14/04/2021 - Transformation
You took over from Philippe Crouzet in March 2020. How have you found this unique and surprising first year as Chairman of the Vallourec Management Board?
Édouard Guinotte : Vallourec is a company I know well, as I joined in 1995. I would even say that I grew up with the Group. I have always been struck by its fantastic ability to adapt to the often very rapid changes in its markets. What I will take away above all from the past year, is the commitment shown by our teams around the world in tackling this sudden and unprecedented health and economic situation. As it does whenever Vallourec is hit by a crisis, our Group has demonstrated a quite extraordinary capacity to address priority issues. This is a source of great pride for all the teams and I would like to sincerely thank them.
My second key takeaway from the year is that it has been a difficult one, of course, and we have had to make some tough decisions. But we have also been able to count on the tangible results achieved by the transformation and cost reduction plan carried out since 2016, which has restored our competitiveness in many of our markets. This is illustrated by the following figure: in 2016, in the midst of the previous crisis, our EBITDA was -€219m. In 2020, it was +€258m. This comparison reveals just how far we have come.
Our high-quality, innovative and effective product range has always been one of our strengths.
What has been done to restore competitiveness?
E.G.: Firstly, our transformed industrial footprint, that positions us on the most attractive and resilient markets and particularly gives us the advantage of highly competitive export bases in Brazil and China – along with Europe for the most sophisticated products. Secondly, high-quality, innovative and effective products, which have always been one of our strengths. The immediate commercial success of our VAM® Sprint-SF connection launched in 2020 in the United States, after only nine months of development, shows that our dynamic innovation approach remains a source of long-term value. Especially since our products are now complemented by an expanding range of services, both physical and digital thanks to our Vallourec.smart solution, to ensure optimal customer satisfaction.
Finally, we are better able to match our production capacities to expected activity levels, thanks to re-dimensioned industrial tools and adjusted product range and costs.
Our 2020 results are certainly not at the level that we were aiming for at the start of the year but, thanks to the impressive resilience I have already mentioned, the Vallourec Group has confirmed that it is much better equipped to overcome the current crisis than previous ones.
Since the health crisis looks set to remain with us for some time, how do you plan to incorporate the uncertainty it generates in your organization?
E.G.: Above all, this means continuing to ensure everyone’s safety, while maintaining our activity, and expanding remote working methods in an intelligent way. We are also emphasizing the urgent and continuing need to reduce costs. The upcoming relocation of our headquarters, which will cut our expenses by around 30%, is a perfect illustration of this. Making full use of all the possibilities associated with new working methods, both remotely and in teams, particularly through the Flex Office approach, this move will also be a very exciting symbol of the new start for the Group.
One highlight of 2020 was the preparation of your refinancing project. This process was concluded in early February 2021 with the announcement of an agreement in principle with your main creditors. How does this financial restructuring mark a key stage?
E.G.: This agreement in principle marks an essential step in the Group's transformation, in that it will give us a rebalanced financial structure suited to our business lines, with a solid shareholder base supporting our prospects for a rebound in the medium term. Once this refinancing plan has been implemented – which we expect to happen in June 2021 – Vallourec will be able to unleash its full potential by drawing on restored agility and competitiveness, a balance sheet allowing implementation of its strategic plan and sufficient liquidity to cope with any unexpected developments.
What impact do these new financial and shareholder arrangements have on your transformation prospects for the future?
E.G.: Our ambitions for the future have not changed, but we now have the means to achieve them more rapidly – particularly in anticipation of the recovery in the Oil and Gas market, expected by analysts from 2022. At the same time, we plan to step up our dynamic innovation approach with regard to our Vallourec.smart solution, which increases the service provided to our customers, particularly through digital technologies. Moreover, we are even more determined to become an active player in the energy transition by 2025. We are mobilizing our teams and our innovation to develop solutions in five sectors – geothermal, offshore wind, CO2 capture, hydrogen, and solar. In other words, we remain more committed than ever to the continued consolidation of our fundamentals and to forging new paths for the future.
We are now well-positioned to be the preferred supplier of premium tubular solutions in energy markets.
On that basis, how are you approaching 2021?
E.G.: Last year was marked by a range of emotions and challenges to overcome. I would like to congratulate the Vallourec teams once again for the way in which they tackled those difficulties. It is thanks to them that we will be able to reap the first rewards of our restored competitiveness. A year of transition lies ahead in 2021, both in our markets and from a shareholder perspective, after which we will be well-positioned to be the preferred supplier of premium tubular solutions in energy markets. Today, we have everything needed to create long-term value.