petrobras?

It's the end of this year, 2017.

First, I'm wondering if you could share your broad expectation for global OCTG demand in 2018 at this stage with perhaps by division. My second question would be on other comments you're making about the progressive activity by IOCs.

If you could give us also here a bit more color on the sort of volume increase you've seen so far, how much growth you've seen in your backlog and when we should expect to start seeing this impact in your results and potentially the impact on wood mix. And my last question would be on US pricing, I'm wondering if you are planning to push for further price increase for your H1 '18 contract prices.

I'll take the first two ones, in fact I can combine them easily. I would say that it's obvious for everyone that there is a clear improvement in the sentiment regarding oil and gas markets and you need to insist on that.

As far as we are concerned, this is supporting a positive view that we have in the North American market. Clearly when we talk of WTI above $50 or $55, we know that this is a level which is clearly attractive for a number of our customers in North America to invest again.

We commented on the plateauing in a number of rigs operating. We don't view this as worrying.

And we traditionally experience that by the end of the year there is a little less activity on this particular market. This is a way of reducing inventories and particularly this year, in 2017 we know that many customers invested over the budget during the first half of the year, they end the year a bit short in terms of cash for CapEx.

But we are confident that this will start again at the beginning of next year. And this view is supported by a number of analysts I think.

As far as the rest of the world is concerned, I think the picture is a little more complex. We expect national companies to keep on developing a sustained level of investment of E&P CapEx, they first have an ambition to grow, this is part of their let's say essence, the mission and on top of that many national companies are experiencing a high depletion rate.

So we know that they have projects to keep on drilling or even to increase the number of rigs operating next year. We have a different feeling about international oil companies.

Although it's too early to make specific comments because very few IOCs are already stated - made statements about their CapEx for 2018. There is a sentiment that they are although more actively tendering or requesting for quotation, the translation into actual orders may take time.

This is what we are experiencing today. There is some change in sentiment, but the way translate into effective orders is a different story, with some exceptions.

But in fact relatively limited exceptions so far. So we don't expect this segment of the market which obviously is one of the most interesting for our kind of business because it's of course premium segment.

And I'm referring to offshore projects specifically. We don't expect this to have significant - to create a significant momentum at least over the first half of the year.

Of course the rest of the year is still open. So I would say that that's mostly what I would comment as far as OCTG and more specifically IOCs are concerned regarding next here.

On US pricing, Nicolas, any comment.

So concerning the US, as you know we've pushed very significantly the prices starting July 1, some of them being fully effective in Q3 and other in Q4. And since we are seeing a little bit less tension on the markets today, we don't expect to see significant price increases coming in next year.

Although definitely in average in 2018 compared to average of 2017, we will of course enjoy an increase in those average prices. But our discussions are starting right now with our main program customers.

And we are trying to settle on prices for Q1 and H1. And we don't see an opportunity to increase significant key prices for this period of time.

So a few questions if I may, so firstly, a little bit technical, but if I look at the current provisions that seems to fall on quite a bit since the end of last year including about five million in the quarter. Can I check that that's right and ask what that's about and whether we can see continued add back of provisions going forward.

Secondly, I understand that you are exporting pipe from Germany and Brazil into the US. Could you give us an idea of the quantum of how much volume you're actually exporting?

And finally, again, a bit of a housekeeping question, but you've continued to stress the FX sensitivity. Can we just have an idea again of how your EBITDA may vary with your dollar.

It seems like the exchange rate is about 5% different as spot versus the nine month average you've reported in the results.

So maybe I will take the first one, the technical one on the provisions. You are absolutely correct.

Last year we increased globally our provisions for different reasons, one of them being that for some orders taken at very low prices, below the full cost of this products, with a contribution of valuable cost, but not above the full cost, accounting wise, you have to take a product to book a provision. Since for some of the customers, which led to this bookings, prices are going up in 2017.

When we manufacture and reverse the provisions taken last year and we don't have to book new provisions or new orders because we don't have that much orders this year that are below full cost. So as a result of this positive evolution in the market situation, we have in Q3 probably low double-digit number in terms of million euros for net reduction in our provisions.

So this is about this question. I will take stay quite away as well the sensitivity to products.

Here, things are changing to some extent, because as you just said, historically, we are basically one sensitivity, which was the last sensitivity, since we are exploring from Europe, lots of things denominated in US dollars with a lag effect vis-à-vis the spot prices since we hedged systematically, it's time we take a dollar. This is to some extent changing, because thanks to our new competitive production routes, we are diversifying our currency exposure and namely we have already quite a significant real to dollar sensitivity because we export as well now from Brail and within Brazil, some of our sales are more or less indexed on the US dollar.

So all this means, at the end of the day, for 2017, over the first 9 months to a slight negative forex impact, but not very meaningful. Again, low double-digit number.

As far as imports to the US and North American markets, Rob, my comment is the following. We do this of course based on the either the type of products that we need to deliver or based on ability to make debottleneck our domestic operations.

It's always better especially for the onshore markets to provide from the domestic mills in terms of service efficiencies, supply chain, it's better. So, so far, we've not had to import that much volumes.

We've tested the flows. It works, it's pretty efficient, but we've been quite successful in increasing our volumes and our capacity based on our domestic supply.

So we're talking of a few tenths of thousands of tons so far. Obviously looking into the future, into next year, if as some say or write, the E&P CapEx in North America would grow by a double-digit number.

Of course, we then would need probably more volumes to come from preferably Brazil and of course to a lesser extend from Europe.

And if I may, just have a stab at one last question. Obviously, things continue to improve each quarter, which I think was covered in an earlier question.

I don't suppose you'd be willing to maybe answer when you envisage becoming free cash flow positive, would you?

I suppose you're right, Rob. We will be making no comments specifically on that one, but we are on our way.

By the way, I want to highlight the fact that we are delivering very good performance on the working capital. You may have seen that not only in Q3, but in Q2 as well.

We are neutral in terms of working capital needs, whereas, our sales are growing quite steadily. So this is the result of a lot of homework of course.

This is a clear consequence of our various programs to be not only saving on the cost side, but also improving our efficiencies on the cash side. We definitely are developing a model, which is lighter in cash.

If I compare our working cap in number of days of sales in Q3 2017 to what we achieved a year ago, we are down 30 days, which is very significant, 30 days and down to 110 days of sales. So this is the way we work step by step.

Of course, improving on everything we can to come back as soon as we can of course and as the market will allow us to do, of course to a positive free cash flow generation.

Fair enough. That's very impressive on the working cap.

So if I may just ask a quick follow-up on that. Beyond the efficiencies within Vallourec, your self-help on working capital, is there also a mixed dynamic whereby the recovery in the US is less working capital intense and as I IOCs and NOCs pick up, you will have to invest working capital just because of the nature of those customers.

Is that what we should maybe bear in mind for 2018 and beyond?

Yeah. You're absolutely right, Rob.

It is true that the part of our portfolio where the working cap needs due to our model which go through distribution as you know, it's the lightest if I may say, is North American. And so you are absolutely right.

There is a positive mix effect in the performance I was describing, but not only when we go deeper, we know that on every segment, we improve our cap. But you're right, looking into the future, if there is a change in our portfolio with relatively less North American sales and more rest of the worlds, where delivery, lead times are much longer and this would logically require slightly more working cap.

So the first question I had goes back to US trends. I was just wondering if maybe you could discuss where you estimate inventory levels to stand on the ground.

And also maybe if you could provide us with a recap in terms of like the net increase in prices that you managed to pass? Thanks.

That would be my first question.

As far as the inventory on the ground is concerned, it remains very low. I think according to available indexes, we're slightly above two months, which is we very low and we confirm that this figure is realistic based on direct conversations with our customers.

Keep in mind that these numbers that are provisionalized by some consulting firms have been trimmed in order to take out the obsolete inventory, so that we can consider that this level of inventory is a good one and a normal one in the US market as of today.

As far as the price increases are concerned?

Yeah. All in all, as we stay as of today, so Q3, or early Q4, on average, our prices for OCTG of the US market are up about 25% compared to their level at the very beginning of the year.

In absolute value, it means that our prices are up by around $400 per ton compared to the beginning of the year. You know as well that this cap price essentially at the beginning of the year has been increasing and then has flattened as the price increase is roughly speaking $100 per ton.

So that net margin recovery is around [indiscernible].

The other question that I had, it goes back to the utilization levels, so you did mention also imports that are serving the US markets, so I was just wondering if maybe you could give us an indication with respect to group plans utilization overall?

So, on the groups planned utilization, in the US, as we already said, we are working at very nice level. In Europe, as far as large capacity mills are concerned, we are benefitting from the restructuring measures that have been implemented latest in early 17.

So that our remaining plant, volume plant in Europe for small dimension tubes, which is working for OCTG, mechanicals and so on, is running at a very high level as well. Our mid diameter large volume mill in Germany as well is running at a good level as well.

And you know that we have divested one of our two steel mills in Europe. So that's here as well while benefiting from our transformation plan.

Then we have some smaller volume mills in France or Germany, what we call specialty mills where the level of load only depends on their final markets. And finally, concluding with Brazil, also the load factor has increased for the local market due to the start of rebound in the local macro economy.

Although we have been exploring to some extent to the US since late H1, the average load factor is still probably say around slightly below 50%, because in particular the exports from Brazil towards Middle East, Africa, North Sea or Middle East are still not at their normal level, waiting for the restart of this part of the market.

Just one last question that with respect to coming back to the price increases in the Middle East, you mentioned that we should see them hitting the P&L in the second half of next year.

It depends for the one or two customers where a little step by little step, we started increasing prices in the quarter of '17. Some of that will take place early '18, but not that much.

A new potential significant orders, then given the right time, it would be mostly for H2 next year.

The first one is on the US market. We recently started seeing prices for OCTG there drifting slightly lower, at least according to Pipelogix index, are you seeing the same trend.

Will you then expect this trend to impact your spot business, which I'm - if I'm not mistaken is about 20% in the US. That's the first question.

Well, on the spot market, we are definitely addressing permanently our prices. If you take into account any evolution of cost factors or any tension on the market, so this is adjusted permanently.

What is really more meaningful is definitely our program prices as you all mentioned. The spot business is only about 20% percent of our total activity.

And then just housekeeping question really, you mentioned some provisions reversal in Q3, have these reversals been included in 9 million EBITDA you recorded in Q3 and what would be the clean EBITDA number without this provision's impact?

Yes. Of course, it's included in our EBITDA.

As I said, it's a low double-digit number.

And the last one from me if I may. Your CapEx, you obviously run pretty low on this one.

On my calculation, it's about 30% of depreciation or slightly less. Given increasing activity across your portfolio, could this level be sustained in the coming quarters?

I think you have to have in mind that typically the quarter during which we invest most is the fourth quarter. So don't consider that the figure for Q3 is representative of a yearly average.

Certainly, it is not. At the current level of CapEx, which roughly is around EUR200 million this year comparable to last year, slightly above or same order of magnitude.

I think we are okay given the fact that our major equipments have been invested since relatively short time and I'm refereeing to North and South American and as far as European mills are concerned, we've done all the maintenance we needed to do. So in fact, we are at a current - at a period in the stage of capacity and maintenance where we don't need to invest that much.

It's really of course related to as well our willingness to be very disciplined on CapEx and on cash, but I want to insist on the fact that we are not compromising by any means the performance of our mills to the country and the quality of our production. So of course as far as market recovery grows in the coming years, we'll have to adjust our CapEx plan, but we'll do it on a disciplined way and always taking into consideration that our equipment is state-of-the-art and does not require major addition in terms of capacity, given what we've accumulated, not only in our traditional European area, but as well more recently in South America, in China and in North America.

It's similar to the last question on CapEx and you probably answered it. So thank you for that.

You've got a larger footprint now, a larger capacity of the Theatro Brasil acquisitions, so can you help talk through what you think an ongoing maintenance CapEx requirement is going to be. You had guided probably a couple of years ago, but that would be around 300 million to 350 million.

Presumably, a question would be, does that go up a bit because of the bigger footprint, does it go down a bit because we're more efficient now? And then the second question to this, just to push back on your comments then, are you convinced that you're not storing up a problem for the future with the under investment in maintenance for the last couple of years.

It is something which is fine for 2018, but do you really expect to get back to normal maintenance spending by 2019. Do you think you can push it out beyond 2019, into 2020?

So your question is very similar to the one I answered just before. The figure we stated some two years ago I guess was EUR350 million of CapEx per year.

We are in the process of revisiting the assumptions backing that figure and definitely this figure will be revised down and the reason for that is that we've downsized significantly some of our operations, specifically but to some extent in Brazil as well. We've merged the two entities and are in the process of stopping some installations like steel mill that we have in our older Belo Horizonte operations in Brazil, therefore those operations will not require any maintenance CapEx in the future.

The remaining operations, the one we've invested recently, as I said earlier, do not require the same amount of maintenance CapEx that the old operations that we stopped are divested over the last two years. So definitely we are becoming more efficient and the nature of the operations that we are running now certainly do not require the same amount of maintenance CapEx that the old equipments of before.

So we'll revise that figure certainly down to which extent it's too soon to say, but we'll probably that figure at the beginning of next year, something like that.

Okay. So you wouldn't be willing to say it's somewhere between 250 and 300 and want to guide us to a 200 to 300 range.

It's quite useful for the future normalized cash flows of the business.

I mean I don't want to give you a precise figure now. You're probably not far from where we will end up if I can help you.

Just a comment regarding the cash flow. We see an improvement with the free cash flow quarter after quarter.

So you reduce in fact the negative free cash flow quarter over quarter, what do you expect for the Q4 in the same magnitude of the Q3 perhaps and for next year. Thank you.

So for next year, of course, it's way too early to comment. As far as Q4 is concerned, you have our guidance for EBITDA.

You know our full year guidance for CapEx which we fully expect to be at roughly similar level compared to the 175 million we had last year. The most important missing element is working capital.

Year after year, we tend to decrease our working capital in the last quarter of the year. So it's too early to say by how much, I don't know myself exactly, but you can assume probably somewhat less working capital needs in Q4.

You mentioned have a need to have some finishing lines in the USA, I was wondering given the capacity of your steel mill and mill, at what point, will you consider after adding finishing capacity versus debottlenecking.

Well, actually as you note Jean-Luc, we have significant available capacity as far as rolling mill is concerned in North America. We've invested in a new line not so long ago and clearly, we could push it to higher volumes and now we know that this is a cyclical market.

So before deciding to invest more in finishing capabilities in order to kind of debottleneck, we would have to be sure that this market will not be cyclical anymore in the future. So we want again to remain rather light or lean in terms of the assets that we manage in North America.

That's why we will try and find solutions not necessarily by adding capacities in finishing. When I was referring to debottleneck I mean as well that improving performance is the best way to - manufacturing performance is the best way of debottlenecking, without adding new equipment and that is really what the teams are working and working on and I guess with very interesting results.

I don't know if you want to add any comment on that Nicolas since you're leading that program.

Well, no, I think you covered it pretty extensively. That's exactly it.

I think as far as steel is concerned, we have inside the group a very competitive steel sources, so that's not a problem and we are very focused in our continuous improvement efforts into debottlenecking our in-house lines. So that will come first.

We may call for some subcontracting and this on a case by case, but our major efforts are really on in-house capacity debottlenecking.

I have a question regarding your balance sheet and your net debt position. I appreciate there are a lot of positive trends happening within your business and the financials over the last few quarters, but I'm so concerned around just how high that net debt level is and it doesn't seem to be going down.

So could you help give some guidance and a roadmap of how you're going to reduce that number over the next couple of years and whether having to raise equity is an option that you would look at to accelerate that process.

So in terms of the roadmap, I think the question has already been raised. You can guestimate quite easily the level of EBITDA that is necessary to bring back positive free cash flow.

So probably it won't be for 2018 and then it will be depending from the continuation of our transformation plan on which we're very optimistic. On the volume rebound that will happen sooner or later, but that will happen and on the price rebound, which is already well engaged in the US and that will happen in the rest of the world as soon as the volumes will restart as well.

So it will happen, but I cannot tell you as of today when exactly of course. Then in terms of balance sheet liquidity, definitely with what have been achieved over the last few weeks, two extremely successful debt issuances, first on the convertible bond market, we wanted to issue EUR117 million and then this amount was away to 250, given the very high demand for this paper.

The secondary market was afterwards extremely good for this convertible bonds and this led us to an issue as well of high yield bond gained very successfully. First, targeting EUR200 million and we did about EUR400 million, again a very favorable secondary market that allowed us to make a tap just a few days afterwards within our market of 6%.

So we're definitely back on this debt market and we have proven that this market is receiving the debt it could issue. From a liquidity point of view, we had already at the end of September, EUR1 billion of cash on our balance sheet.

We had EUR1.4 billion of undrawn long-term bank debt. We are adding to this liquidity, we did EUR800 million that we have raised recently, which again is a nice addition in terms of liquidity, it's a diversification of our financing and it's extending its maturity since all this new debt is to be used in 2022.

Then about potential equity issuance, we don't tell at all that it will be necessary with the liquidity we have, we have all the functional needs to wait for our capability to again generate positive cash flow into step after step and you know that we have one covenant and only one covenant on our bank debt, which is gearing that is to be tested at the end of each year, 75% max at the end of '17 and as of today, we're at around 50%. So, a lot of headroom and this threshold has been raised to 100% for the years to come.

So definitely we believe that we've done what we had to do in order to avoid the risk that we're maintaining of the capital.

Okay. Yeah.

So I appreciate that you've refinanced some of your debt and you do have lot more liquidity available, but when I'm looking at the consensus forecast for net debt, it is increasing in 2018 and then being flat in 2019, I was just trying to understand are you comfortable with those forecasts for net debt and net debt in that level?

I have just said the likelihood is that we'll increase our level of net debt at the end of '18 because it will require very steep improvement in our EBITDA to generate cash flow as soon as 2018. Since we have ample liquidity and no gearing issue at all, and I could add to that that semester after semester, we do surprise positively the market in terms of net debt evolution, thanks in particular to the management of our working capital needs.

Yes, we're not concerned with what you can figure out.

Well, thank you very much. I think we've covered most of the ongoing trends and even short-term perspectives.

So as you can see, we are delivering quarter after quarter on our plan of course focusing on internal efforts, both cost related and cash related and this is of course what we control, what isn't in our control. The rest, that is the market environment will come on top of that and hopefully we will see some positive outcomes.

As you have understood, we are pretty optimistic as far as North America is concerned and more in a wait and see mode elsewhere. Thank you very much for your attention and participation in the call.