Nicolas Dmitrieff – Chairman & Philippe Demigné – Member of the Management Board, CNIM – France
The chairman and member of the management board of CNIM, a supplier of turnkey industrial solutions, discuss the potential of the oil and gas industry for the company.
Although CNIM was founded in 1856, the company has significantly evolved over the years. How would you define CNIM’s core business today?
CNIM is mainly involved in the waste to energy and renewable energies fields, and also in the defense sector. I insist on renewable energies because they have been an important focus, particularly waste-to-energy and more recently, since the last ten years, solar energy and biomass. We are proud to say that we are the only ones in our sector that never went bankrupt in the waste to energy business. Indeed, as a family business, we can implement ambitious but realistic long term strategies. We are committed to executing lasting strategies, and our ownership structure hampers pressure from the stock market and shareholders. We can really enjoy a long term perspective, instead of just focusing on quarterly results.
You took up the torch in 2009. What was your greatest challenge since your appointment? And what were your first idiosyncratic decisions?
When I joined the company, we were facing difficulties in the escalators business. After thoroughly examining its viability, we decided to retreat from this sector. One of my main ambitions since 2009 is to further internationalize the company. We have allocated tremendous efforts to address the sluggish economic situation in France and we now draw 70% of our revenues abroad. In the last 10 years, CNIM reinforced its strong and diversified technological base.
CNIM boasts excellent recent results. In 2014 you achieved a turnover of EUR 790 million (approximately USD 887 million) which illustrates a steady growth since 2011. What are your main growth drivers?
Exports constitute by far the main driver of our growth. Although CNIM is capable of constructing any engineering structure, when we conduct an activity, we always assess operations, maintenance and service opportunities. In all sectors we address, we therefore focus on maximizing profitability. Diversifying our portfolio to incorporate services brings recurrent revenues. Again, as a family owned company, we are not obsessed with turnover or growth. In waste to energy, contracts usually amount from USD 100 million to USD 400 million, which can immediately impact our turnover. Overall, we focus on efficiency, technology and building the critical size for every business segment we encompass.
The French public sector is actively pursuing spending cuts in its defense budget, while the French nuclear industry is put into question. Which strategies will you be implementing to ensure long-term sustainable growth and how will you advance in your traditional markets? Does oil and gas have the potential to become a significant component of your diversification strategy and which synergies can be further encouraged with your other businesses?
Indeed, the French public sector is reducing investments and initiating fewer projects, which has encouraged us to direct our attention towards the oil and gas industry. CNIM comprises a subsidiary called Bertin, focused on innovation for the energy sector, including oil and gas, nuclear and industry. This branch accounts for 15 percent of CNIM’s turnover today. Oil and gas symbolizes our diversification strategy. It is very international and corresponds to our objective of developing beyond our borders and integrate vibrant markets.
There are many similarities between the nuclear and oil and gas industries. In both sectors, we have to comply with stringent manufacturing constraints and challenging environments. We have therefore capitalized on the overlap between both industries. Actually many contractors were very impressed by our achievements in the nuclear and defense industry and therefore trusted us to carry out their projects. We are qualified, competitive and committed to manufacture for the oil & gas industry as well.
Overall, the abundant presence of performing companies has pushed us to bolster our competitiveness. Our wide scope of services enables us to weather cycles and fluctuations by smoothly rebalancing our activities according to the economic context. We are also entering the market in a difficult environment, which has compelled us to immediately adapt our offer to the ever-more demanding requirements of the industry. We already encompass a wide range of services within the oil and gas value chain, and intend to consolidate our presence in each segment.
I would also like to highlight that in addition to products and solutions, we also sell our expertise. Bertin for example delivers expertise to the Yamal LNG project, related to modeling the de-icing of the harbor after the passage of LNG ships. This complex expertise is actively sought by the oil and gas industry and stems from the know-how we acquired in aerospace. We also provided management-consulting services to CGG to help them reorganize their R&D process in the past.
Lastly, we also specialize in reliability, maintenance and safety studies for the oil and gas industry. Our objective is to bolster our sales in expertise and promote high-end equipment designed and manufactured by Bertin. We have recently developed an optical surveillance solution, which allows our clients to monitor gas leakage from a great distance. This unique solution has led to very promising prospects and contracts from the oil majors, notably in the Middle East. We have invested considerable funds to help this state-of-the art solution develop the critical size to meet the demands of the industry. This solution actually emanates from our research efforts in the defense industry.
As a newcomer in the oil and gas industry, how do you raise awareness of CNIM’s scope of solutions?
When we approach oil and gas companies, we simply express how our solutions address the safety and/or the cost-effectiveness of their platforms. Last year, we gained a contract with Petrofac for the supply of heat pumps enabling the recovery of wasted energy. Although Petrofac was not aware of our capabilities before, the attractiveness of our solutions led them to choose us. And we are confident this year to obtain a major contract for the supply of innovative optical monitoring systems for the surveillance of platforms. We now need to capitalize on this kind of success to deploy our distinctive solutions in the oil and gas market. We have the capability to produce research and development but also rely our own manufacturing facilities in France, Morocco and China.
Where are your most promising prospects for international expansion?
CNIM covers technical expertise, equipment and manufacturing. In relation to expertise, it is very difficult to sell outside of France. In regards to equipment, we are really involved in a global business. We sell our technologies in Brazil, China and the Middle East but have no preferred market overall. We have in this regard dispatched professionals abroad to strengthen our positions. We have subsidiaries covering specific segments in certain countries, but our strategy for the future is to foster greater cross segment coordination and synergies. For instance, our historical escalators activity in Singapore has enabled us to dispatch a Bertin team to promote defense, nuclear and oil and gas solutions and services.