(AOF) – Vallourec has appointed Philippe Guillemot to succeed Edouard Guinotte as CEO. Philippe Guillemot was until recently CEO of Elior Group. Previously, he was Director of Operations and Sales at Alcatel-Lucent and Managing Director of Europcar.
In a press release, Vallourec indicates that Philippe Guillemot will be responsible for accelerating the execution of the company’s global strategic plan by favoring a logic of “value in relation to volume” and by significantly lowering the company’s break-even point, by paying constant attention to cost reduction, operational efficiency as well as new business practices, in order to enable the company to pursue profitable growth.
At the end of this process, by the end of 2023, Vallourec will have been transformed and will be better prepared to manage the evolution of a full economic cycle.
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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 €4.2 billion, with a strong positioning in the oil/gas/petrochemicals sector (73%), ahead of industry (22%), and electrical energy, 29% of revenues being derived from Asia-Middle East, 29% from North America, 17% from South America and 14% from Europe;
– 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 and the Japanese Nippon Steel (14.56% each), the 13-member supervisory board being chaired by Vivienne Cox, Édouard Guinotte being Chairman and Chief Executive Officer;
– Balance sheet cleaned up by capital increase of €300m with, at the end of June 2021, net debt of €720m compared to €1.6 billion in equity compared to €1.2 billion in cash.
Challenges
– “Acceleration” strategy for profitable growth through industrial excellence and more efficient support functions with a gross savings target of €200 million over 2021-22;
– Innovation strategy supported by 6 R&D centers aiming to:
– 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 industry, efficiency of power plants in electrical energy and complexity of transportation and storage in oil and gas;
– Environmental strategy in the A list of the CDP and 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 the turnover over 2020-30” / reduction in impact: 40 of renewable energy, 96% of waste recovered, 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;
– Continued winning contracts and optimizing the business portfolio;
– 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 oil prices and to the euro against Brazilian real and dollar;
– Impact of the pandemic: revenue down 9% at the end of June 2021, the good health of the Industry division not offsetting the decline in revenue from the Oil & Gas and Power generation divisions, and sharp reduction in net loss decreased to €42 million.
Metals involved in a “supercycle”
Several experts use this term to refer to the progression of prices in the years to come. Copper and aluminium, which play a central role in decarbonization policies, present significant investment needs. Copper production is expected to decline in 2023 if new mines are not explored.
Meeting the goals of the Paris climate agreement will lead to a six-fold increase in the demand for minerals by 2040. However, the International Energy Agency (IEA) estimates that the limited supply of critical minerals such as that lithium or nickel threaten the energy transition. The investment period is long because more than sixteen years on average are needed between discovery and the first production of a mining project.