The Birth of a new Vallourec
2023 will stand out in Vallourec’s history as the year we transformed the company. Thanks to our game-changing New Vallourec plan, we are once again a force to be reckoned with.
Announced in 2022, the New Vallourec plan has been fully executed and is already a resounding success. We have overhauled both our business and our industrial footprint. The result is a high-performance organization with the right production sites in the right places, each with a clear mission. They enable us to efficiently serve three geographical regions: North America, South America, and the Eastern Hemisphere.
Our focus is now firmly on value over volume. That means leveraging our know-how in steel formulation and the design of gas-tight connections and our industrial excellence to innovate and provide our customers with premium tubular solutions.
The plan announced in May 2022 is fully executed. It has given birth to a New Vallourec, whose journey continues to move forward. Our value creation model is based on a new core principle: to be a trusted partner and create value for all our stakeholders by providing cutting-edge steel solutions that make energy transformation a reality.
A sound financial footing for future growth
The deployment of the New Vallourec plan is already translating into robust performance. 2023 was a highly successful year for Vallourec. We beat our own forecasts to achieve our strongest profitability and cash generation in nearly 15 years. Our EBITDA rose to €1,196m while our adjusted free cash flow reached €860m. And having halved our net debt to €570m, we are progressing well on our path to reach our objective of zero net debt by the end of 2025 at the latest.
This improved financial position is already starting to be recognized. Our credit rating has been upgraded three times in 18 months. And we are committed to creating the necessary conditions to return a significant, peer-leading amount of cash to shareholders, potentially starting in 2025.
We achieved all this thanks primarily to the tireless efforts of Vallourec employees. In 2023, nearly half our workforce subscribed to Vallourec Invest, our employee share plan. This is a real mark of confidence in our company and a personal source of pride for me.
Strong demand and solid execution
Vallourec’s high-performance, seamless tubular solutions for the oil and gas industry were in high demand in 2023 from our traditional customers, supported by our optimized production chain and operational excellence.
These favorable market conditions provide a positive backdrop for premiumization. We expect them to continue in 2024 as the premium tubes business remains in a multi-year upturn.
Our ambition is to continue to deliver consistent excellence to our oil and gas customers. At the same time, we are investing in the development of our New Energies business to become a key player in the low-carbon economy.
New market opportunities to be seized
In 2023, we saw a substantial uplift in our New Energies business, with an 80% increase in volumes and contracts with more than 10 new customers. Geothermal and carbon capture, utilization and storage (CCUS) projects are particularly rich seams we intend to mine. There is meaningful demand from high-value CCUS projects in North America, and geothermal is gathering momentum across all our regions.
2023 also saw the inauguration of our proprietary vertical hydrogen gas storage solution, Delphy. This breakthrough technology, built at our R&D center in Aulnoye Aymeries, France, reflects our role as a major contributor to the world’s energy transition. Not only does it prove the sheer technological prowess of our R&D, it also establishes us as an important player in hydrogen, a sector with huge growth potential. We have already received significant customer interest throughout the entire hydrogen value chain.
As the energy transition gains momentum, so too does Vallourec’s transformation. As an important part of our strategy, we aim to become exemplary in environment, social and governance topics. In 2023, we achieved a major milestone by meeting our 2025 CO2 reduction targets two years ahead of schedule. Our new ambition is even stronger: to reduce our CO2 footprint by 35% by 2035 compared to 2021.
A new industrial journey
In 2024, Vallourec is firing on all cylinders. Our 2023 results demonstrated that our strength today lies in our dual positioning: both in robust, established sectors, but also in high-potential emerging markets.
We have exceeded our own expectations in terms of performance, innovation and sustainability. We are also right on track to achieve our strategic goal to be best-in-class for profitability with a business that is resilient in all market conditions.
The plan announced in May 2022 is fully executed. It has given birth to a New Vallourec, whose journey continues to move forward. Our value creation model is based on a new core principle: to be a trusted partner and create value for all our stakeholders by providing cutting-edge steel solutions that make energy transformation a reality.
The URD 2023 provides an overview of our Group’s activities over the past year, including its financial and operating performance, as well as its outlook for the future. It also contains a detailed annual financial report. Specifically, the document presents a Group profile, followed by a detailed section on the company.
This section highlights the Group’s history and the birth of the new Vallourec, its strategic vision, its values, its organization, its activities with a focus on innovation and R&D, and the highlights of 2023. Additionally, a chapter is dedicated to environmental, social, and societal commitments, as well as business ethics and compliance. Information on risk management, corporate governance, share capital, and assets is also included.
