Vallourec, which specializes in seamless pipes for the oil industry, came out of the red in the third quarter, benefiting in particular from “energy security concerns” of countries deprived of Russian gas, and the “difficult” decision to close its plants in Germany in 2023 to ensure its “survival”.
The French group announced for the third quarter a net result of 6 million euros after a loss of 7 million last year, on a turnover up 54% to 1.28 billion euros.
Over nine months, however, the net loss increased to 444 million euros, compared with 49 million euros in the same period of 2021.
“We have taken difficult but necessary decisions for the survival of the group,” recalled CEO Philippe Guillemot, appointed seven months ago.
The group posted “very encouraging results” in the third quarter, he said in a telephone interview with the press.
In May, following a lengthy financial restructuring process, the group announced the elimination of 3,000 jobs worldwide, including 320 in France, following the cessation of tube manufacturing in Europe, the closure of its German plants, and the transfer of part of its activities to Brazil.
Since then, Vallourec has become closer to its traditional oil customers, with whom it has obtained long-term supply contracts, notably with Saudi Aramco of Saudi Arabia, ADNOC in Abu Dhabi and Petrobras in Brazil. It is also benefiting from a “strong commercial dynamic” in the United States, where exports of liquefied natural gas (LNG) to Europe have risen sharply since Russia’s invasion of Ukraine.
“Many people no longer believed in the future of the group, and today Vallourec has a future because decisions that have been postponed many times have finally been taken,” added Mr Guillemot.
The “New Vallourec” plan to improve performance and reorganize activities will be extended to Brazil.
In the United States and Saudi Arabia, the group plans to increase its production to “take advantage” of the increase in oil investments.
For the future, in addition to its core oil business, Vallourec believes that its know-how can be used in the emerging and fast-developing carbon capture business, since its seamless pipes are “capable of withstanding very hostile environments in terms of temperature, pressure and corrosion”.
It also plans to expand into geothermal energy, where it is already present, and into hydrogen storage.
The group also announced that it has received approval to continue operating the Pau Branco iron ore mine in Brazil, using alternative tailings storage facilities “until the beginning of the second quarter of 2023″.
In early 2022, Vallourec was fined some 45 million euros for “environmental damage” after a sediment containment dam at this mine overflowed.
“We have completed the work necessary to restore the minimum safety level required for the use of the Cachoeirinha tailings facility,” he said.
