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Vallourec reports 2015, fourth quarter loss
By Kalea Hall
YOUNGSTOWN
Vallourec’s 2015 earnings were in the negative, and this year isn’t expected to get much better.
The French pipe maker for the oil and gas industry with operations in Youngstown reported a loss of $85 million in 2015, compared with earnings of $948 million reported in 2014.
The company’s revenue dropped 33.3 percent from 2014 down to $4.22 billion.
“Full-year results were severely affected by the sharp drop in high-margin oil and gas sales in the Europe, Africa, Middle East and Asia region and in North America,” said Philippe Crouzet, chairman of the management board.
Vallourec’s profits took a hit because of the fall in oil prices. The price started to drop in June 2014 when it was at $100 or more per barrel. Lately, the price has been $30 and below because of an oil over-saturation in the marketplace.
The drop led to continued cutbacks by producers and suppliers to those producers.
But the company has a plan to “reinforce its financial strength,” Crouzet said. Vallourec announced in early February that it plans to raise $1.1 billion in new capital and cut its production capacity in Europe by half. The company will close two rolling mills in France, one threading line in Germany and a heat treatment line in Scotland for a total of 1,000 job cuts.
The company expects to deliver earnings of $1.3 billion by 2020.
In 2015, there was a global staff reduction of 3,500. The company had more than 20,000 employees in 2015 in more than 20 countries.
Vallourec Star on Martin Luther King Jr. Boulevard was one of the company’s locations to see workforce cuts.
In February 2015, Vallourec Star made its first cutback for the year after leaders there decided to go on a three-week shutdown and offer voluntary layoffs for interested employees.
In July 2015, the company announced it would cut 60 to 80 jobs in August.
In October, the company announced another workforce reduction.
Vallourec Star never specified how many lost their jobs, but the city of Youngstown, which collects income-tax revenue generated from employees there, expected about 100 job losses.
Girard and Youngstown share tax revenue from Vallourec.
In 2015, Youngstown ended 2015 with the lowest income-tax and business-profit tax collections since 2009 because of an economy slowdown.
In total, the city collected $40,869,160 in income-tax revenue last year. Officials expected to receive $41 million, which was still a 4.6 percent decline from what was collected in 2014, according to a Jan. 14 Vindicator story.
The downturn in the oil and gas industry that led to a loss of jobs at Vallourec Star, Exterran, a plant that makes compressors for the oil and gas industry, and Parker Hannifin, a hydraulic gear pump plant, all affected the city’s tax revenue.