In what context is Vallourec currently operating?
We're currently operating in a very difficult environment. In the Oil & Gas sector, following the sharp declines in barrel prices, our customers are strongly reducing their investments, resulting in very strong pressure on volumes and prices. The entire sector is affected, not just Vallourec.
How is the Group coping with this environment?
Vallourec is fully mobilized. We're adapting to the situation, and we're preparing for what lies ahead. As always when we go through a cyclical low, our first step is to put short-term adjustment measures in place to adapt our industrial sites to the low workload. We have also adjusted our investments and are cutting back our working capital requirements. Beyond these immediate actions, we're strengthening our competitiveness to adapt our offer to the changing market and new customer expectations. We're doing so by rolling out an ambitious plan based on two levers, cost-cutting on the one hand, and premiumization on the other hand, through five strategic programs: safety, quality, innovation, commercial excellence, and operational efficiency.
Is a capital increase necessary?
Vallourec has a strong liquidity position (€1.8 billion of undrawn committed facilities) and room for maneuver regarding financial ratios, so we can cover our 2016 financing requirements, especially if we take into account the operational measures taken by the Group. We will of course continue to look at all the available options to optimize the Group's financial structure and adapt to the potential market change, given the uncertain environment and the lack of visibility.
What is your vision of the future for Vallourec?
The mature oil wells are losing around 5% of capacity per year. Due to this phenomenon of depletion and to the current weakness of the investments to replenish the reserves, the oil production is going to gradually decrease and the current surplus compared with the demand is going to vanish. Something most specialists are predicting for 2017. Our customers' investments and our business will then pick up again. Then we'll be ready and even more competitive, especially since the quality and reliability of Vallourec's premium products are undeniable.
Philippe CrouzetChairman of the Management Board
6 programs to improve our competitiveness, strive for excellence and make the difference