(AOF) – The management of Vallourec Deutschland and the staff representatives have reached an agreement within the framework of the cessation of activities in Germany, and have signed a social plan as well as the corresponding collective agreement. This signature marks the end of a six-month negotiation phase, with a view to obtaining financial compensation and appropriate social measures, for the 2,400 employees of Vallourec Deutschland GmbH at the Düsseldorf-Rath and Mülheim an der Ruhr. Production will cease at the end of 2023.
The seamless steel tube specialist is pleased to have successfully concluded these negotiations, in accordance with its long tradition of social dialogue.
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Key points
– Co-world leader, with Tenaris, in the seamless steel tubes market (12% market share) and world leader in premium tubular solutions;
– Turnover of €3.4 billion, with a strong position in the oil-gas sector (54%), ahead of industry, which is growing strongly (36%), petrochemicals (6%) and electrical energy ;
– New economic model in 3 pillars: reduction of production capacities in Europe, reinforcement of the presence in the 2 Americas, the Middle East and South-East Asia, transformation plan towards better competitiveness;
– Non-operable capital due to the presence of the BPI (2%), the Apollo funds being 1
ers
shareholders with 20% of the shares and Edouard Guinotte, CEO, chairing the board of 9 directors;
– Balance sheet cleaned up by the capital increase in 2021 with equity of €1.8 billion and cash of €752 million against €1.4 billion in net debt.
Challenges
– “New Vallourec” strategy for productivity growth: transfer to Brazil of the German tube production sites effective by 2023 / consolidation on the Aulnoye site of the European threading activities which will be at the head of the new organization ” One R&D” / lowering overheads, by limiting head office functions to strategy and expertise, lengthening structures in all regions / automation of transactional processes, economies of scale / financial objectives: €230m additional recurring operating profit, positive cash impact of €250 million;
– Innovation strategy supported by 5 R&D centers and partnerships: capitalize on the technological advantage (VAM connections) and the digital solutions distributed to customers via the Smartengo Vallourec.smart platform / meet the challenges of lightness in the industry , efficiency of power plants in electrical energy and complexity of transport and storage in oil and gas
/ support employee proposals via Open Innovation challenges and the Booster;
– Environmental strategy validated by the SBTi in 2 parts: offer of energy transition solutions for geothermal energy, offshore wind power, carbon capture & storage and hydrogen with the objective of “a significant increase in turnover on 2020-30” / reduction in impact: 40 of renewable energy, 96% of waste recycled, 43% of steel from recycling;
– Productive quality of the 3 major industrial sites: Youngstone in the United States, hence a competitive advantage for the group favored by the increase in customs duties on steel, VSB in Brazil, and Tianda in China;
– Deployment of the Brazilian and Chinese competitive routes with an expected tube production of 500kt in 2024 against 300kt in 2019.
Challenges
– Sensitivity to crude and iron ore prices and to the euro vs Brazilian real and dollar parity;
– After a 36% increase in sales and a widening of the net loss on 1
er
semester, update of 2022 outlook: positive cash flow and reduction in debt / oil & gas: towards improved margins / industry & others: in a stable market, full restart of the Brazilian iron plant with a target of 2 .6 Mt, hence a gross operating surplus of an estimated €670 to €750 million.
An ecological transition that drives metal prices
The ecological transition is driving demand and driving up prices. Thus lithium prices jumped 100% last year, supported by sales of electric cars. The needs for metals such as aluminum, copper, graphite, or nickel should soar by 2050. The war in Ukraine has reinforced the rise in prices because Russia is a major producer of mineral raw materials , in particular aluminium, palladium, nickel and titanium. The International Energy Agency (IEA) recently warned of the risk of a shortage of several metals necessary for the energy transition. Europe has mobilized on strategic metals with the aim of strengthening its sovereignty.