Valleteau de Moulliac – Chairman & CEO, Principia – France
The current chairman and CEO of Principia, an independent marine engineering company that provides innovative solutions to the Oil & Gas industry, discusses his company’s recent developments and prospects for international expansion, particularly in Malaysia and Asia.
You have been chairman & CEO of Principia since 2008. Could you please tell us how you joined this company and what has been your path so far?
I originally started my professional career working for Areva and Principia was at some stage a subsidiary of Areva. I have personally been involved with Principia since 1993, when I was hired as financial director. As I have a business background, my main role was to instill dynamism in the company and strategically reorganize its activities. I then became chairman and CEO in 2008.
Could you please describe to our audience Principia’s activity and outline its historical milestones?
Mainly, we have served in energy sector (oil & gas, nuclear and renewables) but also we have had significant work in the naval industry. We offer top class services from expertise to the asset owners, to the conception and basic design of high value systems, and I would say that our engineering design activity constitutes our core business. Principia was founded in 1981 as an R&D company. The initial build-up was executed by engineers from a marine subsidiaries of IFP (now IFP New Energies), at a time when the government was heavily supporting R & D activities. We have progressively diversified our portfolio since then.
The second step was to move on to scientific software with the support of the public-serving CEPM (petroleum state department). We developed software in partnership with the IFP and Bureau Veritas. We then developed expertise solutions dedicated to engineering companies. Principia currently develops, distributes and markets its own engineering solutions, but this remains a relatively small department within our organization. Our main clients for our software solutions are the EPCI companies.
Our skill set is very broad and I would like to regroup them into five main areas: studies (hydrodynamic, fluid dynamic, rules calculations, structural analysis…); the development and sales of engineering, including the provision of software; monitoring and measurement engineering and the management of test/trial, training and marine engineering. Our clients include the Major OCs, EPCI companies and suppliers.
How did Principia perform in 2014? What developments have there been in recent years?
In order to properly address our 2014 performance we need to go back in history. Until 2006 we had one shareholder, Areva, which supported our nuclear activity. Before 2008, for instance, we drew a large portion of our turnover from our nuclear. Principia & Areva has decided in 2008 to let Areva take control of our nuclear branch in order to solely focus on our activities related to oil and gas, naval technologies and renewable energies. Our turnover in 2014 doesn’t therefore reflect previous results, but we are growing rapidly and are very optimistic for the future. I am pleased to announce that we doubled our workforce since we took the decision to surrender our nuclear activity.
The oil and gas majors seek your competencies: Total, Exxon, Technip, and Petrobras to name a few. How did Principia evolve to acquire such prestigious clients? What differentiates Principia from national and international competitors?
We have two types of clients. Regarding the majors, Principia’s role is to assist them by providing its competencies, independently from larger EPCI Vendors, with a more specialist focus, in whatever area they need us to study. Today, Total drives 14 perncet of our turnover. With small EPCI companies, our approach is slightly different, in that we support their activity in to the majors. This implies that Principia is sometimes directly responsible for their engineering activities. With small clients, our services encompass a wider scope of activities. Our strategy mainly focuses on consolidating our high added-value know how. We offer the most unique and qualified expertise, which is what differentiates us from competitors in the long run.
At different times in its history, Principia completed the acquisition of small French technological and engineering firms. What role have these acquisitions played in Principia’s global strategy?
Our strategic development comprises both internal and external growth. I believe that in order to penetrate a new market or develop a new product, we must acquire a local specialized company to facilitate our introduction. When Principia became involved with structural software, we required the suitable know how and therefore decided to acquire CALTEC, a small French company that specialized in the edition of steel software in the offshore sector. We initially focused on calculations and analysis, then into engineering/analysis & design for subsea asset and production facilities asset. When we decided to upgrade platform/vessel refits in our portfolio, we acquired a Danish company specialized in naval architecture naval which would later become Principia North. We continue to adopt both a collaborative and acquisition approach to gain access to larger engineering projects.
Knowing that the global plunge in oil prices has more negative repercussions on the exploration sector, what does the future hold for Principia’s activity? How is Principia adjusting to the situation?
Our oil and gas activity mainly revolves around the subsea sector. The current crisis compels EPCI companies to cut back on capex, and even postpone projects. Seismic surveys for instance are seldom being conducted. The market has slowed down, but not only due to the oil and gas sector. Major EPCI companies are suffering but have the ability to re-organize its resources appropriately. SMEs like Principia need to immediately adapt to the situation to survive. To cope with instabilities in the industry, we wish to develop new products and offer new services, to assist our clients getting through this downturn. We are currently attempting to introduce training activity into our portfolio. The goal behind our training activity is to foster local content and acquire a loyal customer base. Our ultimate objective is to erect a “Principia Academy”. We will shortly conclude a partnership in Nigeria that will set us off in the right direction. At the moment our software solutions are mainly sold to French companies and there abroad subsidiaries and we must attempt to promote them worldwide in the international marketplace.
How is Principia performing abroad? What are the future prospects for your international activity?
Our future is to develop Principia worldwide. We are already installed in Malaysia and Denmark. We currently have a well-established activity in Brunei. We recently opened a new office in Singapore. Our strategy to cope with the crisis is also to consolidate our positions in Asia, for example, we have initiated close ties with consultancy companies in Indonesia. The second area we wanted to invest is the Middle East. There is currently an interesting market for shallow waters. I am confident that our pipeline study activity which today generates almost 30% of our turnover, will appeal to oil and gas companies in the region, as will our naval architecture and structural analysis capabilities. We have very promising prospects in Vietnam. Principia is considering building an activity in China, but the process is very tedious. Our main project targets are located in Malaysia and Indonesia, which are much safer ventures, although they sometimes require government authorizations, which take time to be awarded. Our objective is to achieve more 75% of our turnover worldwide. We are very careful with the pace of our growth. We penetrate one market at a time with the help of a trusted local partner in order to build lasting business relationships. As an illustration, for a small and unknown French firm, it is rather difficult to work for Petronas without an entry point in the Malaysian Oil and Gas industry, through an established partner.
If we come back in five years and interview you, what will have changed?
Principia’s strategy is very consistent. Since 1993, we made a profit every year. My philosophy is: I prefer a turnover small grow if it entails higher profit levels. The company’s financial situation is very healthy (no debt and a good investment capacity) and I am very focused to keep it that way.