2014 Achievements and Outlook Philippe Crouzet Chairman of the Management Board
2014 2014 was marked by major changes initiated in several of Vallourecs markets In this difficult context, Vallourec has achieved two of its three targets Moderate increase in sales and positive free cash flow EBITDA penalized…
Outlook: fast adaptation to a new environment Three priorities: Short-term adaptation to the sharp drop in activity Implementation of Valens, the Groups two-year competitiveness plan Reinforced discipline in terms of capital…
Financial results Olivier Mallet Member of the Management Board, Chief Financial Officer
2014: resilient financial performance and strong operational achievements Sales 5,701m +2.2% Record year in Oil & Gas sales (+3.9% at constant exchange rates) Solid performance in North America EBITDA(1) & 855m EBITDA in line with…
Sales evolution in 2014 In millions of , comparison year-on-year +2.2% +7.6% -1.7% -3.7% 5,701 5,578 2013 Volume Currency Price/Mix 2014 Translation Shareholders Meeting 2015 /8
Sales breakdown by region 19% 19% 26% 31% 7% 2013 9% 2014 5,578m 5,701m 26% 22% 16% 25% Europe North South Asia & Rest of America America Middle East the world Expressed in% of consolidated sales Shareholders…
Our markets in 2014 Industry & Other -2.1% Oil & Gas +3.5% Europe: competitive EAMEA: exceptional backlog environment generated in 2013 Brazil: USA: sales record weak macroeconomic 1,007 Brazil: impacted by environment Petrobras…
Net income evolution in 2014 In millions of , comparison year-on-year 262 -65 +26 -9 239 -1,104 -4 +29 (924) -59 (3) 2013 EBITDA D&A & Financial Income NCI Adjusted Impairment Related DTA 2014 Net Other(1) result tax…
Rebasing our assets to their fair economic value Revised prospects for the end-markets served by a number of our assets One-off impact, no effect on cash Goodwill Assets Total In millions of impairment impairment impairment…
Strong free cash flow and Net debt reduction In millions of Net Debt as of Net Debt as of Dec. 31, 2013 Dec. 31, 2014 Cash flow from Change in Gross capital Net operating activities WCR(1) Net debt = expenditure debt = 32.7%…
Capital expenditure In millions of 909 873 803 677 567 529 388 2008 2009 2010 2011 2012 2013 2014 Shareholders Meeting 2015 / 14
Proposed dividend for 2014 2.1 1.9 1.8 Option period: 0.81 0.81 4-17 June 2015 0.69 Payment date: 25 June 2015 (1) 2012 2013 2014 Earning per share Dividend per share Dividend payable in cash or in shares at…
Recent share price evolution Share price from 1st January 2014 to 25 May 2015 50 45 40 35 30 25 20 15 1 Jan. 2014 26 May 2015 Vallourec SBF 120 rebased Brent rebased Shareholders Meeting 2015 / 17
2015: severe impact expected due to oil market evolution Brent / WTI price evolution(1) 120 Brent below 100 110 OPEP 100 meeting 90 /bbl 80 1/1/2015 70 60 Brent 50 WTI 40 International rig count(2) US rig…
Facing severe market conditions in 2015 USA Europe + - Weakening of the Euro - Reduced end-users consumption Destocking from distributors - Very competitive environment in Power Generation and Industry & Other OCTG sales are…
All short-term flexibility levers activated to adapt variable costs to the activity drop 2015 Temporary shutdowns Approx. Reduction Anticipated maintenance of working 15% Reduction of overtime hours in the mills Reduction in…
Q1 2015 financial results significantly affected by severe drop in Oil & Gas markets In millions of EBITDA(1) & Sales Free cash flow(3) EBITDA margin(2) 1,271 196 36 1,052 15.4% -10.4pt 53 5,0% (30) Q1 2014 Q1 2015 Q1…
Vallourec strengthens its competitiveness in a changing environment Philippe Crouzet Chairman of the Management Board
Oil & Gas market: strong growth outlook Worldwide oil production 2014-20 Global accumulated production needs Breakdown of changes in mb/d(1) Worldwide oil Call on Worldwide oil production RoW (2) crude oil. production 2014 USA…
A market undergoing major changes Production-Weighted Average Upstream ROCE* Upstream ROCE Brent /barrel Due to a decreasing 20% - 25% profitability, our Retour 20% - 25% customers business 15% - 20% model is changing 15% -…
Vallourec, global strengths and local assets Our strengths: extended offer, technology, innovation, proximity USA Our asset: 1 supplier of premium OCTG EAMEA Our assets: Cutting-edge technology Brazil Local finishing units…
A confirmed long-term strategy More More More premium local competitive Shareholders Meeting 2015 / 26
A strategy supported by an ambitious competitiveness plan Three challenges to overcome: 2015 2016 2017 2018 2019 2020 Valens COMPETITIVENESS IndEx EXCELLENCE Innovation / Corporate Social Responsibility DIFFERENCE…
Strengthen our fundamentals Jean-Pierre Michel Member of the Management Board, Chief Operating Officer
Safety Achieve the highest standards 10 9 Lost time injuries divided by 7 since 2008, but 2 fatalities in 2014 8 7 6 5 4 3 2 1 0 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 (1) (2) LTIR…
Quality Be in line with our premium positioning Total quality: First factor of differentiation Key factor of competitiveness Our goals: Sharp reduction in : The number of claims, Non-quality costs Involvement of all from…
Make the difference 2015 2016 2017 2018 2019 2020 Valens COMPETITIVENESS Industrial excellence EXCELLENCE Innovation / Corporate social responsibility DIFFERENCE Shareholders Meeting 2015 / 32
Innovating at all levels today to build tomorrows business OUR Maintain our technological leadership TARGETS Create even more value for our customers Streamline our R&D portfolio Sharpen project management KEY ACTIONS Build…
Innovation on the field VAM 21TM has VAM is Thanks to VAM fully achieved the synonymous with connections which intended quality. Quality we have been using performance, delivery, quality for over 13 years, with regards to people,…
Responsibility and commitment Maintain long-term relationships with our stakeholders OUR TARGETS Use our resources reasonably Low-carbon production KEY Smart consumption ACTIONS Support community development around our…
Vallourec teams, the energy that drives our performance Nurture employee expertise OUR TARGETS Promote diversity Retain teams 514,000 hours of training in 2014 Gender equality in the workplace KEY ACTIONS Management: female…
Meeting the challenge of competitiveness Philippe Crouzet Chairman of the Management Board
Structurally reduce our cost base 2-year cost reduction target (1): 350 million reduction 2% on 2014 cost base 10% In million 350 30 of which of which 50% 60% variable variable costs 240 costs 350 OUR GOALS 80 Total…
Optimize our cash optimization Cash allocation optimization: Capex 350 million/year In million 450 388 350 Initial target 2014 2015 Initial target announced 2014 capex 2015 & beyond announced capex & beyond real…
Cost reduction targets by expense category Covering the full scope of the Group (all divisions and regions) MANUFACTURING SOURCING SG&A Cost reduction targets (*) - 4 % to expressed as - 17 % - 12 % - 20 % % of 2013 Mill…
Measures to streamline organization in Europe and worldwide Measures under consideration Improve productivity in all our industrial sites Adapt our European tube production capacity to market trends Search for a majority shareholder…
Ready to return to profitable growth Opportunities in the Energy market remain strong A robust competitiveness plan Difficult but necessary measures We have the necessary fundamentals and the appropriate plan to: Adapt and…
Our ambition Providing total confidence Vallourec, to our customers in delivering world the benchmark solutions for the energy industry leader and other selected demanding applications. Committed to the success of our…
Shareholders Meeting Vivienne Cox Chairman of the Supervisory Board / 45
Vallourec, a company with a Supervisory Board and a Management Board Composition of the Supervisory Board after the Shareholders Meeting subject to the Shareholders approval Chairman Pilar Cdric Pascale Vivienne Cox Albiac Murillo…
The Supervisory Board policy Limited number ensuring fluid exchange of information Limitation of the by-laws (12 members) Selection of competent and involved members Varied profiles: managerial duties, specific expertises Changes…
Activity of Governance bodies in 2014 10 meetings Supervisory Board Average duration of meetings: 3 hours 30 minutes Average attendance rate: 95% Finance and Audit 6 meetings Committee Attendance rate: 100% Appointements,…
Governance Supervisory Board Highlights Supervisory Boards self-assessment One specific meeting of the Supervisory Board dedicated to strategy Compensation of Management Boards members / policy for strengthening employees…
Shareholders Meeting Michel de Fabiani, Chairman of the Appointments, Compensation and Governance Committee / 50
The Appointments, Compensation and Governance Committee as of December 31, 2014 Patrick Boissier Pascale Michel de Anne-Marie Idrac Alexandra Independent Chargrasse Fabiani Independent Schaapveld member Employee independent member…
A significant activity for the Committee in 2014 Governance Supervisory Board: Governance review Independence and date of end term for Supervisory Board Members Supervisory Board Evaluation Management Board compensation: Ran the…
Vallourec compensation policy, a strong link with performance A compensation policy in line with market practices and linked to Group results and individual performance Involving employees in the companys medium and long term…
Management Board Compensation Demanding, Well-balanced and competitive The same performance criteria for Management Board members and Senior managers Balanced remuneration in line with market practices: Fixed / Variable Short…
A remuneration balanced in its three components The three main compensation components at target: Philippe Crouzet Jean Pierre Michel Olivier Mallet 27% 28% 28% 36% 42% 41% 31% 31% 36% Fixed remuneration Variable…
Reasonable fixed remuneration in line with role evolutions A fixed remuneration with a limited evolution on a 5 years period : Reminder Evolution Years 2013 2014 2009 between 2009 and 2014 P. Crouzet 760,000 760 000 798,000 +5%…
In a difficult context, the variable part reflects the evolution of the Groups results and overall performance The 2014 variable remuneration was established with regard to the 2014 budget targets : Criteria P. Crouzet JP .Michel…
Long-term instruments, two different tools for an alignment with shareholders interests The absolute and relative performance criteria of the Group integrated into long term remuneration (performance shares and stock options) : ROCE…
Long Term Instruments: Performance shares Performance shares Allocation years 2009 2010 2011 2012 2013 2014 Vesting years 2011 2012 2013 2014 2016 2017 Number of shares allocated to the 17,000 17,000 17,068 17,068 17,068 29,700…
Long Term Instruments: Stock options Stock options years 2009 2010 2011 2012 2013 2014 Maximum number of options allocated to the 80,000 60,000 60,000 0 60,000 35,100 Management Board Number and % of options vested out of maximum…
Statutory Auditors reports Fiscal year ended 31 December 2014
Statutory Auditors reports Reports on the resolutions submitted to your approbation Report on the Statutory financial statements (1st resolution) Report on the Consolidated financial statements (2nd resolution) Report on the…
Reports on the Statutory and Consolidated financial statements (resolutions to be approved) Opinions on the financial statements: unqualified opinions Report on the Statutory financial statements (1st resolution) The justification of…
Report on the transactions on share capital (resolutions to be approved) Your Management Board recommends that you confer on it the authority to decide: The issue of shares and/or securities giving access to the capital of the Company…
Report on regulated agreements and commitments (no resolution to be approved) Agreements and commitments authorized during the year We have not been advised of any agreement or commitment authorized during the year Agreements and…
Other reports Report on the report prepared by the Chairman of the Supervisory Board on internal control and risk management procedures (no resolution to be approved) We have reviewed the internal control and risk management procedures…
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