(AOF) – Vallourec, specialist in premium seamless tubular solutions, announces the signing of a 5-year contract with Equinor in Brazil for the turnkey supply of tubes, connections, accessories and services. Equinor is one of the largest oil producers in Brazil. Vallourec will contribute to Equinor’s energy transition plan aimed at achieving net zero emissions by 2050. The contract also includes innovative digital solutions. The first deliveries are planned for the second half of 2025.
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Key points
– Global co-leader, with Tenaris, of the seamless steel tube market (12% market share) and global leader in premium tubular solutions;
– Turnover of €3.4 billion, 95% generated by tubes, with a strong positioning in the oil-gas sector (73%), ahead of industry;
– New economic model in 2 pillars: grouping of production capacities in the 2 Americas, and in Asia and transformation plan towards better competitiveness;
– Non-operable capital due to the presence of the BPI (14.56% of the shares and 14.82% of the voting rights), the employees being 2
th
shareholder (3.03% and 3.30%) Edouard Guinotte, general manager, chairing the board of 9 directors
– Cleaned up balance sheet with equity of €1.7 billion and, at the end of June, cash of €1.5 billion compared to €868 million in net debt.
Challenges
– “New Vallourec” strategy:
– transfer of production sites to North America, South America and Asia and total control of their ownership, only 5 factories being maintained in Europe, including 4 in France,
– improvement of €230 million per year in operating profit,
– total debt reduction in 2025;
– Innovation strategy supported by 5 R&D centers aimed at capitalizing on technological advantage (VAM® threaded connections) and digital solutions distributed to customers via the Smartengo Vallourec.smart platform:
– services and solutions: solutions for energy storage and mobility. grouped under the name Vallourec New Energies and digital solutions within the VAM DATA department,
– industrial market: lightening of cable structures,
– oil and gas: solutions to reduce the total cost of ownership or TCO,
– new energies: solutions for geothermal energy, transport and storage of CO2 and hydrogen with the objective of contributing 10 to 15% to operating income;
– Environmental strategy in 2 stages;
– 2030: 30% reduction compared to 2021 in CO2 emissions for scopes 1 and 2,
– 2035: 35% reduction compared to 2021 in CO2 emissions for the entire value chain;
– 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;
– Control of supplies via iron mines and forests, mainly Brazilian for steel processing.
Challenges
– Sensitivity to crude oil and iron ore prices and to the euro versus Brazilian real and dollar parity;
– Completion of the 2 extension projects of the Brazilian iron mine, the finalization of which is expected in 2024 and 2027;
– Strong positive impact of price increases on turnover growth;
– After a 31% jump in sales and a doubling of the operating margin in the 2nd half, 2023 objectives of growth in operating profit between €950 million and €1.1 billion, positive free self-financing and ‘a reduction of the debt;
– Return to dividend distribution in 2025, i.e. 85 to 100% of cash generation.
Learn more about the Commodities/Metals sector
The multiple challenges of environmental criticality
It first refers to the supply and availability of different metals in the subsoil. The other determining element is demand. According to the International Energy Agency, lithium consumption will increase more than 40-fold by 2040. Copper is also the perfect example of this criticality. According to S&P Global, copper consumption will double by 2035, from 25 million tonnes per year to 50 million tonnes. However, investments in new mines are penalized by falling prices and rising financing and production costs. Shortages are therefore to be feared in ten or fifteen years. Finally, the mining industry will face growing opposition from populations because of its impacts (particularly in terms of waste and water pollution).
