after coming close to bankruptcy, the French metallurgy group Vallourec has regained great optimism

Right now, it’s the season of results and assessments. Friday, we discover the Vallourec company, a French group and world leader in metallurgy. Its CEO, Philippe Guillemot, tells us about it.

Philippe Guillemot is the CEO of Vallourec. This French metallurgy group, more precisely the world leader in seamless tubes, is mainly focused on the oil and gas industry. It publishes its results for 2023, Friday March 1. After coming close to bankruptcy Vallourec posts a net profit of 496 million euros.

Philippe Guillemot: Everything happened really fast. The year 2023 will indeed have been a pivotal year, after many years of great difficulties and a risk of disappearance of the group in 2021, we have now turned the page on recovery and are posting the best results for the group in 15 years. The net profit is almost 500 million, after a loss which was significant last year, due to restructuring costs, since upon my arrival, I announced a plan which was quite drastic.

What was the strategy?

I focused the group on products with the highest added value. We are at the forefront of metallurgy and gastight connections and therefore we have stopped selling convenience products. And then I profoundly reviewed the industrial footprint.

“I closed a large part of our factories in Europe, starting with the German factories, quite simply because there is almost no oil and gas market in Europe.”

Philippe Guillemot

at franceinfo

Today, we have to produce close to the markets. In our case, the United States, Brazil, and the Middle East.

Site closures mean job destruction. Today it’s over. Are you going to hire again? And particularly in France?

What remains in France today is a research and development center, which is at the heart of the group’s strategy, and two industrial sites. And today, we are hiring, because we have plans for the future. For example, our vertical hydrogen storage solution, which is a world first, requires talent and expertise. And we recruited fifteen doctoral students last year in this research and development center.

You still work mainly for the oil and gas industry today. Are you still able to attract young people who are sometimes more sensitive to this issue of ecological transition?

We have no problem recruiting, because we have very good projects.

“Today, our objective is to have between 10% and 15% of our results with non-fossil applications.”

Philippe Guillemot

at franceinfo

I talked about hydrogen, but there is also geothermal energy. We are on all European geothermal projects. And there is also carbon sequestration since, as you know, one way to decarbonize the economy is to capture and sequester carbon.

And your traditional market, oil and gas. How do you see it evolving?

I think we still have income for many years to come. Last year, there were 102 million barrels per day consumed worldwide. It will increase again this year. Even if the additional energy needed to cope with the growth of the global economy came from non-fossil energies, we cannot afford to violently reduce the consumption of fossil fuels. That being said, we see this mix evolving. Less coal, oil and then gradually, more and more towards gas.

With the issue of global warming, does it still make sense to drill today?

An oil well produces less and less over time. So just to maintain the 102 million barrels per day, we must continue to invest. This is called depletion.

“An oil well produces 5% to 8% less every year, inexorably. And so new wells are needed to even maintain the level of production.”

Philippe Guillemot

at franceinfo

How do you see the longer-term future of Vallourec?

Vallourec must first continue to generate cash from its core business, tubes for oil and gas applications, and reinvest this cash in non-fossil applications, those that I mentioned earlier. Hydrogen storage potentially is a building block that was missing in the hydrogen sector. When you produce green hydrogen with electricity that is either solar or wind, it is intermittent, so if you do not have storage solutions, the project is not economically viable. With this solution, we make these projects economically viable.

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