Philippe Crouzet - Chief Executive Officer Olivier Mallet - Chief Financial Officer Nicolas de Coignac - Senior Vice President North America Didier Hornet - Senior Vice President Development & Innovation

Kevin Roger - Kepler Cheuvreux Jean-Luc Romain - CM-CIC Market Solutions Michael Shillaker - Credit Suisse Nicholas Green - Sanford C. Bernstein & Co., LLC.

Vlad Sergievskiy - Barclays David Farrell - Macquarie Research Maria-Laura Adurno - Goldman Sachs Amy Wong - UBS Robert Pulleyn - Morgan Stanley

Thank you. Good evening, everyone.

I am very pleased to be with you tonight to comment on the great achievements we made this year and starting with a breakevening on EBITDA, and of course, the debt level as well. To achieve these as stated on the slide here on Slide 4, I’m right.

We firstly benefited from the first tangible signs of recovery in the oil and gas industry, and specifically North America, where drilling activity recovered to a stronger pace than what we initially forecasted. And this allowed us to boost our deliveries and increase our prices as well.

In international oil and gas markets, tendering activity begin to resume at a more gradual pace. And meanwhile, the improved microeconomic context in Europe and Brazil supported our industry and other activities.

All in all, our sales were up 25% or 15% at constant exchange rate. Reaching EBITDA breakeven came as well from the continued implementation of our transformation plan.

And we are pretty successful in generating savings, implementing, and expanding our new competitive production roots and developing a new organization that brings our team closer to our customers. We maintained as well a continued focus on cash and namely by efficiently, managing the working capital requirements, and monetizing some non-core assets.

And lastly, of course, you are probably familiar with the fact that we strengthened and diversified our liquidity position by raising €800 million on the bond and convertible bond market. I would like for those achievements to thank all the teams, all the Vallourec teams for their commitment and their hard work.

As a result of these efforts, we delivered a financial performance that clearly exceeded our initial expectations, again both at EBITDA and debt level. If we move on to the next slide, I’d like to say a word about safety which is a top priority of ours.

I should say the number one priorities. We work a lot on that and we've been working a lot with as you can see here a great result.

And I'm very pleased that year 2017 is the third consecutive year without any fatality, which is not that common, unfortunately in our industry. Our safety results improve in most of our operations over last year, especially in terms of last time incidents.

We had a slight disappointment in terms of the total recordable incident numbers, but this is very focused, can be explained, but it's not as satisfying since we commit to achieving the highest standards of safety in our industry. So we will implement specific action plans.

All in all in 2018, we'll continue our efforts on our roadmap, on our safety roadmap, along three main initiatives for the year. First, safety leadership, we planned to work more on that at every level of the organization.

Second, deploy our safety observation cards program everywhere in every operation of ours. And lastly, extend the risk assessment which obviously is already systematic, but to unusual working situations because we have more to do there.

Let me now move on to the market fundamentals and starting with our number one market, oil and gas market. As you all know, the demand for seamless tubes is primarily driven by the level of CapEx, capital expenditure for development and production by the participants of the oil and gas markets.

And this level is itself driven by the balance of supply and demand for oil and gas and the current and expected oil and gas prices. So starting with this aspect, the balance between supply and demand, as you can see on the first chart.

2017 saw a rebalancing between supply and demand with demand exceeding the supply in most of the year and contributing to a significant reduction in the stocks and the inventories by year-end specifically. And we expect this trend to continue over the coming quarters.

Thanks to a strong demand growth, averaging 1.31 million, 1.4 million per barrel quite above the average mid-term perspective of demand growth. And of course, this in spite, I know there's a lot of debate around that, in spite the shale potential in North America.

Just as a reminder, in addition to demand for oil and gas, increasing demand, field depletion is the key driver and remains the key driver of demand for oil and gas production over time. Oil fields produce less and less as we all know, and the impact of this depletion is shown on the second graph.

It can be cautiously evaluated at an additional estimated need of 2.5 million barrels per day to be produced each year on top of the existing production just for the conventional output to remain flat. And so this is true for all oil production, but it's even more important for title where the depletion rate is considerably higher than the 6% translating into 2.5 million barrels per – just to remind that the more shale is growing as a proportion of the ore production in the world, the more depletion will be an important factor in this supply demand aspect and in the need for drilling.

So I reaffirm my personal opinion that these combined factors of demand growth and accelerate depletion should inevitably lead to a rebound in CapEx in order to meet the increased needs and to avoid annoying counter shock and of course, especially since we have seen three years now of under investment in expiration and production. Now what did we see in 2017.

We’ve seen some of this happening in the course of the year. Moving to Slide 7, we take a closer look at the CapEx, E&P CapEx and we see that after two years of freefall to 2015 and 2016.

This started to not rebound recover I should say in 2017 and we have a close look at the breakdown per region. It is entirely due to a rebound, a significant rebound in North America where the E&P CapEx increased by more than 30%, which means by the way that in the rest of the world in especially in offshore the figure was still negative.

And thanks to our exposure to the North American market. This obviously was a driver for Vallourec sales growth over the year 2017.

Whereas the level of CapEx in other regions was relatively flat or going down. So consistent with that situation of course we experienced a very strong increase of the rig counts operating in North America since mid 2016 and you see this on the next graph.

At the end of the year, as you maybe aware, we have reached North American rigs operating reached more than 900, so coming from a low off or slightly above 400 in April 2016. So quite a rebound and in addition to the increasing number of rig operating in North America, let me insist on the fact that the OCTG consumption is as well driven and specially in North America.

By an increasing the consumption of tubes per rig, which we call rig efficiencies and this continued in the course of 2017 and we anticipate to see the same factors in 2018 meaning increase moderate increase in the number of rigs operating compared to where we stand today and continued increase in the consumption per rig. Now turning to the rest of the world, if I may say as far as the oil and gas is concerned.

We really are in a different world when we move out of the onshore U.S. market.

International offshore projects showed in the course of the year the first signs of recovery with an increasing tendering activity. It's still modest, but we think, it will continue in 2018, just like to remind you that due to the nature of those project the international offshore projects.

The impact on the deliveries will be modest and should be modest in 2018. I will come back to this in my conclusion.

In this context of strong demand in North America, OCTG prices have started to recover from their lows of mid-2016 and they really rose sharply, mostly in the U.S. where we recorded more than 20% average price increase, when we compared the lowest level achieved in 2016 to what we achieved in 2017 and prices are still showing incremental improvement as we enter into the year 2018.

And the left – low left chart illustrates the price evolution and these are not evaluates average prices. These are prices that we get from public data.

So all-in-all, 2017 was really about growth and with sharp regional contrasts and about volatility. All these positive market trends in oil and gas were complemented by strong volumes as well in our industry and other markets and they are reflected in Vallourec volumes.

This is the Slide 8, where you see the confirmation of the recovering trend quarter-after-quarter into 2017. Overall, our volumes went up from close to 1.3 million tons in 2016 to around 2.3 million last year.

Not only thanks to market recovery, but as well and this is the light purple color on the right hand side of the graph. Thanks to change in scope and more specifically the fact that we've included with consolidated, chummed up since the beginning of 2017.

So when we compare Q4, 2017 to the last record deliveries which was Q4, 2014. The figures are very comparable, but of course there is a change in mix, since at that time, we had nothing from Tianda, and unfortunately, of course the prices not yet comparable.

I will now hand over to Olivier who will present you the key financial figures for the year.

Thank you, Philippe, good afternoon, everyone. So let's start with some detail on our revenue evolution by market.

As you can see on this slide, our revenue increased quite significantly in 2017 driven by the market rebound for oil and gas particularly in the U.S. as well as in the industry and as well from the scope affected after the acquisition of Tianda and the full consolidation of VSB in Brazil.

Our total revenue as a consequence was up by 26% or 15% at same scope and ForEx. Our largest market is of course oil and gas which does represents 61% of our sales and revenue went up by 28% on this segment.

It was laid by the U.S. with a very strong recovery volume wise which allowed us as well to increase our prices significantly in H2 2017.

Revenue for oil and gas was stable in the EAMEA part of the world with some positive scope impact with Tianda and VSB, but offset by negative price effect due to 2017 decrease made at lower prices than 2016 based on the contracts awarded mostly in 2016 at low prices. And finally, some gross oil and gas revenue in Brazil mostly in Q1 with some exploratory wells for the Libra field.

Moving to the non-oil and gas segments, one word on power generation where the market environment is difficult both for conventional power plants and nuclear ones, which led to a decline in revenue of 16% in 2017. The good news came from the industry and other segment with a very significant growth, 38% or 30% at same scope in ForEx which took place both in Europe where we driven mostly to the Germen industry for mechanical products and as well in Brazil which is progressively getting out of two years acquisition and where we said as well iron where prices went up in 2017 compared to 2016.

Next page, slide you see first a bridge in terms of revenue where the biggest driver was volume, 35% excluding the scope effect which was about 11% and its negative price mix effect of 19% due both to change in the version mix with the strong growth in the U.S. and this negative price effect in the EAMEA region.

Moving to the P&L and to the EBITDA evolution so up by €221 million compared to 2016 with two key figures to be highlighted. I think first one industrial marginal that was boosted both by the recovery in activity and by the successes in our Transformation Plan and associated savings to increase by 90%, close to doubling compared to 2016.

The second key figure on this slide is about SG&A which are again down by 2% compared to 2016 despite the addition of Tianda and VSB and some inflation ancillaries which shows that we continue to make a savings in this SG&A area, despite a strong recovering in our activity. Next Slide is about the Transformational Plan execution, where good results were achieved in 2017.

Starting with savings, we delivered again a strong year with €164 million gross savings after €151 million in 2016. This leaves us after two years of implementation to a total of €315 million to be compared over two years to be compared with an objective of €400 million over five years.

So we are definitely doing better than initially anticipated for savings. The other side of the Transformational Plan is positive deployment of new very cost competitive route, where we have achieved what we wanted to achieve so far with a reduction of capacity in Europe done in 2016 and early 2017 with the acquisition of Tianda and with the merger of VBR and VSB in Brazil.

The integration of Tianda in the industrial step up of the route is progressing very well, and we saw in 2017 the first commercial successes of this route with a contract in Egypt with BAPETCO or JV between Shell and local player for products to be partly delivered from Tianda for premium tubes. As far as Brazil is concerned, the anticipated synergies from the merger are higher than what we are thinking, and a significant part of the overall savings that we are delivering to make Brazil a very, very cost competitive export base.

So that we can say that after two years of implementation, we have achieved approximately 50% of the €750 million contribution from the Transformational Plan to our EBITDA improvement, and this makes us of course very comfortable in our capability to deliver the €750 million contemplated improvement from this plan. This is mostly about the P&L.

The Transformational Plan is as well focusing on cash items. Two elements that I could highlight.

First, in terms of CapEx. Again, 2017 very efficient CapEx measurement, only €152 million cashed out for CapEx.

And in terms of working capital, we have been able to again decrease our working capital by €61 million despite the revenue increase by 26%, which is defiantly something we are very pleased about, which came from inventories from [indiscernible] from some tax synergies in Brazil as well. To give you an additional figure about that, if you compare our operational working capital payable with your inventories vis-à-vis our Q4 annualized sales at the end of 2017 were 23% to be compared to 31% at the end of 2016.

So definitely a very good year in terms of working capital management. On the next Slide, a few comments, but the rest of the P&L below EBITDA, may be three points to be noticed on top of the fact that our net result has improved 9 million EBITDA by €221 million.

First one, our financial expenses increased compared to 2016. This is due to the change in scope with the addition of VSB in particular.

With some change in fair value of the Nippon Steel shares we were holding before we sold it in Q4 and some higher interest charges as well. Second point, we recorded in 2017 and mostly in Q4 about €65 million impairment charges and €79 million charges related to assets disposal restructuring and other.

There are three main components in these charges, which are non-cash charges, one is related to the insolvency procedure of Ascoval, the steel plant company in which we had a very minority stake. The second one is related to the disposal from non-core assets like our drilling projects.

And the third one is in impairment of some assets in China linked to the reduction in a number of projects for coal fire plants. Last comment on this P&L, we recorded a tax again of €100 million mainly related to the recognition of deferred tax assets in Brazil and in the U.S.

Moving to Slide 14 for the net debt evolution, our net debt at the end of 2017 was €1,542 million. So an increase of €255 million compared to end of 2016 and to be noticed a decrease of this net debt by more than €100 million, overall Q4.

So what are the big components of this year-to-year year-on-year evolution. Cash flow from operating activities at minus €332 million compared to €400 million negative in 2016.

I mentioned in additional reduction in working capital and the limited amount of expenses for CapEx. You have in the asset disposals and other items when €168 million, some price effect and disposal of our Nippon steel shares for €69 million.

Finally, on our liquidity position, we have a strongly liquidity at the end of 2017, which is made of €1 billion cash on our balance sheet, plus €2 billion of undrawn medium and long-term committed bank facilities. As you know, this liquidity has been growing force in October, when we very successfully issued €560 million of bonds and €260 million of convertible bonds on the market.

We have as well, as you know gained the flexibility on our bank, liquidity with the gearing covenant on these bank facilities, ways from 75% at the end of 2017 to 100% for the years to come and at the end of 2017, we were at 76% in terms of covenant gearing, which is thus with a large headroom for the coming years. And I will now handover back to Philippe, who will tell you more about our outlook.

Thank you, Olivier. So here on the next Slide, we summarize the key elements basically in the continuity with what we experienced in 2017, we still a sharp contract between North America and the rest of the world as far as oil and gas is concerned.

So we expect to benefit from a favorable activity level in the U.S. We anticipate the average rig count to continue to increase, although moderately, of course, and the U.S.

OCTG consumption per rig as well to continue to rise. So we should benefit from the full-year impact of the volume and price increases which we achieved in the course of 2017 especially in the second half, plus some additional moderate increase.

Oil and gas activity should remain stable overall in Brazil with the renewal of our frame agreement with Petrobras which is expected in the first half of this year. Well as in the rest of the world, we foresee an increasing tendering activity for oil and gas projects.

But again, this should results in higher bookings with positive impact on deliveries to materialize mostly as of 2017. Meanwhile we remain optimistic regarding the improved momentum in the industry markets in Europe as well as in Brazil, in the case of Brazil industry and others including iron ore sales.

And we know these markets will remain very competitive, but the volume is there and some price increases opportunities have already appeared. From a more macro perspective, there is some kind of change if I may say over the last weeks, we definitely experienced and I want to highlight that unusually high volatility in a number of factors which may impact our financial performance notably at some consumable prices, electrodes which we use in our electric furnaces, and of course, high volatility in currencies as well no need to insist.

But as you know, just as a reminder, we are very sensitive to the euro, dollar rates for exchange rate, and this of course as we speak is quite unfavorable to our P&L and balance sheet as well by the way. In this context, on the positive side, what we control, what is under our control, we will continue to deliver I think good results, so we will continue to steadily execute our transformation plan and we expect to generate again significant savings, and on top of that, of course, continue improving our competitiveness.

So if we combine the continued progress on what we control with the markets and sales improvement, we expect to see our financial performance improving in 2018. Thank you for your attention.

Now we can move to the Q&A session both with the audiences in this room and on the net, on the phone.

Good evening. Kevin Roger with Kepler Cheuvreux.

I’ll start with three questions if I may, recently the press reported that you could sell some Brazilian asset, especially information on ForEx with cash discussion up to €600 million. I was wondering if you can comment please.

Second question, you just say that on the guidance, you say you expect an improvement for 2018 compared to 2017, could you please give us a review also on the consensus which is at the moment close to €230 million something like that? And the last point is on the ForEx, previously you used to say that €0.10 was one of the median EBITDA impacts, if you can update us also on this point please?

Okay. These are three questions for Olivier.

Thank you, Kevin.

[Audio Gap] cutting the number of blast furnaces in particular by shutting down the two blast furnaces in [indiscernible]. One has been shut down in 2016 and the second one will be shut down as planned mid this year.

So that we said that studying to part of our or maybe all our ForEx since we can buy whole of the market that would make sense. If we buy offering a nice price point.

This kind of asset is not something that is very liquid, where you offer lots of potential barriers. So it's a long process.

We won't sell it. Again, before we sign to buy with a new project and a good price.

So that you should discount the owners that you read, which are backed by as of today confirmation that they could gave on the name of the buyers as well as the Brazilian past and the price offered. This is not based on what we have in this process.

On your second question, what about the consensus, as you know we don't really comment as the consensus, which as you say, strong of €200 million EBITDA. Just the addition I can make is that you have to let these to take into account and it's an opposition to your third question.

The fact that quite recently we've seen these changes in ForEx, which may have a negative impact on our 2018 results improvement. So moving to this ForEx affect, you're right.

We were saying a few years ago that about $0.10 in the euro-dollar evolution had an impact of [€100] million EBITDA wise after some delay, because we have hedges in place each time we take orders. This sensitivity has been reduced since then for two reasons.

In most 2014 sensitivity and full volume while not of the same volume in 2014. And it was at the time where everything was exported from Europe.

So a strong exposure to the euro-dollar. Now we export much more from Brazil instead of Europe and to some extent from China as well.

So this sensitivity has been reduced there are quite significantly still it does exit. So that to give you an order of magnitude if the euro-dollar and taking into account as well as a higher dollars, high-volume with lots of effects so actually we have to stay at say 125 from euro-dollar and negotiated other countries.

The negative impact in 2018 compared to 2017 could be a few tens of million euros.

Question yes.

Jean-Luc Romain, CM-CIC Market Solutions. In 2017, how much do you attribute in your improvement in EBITDA to volumes and how much to implementation of plans.

And few years ago you had mentioned negative volume effect and EBITDA of €900 million I understand that the scope has changed and is now included, but how much could you recoup of this negative volume impact if volumes could go back to 2014 levels, excluding CapEx affect?

Again for you.

Your first question is [indiscernible] what about the drivers between volume and other factors in 2017 improvement. The biggest driver was actually our savings €164 million.

So very large cost savings and much above the inflation that was actually low in 2017 in particular in Brazil which had a very good performance in terms of inflation. Then we had some positive volume impact in particular in the U.S.

of course volume wise – our volumes almost doubled in the U.S. in 2017 compared to 2016.

Price wise, as I think we said it clearly, you had positive effects in the U.S. – positive price impact mostly in H2 and that we have a full year affect over 2018 that would be a big plus.

But on the other hand, this negative price impact in the Middle East region with orders delivered on the back of orders taken in 2016 at lower prices. Just to tell you that in the coming months and years, what we have to see considering is a continuation of volume growth in the U.S.

to some extent, but now in other parts of the world as well and some price recovery that to pay so far essentially in U.S. We're not judging the rest of the world and that has to develop with the rest of world.

And in this regard, it’s very difficult to tell you as of today what will be the exact pace of price recovery and this is the answer to your the second part of your question, I guess.

Questions from the phone, if you have some questions on the phone?

Yes, thanks very much for taking my question. My first question, if I may, just on Petrobras in Brazil, you talked about volumes looking as though they're probably stable this year, but in the renegotiation contract of the frame agreement.

Can you talk a little bit about what you're anticipating on pricing, because what I would imagine there's quite a lot of pressure in Brazil to negotiate pricing down and I guess at the moment, given that the government could still pretty difficult to say that you've really got any pricing power. So if you could tell us a little bit about your thoughts on that?

And second question just on CapEx. You're obviously running still around 50% CapEx to depreciation.

In a business like yours, which does rely very heavily on sort of technology, innovation in R&D, and how long do you feel comfortable running at that kind of level before you start losing brand potentially on the likes of – and the high-end competitors? And on the Brazil assets, sorry, if I missed your question, but we had an interruption from the mediator during that question, but the first that you are planning on potentially selling.

That is what if you could look this price that you’re taking charcoal from, I’m assuming is the idea if you sell that for us that you would no longer benefit from the charcoal that cost and you would have to effectively buy charcoal or met coal or whatever you decide to do at market price. So you gain on the asset, but you lose on the OpEx.

And I guess final question just on working capital. You've done a great job on managing working capital through the downturn, how are you feeling into this potential recovery on the position of working capital control going forward, because obviously – you see clearly already still a lot of working capital into their recovery, I guess you're going to be in a situation where as the recovery continues you're going to have to do the same?

Thank you.

Okay, I'll take your first three questions Michael. The one about Petrobras, it’s true that since we are getting out of contract, which was signed, I guess in 2014 – even 2012.

Of course the pricing is quite different today than it was then and it's part of a normal re-discussion of a contract that there are some pricing adjustments. Now in the meantime, we've been capable of enriching our offer including some services that will obviously, be a way for us to increase the value of what we provide to Petrobras without harming, of course their P&L and.

So this is integrating more value is a way of balancing some price decrease on the pure pipe part of the contract, which obviously, will happen. Let me as well at – would on wide volumes are stable for the Petrobras next year.

Petrobras of course, is in a situation where there are some constraints on the CapEx plan and that is the reason why they are very disciplined on CapEx and they are rolling out an industrial plan, which includes growth in investment in, but obviously, not at the speed that they would probably implement if they had lesser constraints on their balance sheet. The good news is that due to changes in the Brazilian legislation, there will be in the near future other operators in the pre-sold area and those operators are already well known, some of them have contracted strategic partnerships with Petrobras, like Total, like Statoil, Shell and others might come.

And of course, this will provide us with more opportunities to add to our present relationship with Petrobras, other volume growth in the pre-sold area, but of course, it takes time because the new operators must get some licenses. We are of course operating in offshore in a very sensitive areas so it will not show up in as early as 2017 and that is the reason why we foresee a stable activity in Brazil.

Staying in Brazil by the way about the ForEx what we commented, what Olivier committed is that we now have clearly a Nexus of ForEx capacity compared to our needs and now that we have restructured or we are close to completing the restructuring of our steel making activities in Brazil. So we need significantly less charcoal than the capacity of our ForEx and then the rest is subject to negotiation.

So we will be opportunistic if there are offers which are attractive to more acquisition then what we initially put for sale. We might consider them, of course taking into account the fact that this would be then associated to long-term contract of charcoal supply.

About the CapEx, you are right, the level we achieved in 2017 is very low, half our depreciation. To be honest, I don't feel that we put that much constraint on our mills.

We have been implementing programs of preventive maintenance quite efficient and which makes that compared to say a few years ago, we can get the same effect in maintaining our mills with less CapEx. On top of that, we have less mills since we've closed quite a number of lines and plants even, so we need less CapEx.

This being said, I don't expect to remain at 150 for more than a year. We will certainly increase a bit our CapEx into 2018, but certainly not come back to the levels where we were some years ago, again because we have a different scope.

We have younger equipments on average and more concentrated operations. So these are your three questions.

The last one was on working cap I guess, so Olivier.

Yes, Michael. On working capital, as you have seen we’ve made a little progress over the last few years to manage much more efficiency on our inventories, receivables collection and so other.

We are continuing to have a programs in place in particular for some kinds of inventories. This being said, of course, we cannot get working cap year-after-year in the context of including activity.

So you should expect our working capital to go again progressively starting in 2018. The rule of thumb that we are giving to analyst was about 25% of our sales increase benefited in working cap, we see whether we can do better than that, but some working capital increase is 2018.

Okay. Thanks.

Just one very quick follow-up question…

Model in North America where we work with distribution, so in North America, very good service we provide doesn't wait on our balance sheets, but I’m sure you know that Michael. Any other questions on the phone?

Good evening. Thanks for taking my question.

Two please. So the first one to your comments on the long-term transformation plan.

It's great that you've made good progress towards the €750 million. What about the question though is, are you still comfortable committing to the €1.2 billion to €1.4 billion EBITDA target by 2020?

And if you are, in which case could you help us understand how to bridge that please? If you've got about €375 million left from the €750 million, in the previous plan, you had assumed about €900 million volume recovery.

Well your volume in 2017 is not that far different now from your volume in 2014. So it is looking as if a decent amount of volume recovery is coming and it hasn’t actually led to the same the EBITDA uplift you had expected.

So it would be good to understand please, do you still stick behind that target? Do you want to step away from that target and help us understand the bridge please?

The second question relates to a more sort of business fundamental question, regarding your operating cash flow. In Q4, you posted a minus €124 million operating cash flow before net working capital.

Can you please help us understand why that remains so negative? Your Q4 tonnage, for example 655, that is the highest tonnage you posted since 2008.

Why this is negative operating cash flow and isn’t that – or could you help explain why there shouldn't be ongoing concern for us? Thank you.

In terms of volume, it’s totally fair view of our 2017 volume to say that we are back to 2014 because it's due to the Tianda acquisition that is producing about 500,000 tons per year mostly so far for the Chinese market which of course nature of products and in EBITDA that it is not comparable to what we sell in other parts of the world. So if we think and compare apple-to-apple, we’re still pretty much below the 2014 volumes.

We are convinced that the market will go volume wise and that it will positively come back to the 2014 volumes or close to it for relatively simple reasons that are been shown by Philippe at the beginning of the slides. The Vallourec needs to drill again in order to offset depletion and to follow the growth and demand for oil and gas, and when you drill, you need OCTG tubes, and even more if as we see as of today, the U.S.

are leading always, just be aware that the tube intensity in the U.S. is much higher than the rest of the world.

The OCTG market in the U.S. is about one third as a global OCTG market.

The oil production is much higher than that 12%. So volumes will come back.

We don’t know, of course, nobody knows whether it will be in 2020, 2021, 2022, but that will come back. Well it’s much more difficult to assess what will happen is third level which is prices, of course, which went down quite a lot in most oil and gas market since 2014.

As of today, we have seen the start of recovery in the U.S. notably in the rest of the world, and this is what will have to happen in the coming few years and the volume enterprise recovery continue in the U.S., and happened in the year-over-year region mostly.

So would it be fair to…

Answering to your second question, when you say that you have a very strong volume in Q4 2017 that still negative cash from operations, same answer in our Q4 2017 volume, where you have quite a lot of Tianda volumes in part of the world where prices have not recovered yet compared to a few years ago.

So is it fair to say, I don't want to put words in your mouth here, but you will stepping away from your €1.2 billion to €1.4 billion EBITDA target by 2020 And instead preferring to stay closer to a €750 million strategic initiative target?

Stepping away, we always said that it was based on [indiscernible] internal contribution, and prices and volumes coming back to 2014 level.

And then capacity, I mean potential for additional volume growth, we have. We have in Brazil, we have in China.

Apparently we sell our capacity in China. But as reminded by Olivier, the significant part is still sold to the domestic market, let’s say products we do not want to keep for the medium term and we will substitute by more value-added products, which we are in the process of doing, and we still could the bottleneck our capacities in North America as well, but of course, to get that additional volume, which would bring additional contribution to the €750 million.

This requires that the market well oriented and provided attractive prices. Maybe questions in the room that was one or two.

Yes, good afternoon. [Indiscernible] and you didn't say a word about competition and last year did you gain or lose market share in your middle-markets?

And maybe it’s an opportunity for me to introduce and give the floor to Nicolas de Coignac, who is heading our U.S. activities and that’s probably one of the markets, where we – and there is more opportunities to grow and that's a good way to speak about what we achieved there.

Nicolas?

Thank you, Philippe. So just to answer your questions specifically in North America, in 2017, we have lost a bit of market share for a simple reason that the market recovered extremely quickly.

And we had some delay in ramping up our plans to full production. Meanwhile, we're starting from a point in 2016, we're at the opposite.

We gained very significant part of the market share. So I would say that in 2017, we’re probably backed where we were two years ago, but now that our plants are working at full capacity based on some of the bottlenecks on which we're still working as Philippe was alluding to.

We expect to gain back some points of market share in 2018.

In other part of the…

In other part of the words, it’s harder to calculate because it depends on tenders mostly and so depending on how you transfer that – you get different figures. In North America we have broader statistics who have intact much more statistics and then in the Middle East or the rest of the world.

I would tend to say that probably no significant change in market share. We have a stronghold, where of course, Brazil, some countries in the Middle East where we have a quite a low level activities there were probably registered pretty well.

But on a quite a level of activities there were very, very low level of deliveries in this region of the world. In other markets, then oil and gas, I would tend to say that in industry, we've probably regained some market share on the most attractive segments and we're trying to get out of the commodity segments.

In Powergen, we probably capped is on increasing our market share, but it's a declining market, unfortunately. So it doesn't bring a lot to be honest.

So I would say, all-in-all, probably no significant changes in market share, but hopefully, some nice perspective now on.

There was another question here.

[Indiscernible], four questions please. The first one on the pricing in North America, due to the high level of WTI, could you expect some new price increase in 2018 after the [indiscernible]last year?

The second question concern to Transformation Plan. So with €350 million during the previous year near the €400 million target for the 2020, so do you expect a little bit higher than that?

And for 2018, do you expect there is some level and €150 million impact in 2018 compared to last year? The third question, only the mix price, due to higher level of price in North America, could we understand that the negative impact of the mix price effect at 20% last year could be lower than that in 2018?

And the last question, I come back to the ForEx impact, could you give us the net position of the group in terms of percentage of sales to the higher level? In the past I remember that probably 30% of net sales was exposed to the U.S.

dollar, could you give us an update with that? Thank you.

Okay. Let start with the two question regarding North America.

I think it was essentially one concerning prices. So prices in North America, what as you know, we revised our prices about every six months more or less and in some few cases every three months.

We have pushed the prices north of 20% last year and for the first half of 2018, we expect those prices or we know that those prices will remain stable compared to the end of 2017. However, you have probably read that we announced prices increase, very recently $125 a ton and this will impact very slightly Q2, nearly nothing, because we are under our contract, but certainly the second half of the year.

And we are pretty vocal on saying that this is probably not the last increase that we will announce. Regarding the savings, first of all, you are right, being where we are at the end of 2017, we will certainly do significantly more savings and the €400 million I do not articulate to any precise figure today, but obviously we have planned to go further.

Especially in North America, where in fact to really the consequences of the merger between the two entities that we have there, the former company we were owning 100% and the joint venture with Nippon steel. The merger of the two entities is really delivering good savings, but as well in Europe, we have other plans and we are constantly generating new ideas.

So there will be more savings definitely than the €400 million and that will contribute of course to reaching our overall targets which we've already commented. Olivier for the next questions.

On your third question, [Jean Francois], which was about the price effect in 2018 after the negative one 2017. Yes, we anticipate a positive price effect in 2018 compared to 2017 due mostly to two factors.

One, in the U.S., we saw the full-year effect of the price increase of a good 25% that took place July 1 in the U.S. plus what Nicolas just said very lightly for the price increases in the course of 2018, essentially in H2.

In the other part of the world, we were saying during the presentation that for industrial sales. Demand in Europe in particular and to some extent in Brazil has been picking up since mid-2017, it is starting to allow us to increase prices for this kind of mechanical products, not as fast as the 25% we had last year in the U.S., but at a level which allows us to regain some margin on these kind of products.

And finally in the EAMEA region, for oil and gas, again for a limited number of customers, but significant customers where the prices had been the most under attack in 2015, 2016 because there were only one coming with tenders regularly. We have successfully started to increase prices again in the course of 2017.

As you know during time on this part of the world is on average nines months but first we didn't see the positive impact in 2017 deliveries, but to see some positive impact in 2018 knowing that it's only a few customers once again. We cannot say in this part of the world so far that it's a general price increase of any kind for any kind of customer.

And I think this is the mostly in Brazil we mentioned the Petrobras contract renewal that we are targeting where there could be some price concession, but that we don't expect it to be too massive. Finally, on your last question.

The Euro-dollar sensitivity. The question is what is the share of our sales in U.S.

dollars made by non-U.S. dollars companies, it happens both ways where when we say in U.S.

dollars in some countries were sales in U.S. dollars, but indexed to some extent from the U.S.

dollar. So the share changes every year, of course, back in 2017, it was fairly close to 55% of our group sales.

I don't have a figure in for 2018, but I guess, the more the U.S. sales increase, which are domestic sales, the less this percentage will be.

Good afternoon, gentlemen. Thanks for taking my questions.

I’ve actually have three. First, can you clarify a few points on provisions reversals that you have an 4Q and then 2017.

So in your press release, you disclose €45 million of non-cash provisions reversals of impact in EBITDA in Q4. In this respect, can you confirm that clean up at the net of this effect was negative €34 million in Q4 2017.

Also can you disclose the full number of provisions reversals for 2017 you had. And can you give us any idea of how much of this provisions left for you to revert in 2018?

That’s my first question please.

On your first question, since we renew you would ask it. We gave the number in our press release.

So the amount of net provision reversals that took place in 2017 is €81 million, which by the way is a good news. What is it about it's about the fact that in 2015 and 16, in some cases, we're accepting to sell products below their full cost.

In this case, you book a provision and you release it when you deliver the products, which took place in 2017. The good news is that in 2017, with the customers that we are leading these kinds of provisions, prices went up.

So the amount of new provisions to be booked has been reduced very largely in 2017 which leads to the second part of your question. The 2018 situation will be such that we will have almost no net provision reversal, leading to the fact that our cash flow from operations will improve significantly more than the EBITDA per say, because these moves in provisions will not happen again.

That’s clear. And few more questions if I may.

So can you give us an idea of profitability of your U.S. business.

So the first half of 2018. You just highlighted the prices were also effective they are select.

Obviously you are pointing to what’s cost inflation, including electrodes but not only in your press release. Does it mean that profitability built on or margin of your U.S.

businesses is likely to shrink in first half 2018 compared to second half 2017? And if I may, third question, straightaway, on the offshore.

According to some are your competitors, offshore projects are now offering comparable economic the U.S. sale which was obviously not the case in the prior world and they also require significant working capital investment.

Do you agree with this assessment of the offshore market today? And does your balance sheet allow you to compete in this offshore market conditions?

Yes, on the U.S. business, I’m not sure I fully understood your question.

But at the end of the question was will the profitability of your U.S. business shrink in H1 2018, and the answer is no.

Yes, so the question was really, what is the change of profitability built-on in the U.S. directional in first half 2018 versus second half 2017 please.

Basically, no bigger change, as Nicolas said, prices are stable in H1, volumes will be at least at the same level as H2 2017. So there will be no significant change in the structures.

And in addition to that, while increasing to some extent, our exports from Brazil to the U.S. in order to be able to answer the growing demand in the U.S., which is adding some profitability share between Brazil and the U.S.

due to our transfer pricing notes.

And as far as deal offshore projects are concerned. I didn’t notice any significant change in the practice even in some case, some players, but not all of them are putting for tender broader offers in terms of services.

But this is not necessarily require a significant increase in working cap. Our present balance sheet, including working cap does include some significant offshore projects and some of them – they had to come to my mind are delivered from Brazil to Australia, as an example so we typically of course, incurred the working cap impact of long delivery time.

But I think that that's all and we are absolutely capable of financing that as we've always done when we work on our offshore projects. Where we see opportunities to work with a leaner balance sheet is obviously, onshore and especially onshore North America, where we are working with distribution and developing 2018s approach with them in order to improve the service, but there is no change there in terms of working cap.

This is probably carried as well as the financial risk by the way by the description companies, which are partnering with us.

Other question on the phone?

Hi, good afternoon. I’ve just got one question, last year you were very helpful in – helping us kind of guide on the quarter-by-quarter basis some of the moving dynamics and I just wanted to come back to kind of the electrode issue, there is a quote on Bloomberg that it would conclude negatively tens of millions of euros negative impact to the 2018 numbers.

Is that going to flow through in the first half of 2018? And therefore, should we expect EBITDA to actually fall back in the next coming quarters and for your increased year-over-year profitability really be driven by the second half of the year?

Frankly speaking it's not a huge impact, its a few tens that we have few tens of million euros on a full-year. As you mean that for the part of our – that are still exposed to the spot market, which is [indiscernible] we don’t get long-term deals, which we're trying to do.

And it will happen relatively quickly I think we're seeing some inventory that may cover say Q1 and then it will be a spread over the year.

I guess coming back to the initial question around consents. It does sound as if we could be seeing in terms of downgrades here, potentially of 10% to 20% on the back of these two negative macro events.

Is that something you can go with?

Again we don’t comment consents. I think our approach has been that giving you guidance at this stage of the year, given the volatility of our markets, plus this year's volatility of ForEx and some consumables probably wouldn't have been be a good idea.

We’ve done that last year and it has been a little bit of footing on our foot. We gave guidance during the year and we improve this guidance quarter-after-quarter which is probably not the best way to manage this kind of very volatile market.

So we prefer to be quite precise market-by-market and then to let you make your own assessment.

Yes. I guess the difference being this year though that no one really kind of expects the material shift in the U.S.

that was already in China at the start of last year.

I refer to my comment that as far as 2018 is concern in North America, we do not expect for sure such a significant change as the one we experienced in 2017. It’s more full-year effect plus as our vision today is some increase in the number of rigs operating compared to the year-end situation, but moderate increase.

So I think this is part of the – the forecast is probably much easier to anticipate than what happened last year. Of course, we leave completely aside, completely aside, it is out of our picture, any potential impact of the 232 legislation which is apart from not being easy to understand, really unpredictable.

I just wanted to follow-up on that. Obviously, I think we can all appreciate how OCTG price would move up.

Is there any negative effect in terms of cost of sales, input costs, the motorized from Section 333?

I think if you can understand what may happen. The first impact will be really – and the stronger impact short-term will be very likely on the domestic prices, because it will create, it could create depending of course on the scenarios and the decision made by President Trump, but it would create an immediate shortage.

So with an immediate impact on the pricing situation, now I must insist on the fact that it might be a shortened vision because given the nature of the measures which envisioned or presented or proposed by Secretary of Commerce Ross. It is hard to think that it will not trigger retaliation from other countries.

The nature of the measures that are envisioned is country by country, which is very unusual. So it is hard to think.

So I think the major impact would be on prices, no doubt. And then on the flows between countries, it's true that we export to the North American market, but relatively limited volumes compared to what we produce in North America.

And as I said earlier in this meeting, of course, we are in the position to debottleneck some of our capabilities – capacities in North America, so that could be an option as well.

Okay. Thank you very much.

Question on the phone or in the room. Phone?

Yes. Thank you for taking my question.

So just one very first question which is to clarify something, the guidance which you provided for full-year 2017 EBITDA and the range that you provided was that inclusive of the provisions or are not just to be able to compare with current FY 2017 EBITDA? So that would be my first question.

Second question, based on all the comments you've been doing, would it be fair to assume that you should have relatively stable volumes into 2018? And third one is around free cash flow, if indeed you have stable volumes and well to certain extent you have potential headwinds coming from FX raw materials?

Then from free cash flow statement standpoint, how should we think, should we think about the deterioration versus FY 2017? Thank you.

I think your first question was to know whether our guidance for 2017 was taking into account provisionally, so yes it was consistent of course. On your second one, which is about 2018 volumes, are two areas that should lead to higher volumes.

One of course is U.S. keep in mind that we spent as Nicolas was saying H1 2017 ramping up the [indiscernible] by rehiring teams in the U.S.

in order to be at full capacity in H2. So we have a full year impact of this full capacity of situation of H2 2017 in the U.S.

The second part of the business, where we definitely expect the growing volumes is industry, both in Europe and in Brazil. I will say that we're enjoying strong momentum, since early mid-2017 in these areas and we see that continuing in 2018.

In the rest of the world, probably less significant changes volume wise. And finally, for free cash flow, I can just remind you about what will be below the EBITDA in terms of CapEx.

You can assume an envelope closer to the one that we had announced for 2016 and 2017 of €200 million CapEx. We've done less then that finally in 2016 and 2017, because we decided to spend more time in some cases on engineering studies before giving the final green line to some projects.

But again, as you seem about €200 million. In terms of financial charges, some things slightly above €160 million.

And finally, if you add up tax this kind of other elements, it's about €100 million. And then, but depending on the level of activity of early 2018 and late early 2019 and late 2018.

You will have some increasing working capital, but which is not possible to precisely measure at this time.

Sorry, just one follow-up question, so I remember I don’t know whether it was a 2Q or 3Q. You had mentioned that actually the Brazil five year contract which you had was actually coming to an end in 2017.

So I was just wondering given that you're still in the process of negotiating whether from that standpoint it's business as usual from activity standpoint and also pricing if you are making any deliveries. Thanks.

Yes, definitely we continue with the existing contracts until we sign the new one.

Thank you very much.

The question on the phone.

Most of my questions have been answered. The one I have left is looking at your EAMEA order book for oil and gas.

Can you give us an idea how the pricing of that product, that book is about how it stretches out into 2018, how far it stretches and then secondly on the size of the tendering pipeline which you are seeing shouldn’t a result an increasing tendering activity? Can you quantify how much that tendering pipeline have increase now versus six months ago?

Thank you.

Amy, it’s hard to put figures on that because there is a new trend especially in the Middle East for big tenders so not as frequent is before, but bigger. So we expect quite number of those tenders to take place in the course of 2018.

We are already end of February so it means that anyway the impact on 2018 will be negligible if not nail. So this is the name of the gamer I would say so we cannot really put precise figures on that and anyway the impact will be more 2019 and 2018.

But what about the current book value you’re executing on is the pricing and there still continues to be lower in 2018 versus 2017. So how should we expect your EAMEA results that evolved in 2018?

I cannot be excessive about 2018. The trend is not lower than 2017, but the message is that we still are and we still were in 2017 below the levels of say two years before, definitely.

So we had not recovered recover yet on the pricing side as mentioned by Olivier earlier and this is one of the key say potential or question mark regarding the medium-term financial performance, so volumes that there are definitely know that quite a number of tenders are being prepared. There is a clear willingness of a number of operators in those regions and I'm referring there mostly to the Middle East, North Africa.

Less West Africa to be honest compared to a few years ago. So there are ambitions.

There are projects and now sometimes tenders take time to – we put on the market and the pricing situation is still a pretty competitive, I would say, compared to a few years ago. No doubt about that.

Okay, great. Thank you very much.

Good evening, gentlemen. Amazingly, I still have some question if that's okay.

If we can revisit section 232 just quickly, as we've seen the proposals as it stands. And I appreciate they are not firm yet there would also be import tariffs and may be quotas on countries such as Brazil and also maybe even Germany.

Would that limit your imports from those areas into the U.S.? And just to understand that the importance of this could you remind how many tons you are importing into the U.S.

from those two areas? The second question is as you previously talked about debottlenecking in the U.S.

to try to deliver more and tons to the U.S. market from your U.S.

mills? Could you give a little bit of color as to what would it be possible in that exercise?

And the third question is, you talked about the cash flow movements, you mentioned tax and other. Could you just give us a guide on where taxes could be in 2018 because clearly we’ve seen some very large differed tax assets moves in 2017?

Thank you very much.

Okay, maybe I’ll leave the floor to Nicolas, regarding 232. It’s preliminary of course.

And even in the volumes we could import in the future. I'm sure you would understand without knowing exactly what the scheme would be.

It's pretty hard, so Nicolas?

That's definitely a tough exercise that you ask for me, Rob. Of course, the options are still proposals at this stage and we know that anything could happen out of this, but only one of the three options, but anything in between and anything that is different.

Just to insist on one of the points that Philippe has mentioned already. The large majority and by large I mean really large majority of our sales in North America are produced domestically from the [indiscernible] so we have our capacity of melting our own steel and we do the rolling and all the finishing.

What you do import is first of all, we don't have all of the size range that is required from our customers out of domestic mills mainly for some of the upfront business. So we import some of those larger orders.

That’s a small volume, but it exists. The second one is certain amount of non-OCTG projects, non-oil and gas related products that we do import and that are definitely at risk if there is some kind of tariff either on Brazil or even on European countries.

Although I think that this scenario is quite unlikely. I think the measures that present, is considering today and he's vocal about it is essentially targeting at more China or countries using China material.

So I think putting into the same baskets Europe and Chinese import is probably not really what he's aiming at. But would Europe be impacted or Brazil be impacted to some extent, yes.

We will have an impact, but it’s a small one compared to the amount that is served directly out of the U.S. And lastly Rob, if I may, anyway even if there are tariffs on some imports from some countries.

The key question is what will be the domestic price? And we can not anticipate that the domestic price to increase very significantly, which may bizarrely enough, not dissuade importers to ship to the U.S.

So it is a really odd scheme. Anyway every time you want to get out of the untied on being classical system which is company-per-company, not country-by-country approach.

You enter into unknown territories and that's exactly where we are.

And if I may add one point, Rob is that definitely prices will increase. Bear in mind and you did pretty well in this room on the phone is that today – as far as we consider OCTG, for example, which is bulk of the seamless pipes, is that the consumption in the U.S.

is served around 50% maybe a little bit north of this from imports. And there is not that much available capacity if imports were completely banned.

So if there is a tariff, that’s an increasing price for 50% of the volume. And undoubtedly, there will be an increase on domestic prices which as a consequence will may also impair the demand level, because if prices increase and CapEx from the operators will not increase accordingly, they will drill less wells.

So that's a pretty complex equation to solve. And I think that we're preparing all kind of scenarios, but we better wait for the outcome and the final decision from President Trump.

Okay. Fair enough.

Thank you for the color. And on taxes and debottlenecking?

Olivier is back.

On taxes I’m back. So say €30 million, €40 million cash out in 2018.

And on debottlenecking, Nicolas is back.

Good question. I forgot the debottlenecking part, which is certainly a major area of our action plan.

So as you know, we have a rolling capacity in the U.S. of 750,000 tons.

This has been shared with you for a long time already. Today, we are not at this level, because as I shared it with you, I think already in our Q3 earnings call, we are having still debottlenecks on the finishing.

We are working on several projects that are not extremely demanding in terms of CapEx to improve this debottlenecking and finally reach the maximum capacity of 750,000 before the end of this year. So we have some headroom to improve our domestic supply in 2018.

Very clear. Thank you, gentlemen.

Okay. Last question from the room.

No. End of Q&A

Thank you very much to you all and thank you to those on the phone. Bye-bye.