DGAP-News: TMK Announces 2Q 2013 and 1H 2013 IFRS Results
ID: 291074
(firmenpresse) - EquityStory.RS, LLC-News: OAO TMK / Key word(s): Miscellaneous
TMK Announces 2Q 2013 and 1H 2013 IFRS Results
27.08.2013 / 10:18
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TMK ANNOUNCES 2Q 2013 AND 1H 2013 IFRS RESULTS
The following contains forward looking statements concerning future events.
These statements are based on current information and assumptions of TMK
management concerning known and unknown risks and uncertainties.
OAO TMK ('TMK' or 'the Company'), one of the world's leading producers of
tubular products for the oil and gas industry, announces today its interim
consolidated IFRS financial results for the six months ending June 30,
2013.
Summary 2Q 2013 and 1H 2013 Results
(In millions of U.S.$, unless stated otherwise)
2Q 1Q Chang- 1H 1H Chang-Note: Certain monetary amounts, percentages and other figures included in
2013 2013 e, % 2013 2012 e, %
Sales volumes, thousand 1,117 1,058 6% 2,175 2,107 3%
tonnes
Revenue 1,649 1,725 -4% 3,374 3,439 -2%
Gross profit 355 369 -4% 724 801 -10%
Income before tax 61 112 -45% 173 257 -33%
Net income 40 85 -53% 125 182 -31%
Earnings per GDR(1), basic, 0.20 0.40 -50% 0.56 0.84 -33%
U.S.$
Adjusted EBITDA(2) 250 273 -8% 523 575 -9%
Adjusted EBITDA margin, % 15% 16% 15% 17%
this press release are subject to rounding adjustments. Totals therefore do
not always add up to exact arithmetic sums.
(1)One GDR represents four ordinary shares
(2)Adjusted EBITDA is determined as profit/(loss) for the period excluding
finance costs and finance income, income tax (benefit)/expense,
depreciation and amortization, foreign exchange (gain)/loss,
impairment/(reversal of impairment) of non-current assets, movements in
allowances and provisions (except for provision for bonuses), (gain)/loss
on disposal of property, plant and equipment, (gain)/loss on changes in
fair value of financial instruments, share of (profit)/loss of associates
and other non-cash items.
In the first quarter of 2013, management amended its definition of Adjusted
EBITDA. For the updated methodology please refer to the Financial
Statements for the three-months period ended March 31, 2013.
2Q 2013 Highlights
Sales
Sales (thousand tonnes) 2Q 2013 1Q 2013 Change,- Total pipe sales increased by 6% quarter-on-quarter to 1,117 thousand
%
Seamless 645 625 3%
Welded 472 433 9%
Total 1,117 1,058 6%
tonnes, mainly due to an increase in OCTG and large-diameter (LD) pipe
sales.
- Seamless pipe sales increased by 3% compared to the prior quarter and
amounted to 645 thousand tonnes. Seamless OCTG pipe volumes increased
by 10% quarter-on-quarter on the back of a strong drilling activity in
Russia.
- Welded pipe sales grew by 9% from the prior quarter to 472 thousand
tonnes. Welded OCTG and LD pipe sales increased by 14% and 8%
respectively.
Financials
- Revenue for the second quarter was $1,649 million, a decrease of 4%
over the first quarter of 2013, mainly due to an unfavorable sales mix
mostly in the Russian division, weaker pricing in all other markets
except the Russian one and a negative effect of currency translation.
Sales of seamless pipe, the core business of the Company, generated 62%
of total revenue.
- Adjusted EBITDA decreased by 8% quarter-on-quarter to $250 million due
to an unfavorable sales mix. Adjusted EBITDA margin was 15%.
- Net income was $40 million for the second quarter, as compared to $85
million in the first quarter of 2013, being negatively impacted by a
$40 million foreign exchange loss in the second quarter of 2013. Net
income margin was 2% for the second quarter of 2013.
- As of June 30, 2013, total debt decreased to $3,769 million compared to
$3,849 million as of March 31, 2013, mainly due to the Rouble's
depreciation against the U.S. dollar. Net repayment of the debt
amounted to $36 million for the quarter. TMK's weighted average nominal
interest rate decreased to 6.67% as of June 30, 2013 from 7.02% as of
March 31, 2013.
- Net debt decreased by $95 million in the second quarter of 2013 to
$3,632 million as of June 30, 2013, while the Net Debt-to-EBITDA
ratio(3) was 3.7x.
(3)Net Debt-to-EBITDA ratio is defined as Net Debt at the end of the given
reporting date divided by the Adjusted EBITDA for the 12 months immediately
preceding the given reporting date.
1H 2013 Highlights
Sales
Sales (thousand tonnes) 1H 2013 1H 2012 Change,- Total pipe sales grew by 3% to 2,175 thousand tonnes compared to the
%
Seamless 1,271 1,273 -
Welded 905 834 8%
Total 2,175 2,107 3%
first half of 2012, mainly due to an increase in line and LD pipe
volumes.
- Seamless pipe sales remained almost flat compared to the first half of
2012 and amounted to 1,271 thousand tonnes. Seamless OCTG pipe volumes
slightly decreased by 1% year-on-year.
- Welded pipe sales increased by 8% year-on-year to 905 thousand tonnes.
Welded OCTG and line pipe sales increased by 3% and 9% respectively,
whereas LD pipe sales grew by 35%.
Financials
- Revenue decreased by 2% year-on-year to $3,374 million mainly due to
weaker results of the American and European divisions. Sales of
seamless pipe, the core business of the Company, generated 63% of total
revenue.
- Adjusted EBITDA decreased by 9% year-on-year to $523 million negatively
affected by weaker pricing and an unfavorable sales mix in the American
and European divisions. Adjusted EBITDA margin amounted to 15% for the
first six months of 2013.
- Net income was $125 million for the first half of 2013 as compared to
$182 million for the first half of 2012, being negatively impacted by a
$44 million foreign exchange loss versus a $5 million gain in the first
half of 2012. Net income adjusted for the gain/(loss) on changes in
fair value of the derivative instrument(4) amounted to $120 million;
adjusted net income margin was 4% for the first half of 2013.
- As of June 30, 2013, total debt decreased by $116 million to $3,769
million compared to $3,885 million as of December 31, 2012 mainly due
to the Rouble's depreciation against the U.S. dollar. Net repayment of
the debt amounted to $22 million for the first half of 2013. TMK's
weighted average nominal interest rate decreased by 32 basis points to
6.67% as of June 30, 2013 compared to December 31, 2012.
- Net debt decreased by $24 million in the first half of 2013 and
amounted to $3,632 million as of June 30, 2013. The Net Debt-to-EBITDA
ratio was 3.7x.
(4)For the purposes of disclosure of the management's position in respect
of the treatment of the conversion option in the press release, net income
has been adjusted for the gain/(loss) on changes in fair value of the
derivative financial instruments.
Recent Developments
- In April 2013,???completed a placement of $500 million Eurobonds
maturing in 2020 with a coupon of 6.75% p.a., payable semi-annually.
The Eurobonds are listed on the Irish Stock Exchange.
- In April 2013, TMK signed an agreement with the Skolkovo Fund (the
'Fund') to open its research and development facility in the Skolkovo
Innovation Centre. The TMK R&D Centre will focus on developing
efficient technologies in the areas of oil and gas exploration and
production, transportation of hydrocarbons, and finding new solutions
to improve energy efficiency in the iron and steel industry. The Centre
is expected to reach the designed capacity in 2015.
- In June 2013, TMK and Gazprom Neft approved a program for scientific
and technical cooperation for 2013-2015. The program provides for
development of new types of casing, tubing and line pipe with improved
performance characteristics as well as for provision of technical
support and supervision.
- In June 2013, TMK Oilfield Services division launched an inner coating
line at one of its production facilities in Russia with an annual
capacity of 32,000 tonnes of pipe with a diameter of 73-168 mm.
- In August 2013, TMK supplied tubing with premium connections TMK FMT
and provided related services for the hydraulic fracturing project at
the Davydovskoye oilfield operated by Orenburgneft, a Rosneft
subsidiary.
2Q and 1H 2013 Segment Results
(In millions of U.S.$, unless stated otherwise)
2Q 1Q Chang- 1H 1H Chang-Russia
2013 2013 e, % 2013 2012 e, %
Sales volumes (thousand
tonnes)
Russia 820 786 4% 1,606 1,537 5%
Americas 255 228 12% 483 478 1%
Europe 42 44 -5% 86 92 -7%
Revenue
Russia 1,164 1,277 -9% 2,440 2,370 3%
Americas 413 369 12% 782 887 -12%
Europe 72 79 -9% 151 182 -17%
Gross Profit
Russia 290 321 -10% 612 566 8%
Americas 50 36 37% 86 188 -54%
Europe 14 12 18% 26 47 -44%
Adjusted EBITDA
Russia 208 247 -16% 455 386 18%
Americas 33 20 65% 53 156 -66%
Europe 9 6 48% 15 33 -56%
2Q 2013 Highlights
In the second quarter of 2013, revenue decreased by 9% to $1,164 million
from the prior quarter mainly due to an unfavorable sales mix in seamless
and welded businesses and a negative effect of currency translation.
Gross profit for the second quarter of 2013 declined by 10%
quarter-on-quarter to $290 million largely due to an unfavorable sales mix,
while gross profit margin remained flat compared to the prior quarter and
amounted to 25%.
Adjusted EBITDA for the second quarter of 2013 declined by 16% from the
prior quarter to $208 million due to lower gross profit and higher
operational expenses. Adjusted EBITDA margin decreased to 18% in the second
quarter of 2013 from 19% in the prior quarter of 2013.
1H 2013 Highlights
For the first half of 2013, revenue increased by 3% to $2,440 million
mainly due to the higher LD pipe volumes, better pricing and product mix in
seamless pipe sales. The growth in revenue was partially offset by the
negative effect of currency translation.
Gross profit for the first half of2013 increased by 8% year-on-year to
$612 million, mainly driven by the improved sales mix of seamless pipe and
lower raw materials costs. Gross profit margin improved to 25% for the
first half of 2013 from 24% from the first half of 2012.
For the first half of 2013, adjusted EBITDA increased by 18% year-on-year
to $455 million following a growth of gross profit and a decrease of
commercial expenses. Adjusted EBITDA margin improved to 19% for the first
half of 2013, from 16% for the first half of 2012.
Americas
2Q 2013 Highlights
In the second quarter of 2013, revenue increased by 12% from the prior
quarter to $413 million, primarily driven by higher volumes, particularly
of welded and seamless OCTG pipe.
Gross profit for the second quarter of 2013 increased by 37%
quarter-on-quarter to $50 million mostly due to a favorable sales mix of
welded pipe and higher volumes. Gross profit margin improved to 12% in the
second quarter of 2013 from 10% in the first quarter of 2013.
In the second quarter of 2013, adjusted EBITDA grew by 65% to $33 million
mainly as a result of higher gross profit. Adjusted EBITDA margin improved
to 8% in the second quarter of 2013, from 5% in the first quarter of 2013.
1H 2013 Highlights
For the first half of 2013, revenue decreased by 12% year-on-year to $782
million mainly due to the deterioration of the pricing environment in the
U.S. following an increase in import volumes and a decline in rig count.
Gross profit for the first half of 2013 declined by 54% year-on-year to $86
million primarily due to significantly weaker pricing in welded and
seamless businesses, not fully offset by lower raw materials prices. Gross
profit margin decreased to 11% for the first half of 2013 from 21% for the
first half of 2012.
Adjusted EBITDA for the first half of 2013 declined by 66% year-on-year to
$53 million due to lower gross profit. Adjusted EBITDA margin fell to 7%
for the first half of 2013, from 18% for the first half of 2012.
Europe
2Q 2013 Highlights
In the second quarter of 2013, revenue decreased by 9% from the prior
quarter to $72 million largely due to lower sales of steel billets and
seamless pipe.
Gross profit for the second quarter of 2013 increased by 18%
quarter-on-quarter to $14 million due to higher share of seamless pipe in
total volumes and a favorable product mix of steel billets sales. Gross
profit margin improved to 20% in the second quarter of 2013 from 15% in the
first quarter of 2013.
Adjusted EBITDA in the second quarter of 2013 grew by 48%
quarter-on-quarter to $9 million mostly due to higher gross profit.
Adjusted EBITDA margin in the second quarter of 2013 improved to 12%
against 7% in the prior quarter.
1H 2013 Highlights
For the first half of 2013, revenue decreased by 17% year-on-year to $151
million as a result of a weaker pricing, an unfavorable sales mix and lower
volumes.
Gross profit for the first half of 2013 declined by 44% year-on-year to $26
million as falling average selling prices of pipe products outpaced falling
scrap prices. Gross profit margin decreased to 17% for the first half of
2013 from 26% for the first half of 2012.
Adjusted EBITDA for the first half of 2013 fell by 56% year-on-year to $15
million as a result of the gross profit decline. Adjusted EBITDA margin for
the first half of 2013 decreased to 10% from 18% for the first half of
2012.
2Q and 1H 2013 Market Conditions
Russia
In the second quarter of 2013, the Russian pipe market grew by 4% from the
prior quarter mainly as a result of an increased demand for seamless and
welded industrial pipe and LD pipe. For the first six months of 2013, the
Russian pipe market increased by 9% year-on-year largely due to improved
demand for oil and gas pipe grades supported by a high level of drilling
activity.
Demand for TMK's core products, seamless OCTG and line pipe, was strong for
the first six months of 2013 and increased by 32% and 14%, respectively,
compared to the first half of 2012, while in the second quarter of 2013
there was a decline from the prior quarter due to seasonal factors.
The LD pipe market in Russia improved by 4% quarter-on-quarter and by 5%
year-on-year, driven by the construction of the Russian onshore section of
the South Stream pipeline and construction of several oil pipelines by the
Russian oil majors.
In the first half of 2013, the industrial seamless pipe market in Russia
declined by 11% year-on-year, while the welded industrial pipe market grew
by 4% in the same period impacted by growing construction activity in
Russia. In the second quarter of 2013, seamless and welded industrial pipe
market increased by 16% and 13%, respectively, compared to the prior
quarter.
Americas
The Baker Hughes rig count averaged 1,761 rigs in the second quarter of
2013 compared to 1,758 in the first quarter of 2013. Crude prices supported
the addition of 65 oil directed rigs, up 5% from the first quarter of 2013
and up 2% year-on-year. The oil rig count accounted for 79% of the active
drilling rigs, up 4% quarter-on-quarter. WTI crude prices remained stable
during the second quarter, but natural gas prices increased by 15% from the
prior quarter to average $4.01/MMbtu. Withdrawals of natural gas from
storage ceased at the end of April and prices of natural gas are expected
to soften until the winter season returns in the fourth quarter. OCTG
consumption, according to Preston Pipe and Tube, was relatively unchanged
compared to the first quarter of 2013, reflecting the stable rig count.
However, OCTG shipments increased by 6% resulting in an increase in month's
supply of inventory. Industrial pipe shipments were relatively unchanged.
Competition against imports and building inventory in the OCTG market
caused continuous downward pressure on prices. According to Pipe Logix,
both the average composite OCTG seamless and welded prices were down 1 %
and 2%, respectively in the second quarter of 2013 compared to the first
quarter of 2013. Price competition from imports in other products also had
similar effect.
Europe
Throughout the first half of 2013, the European market environment remained
challenging. End-users continued to focus on spot orders anticipating more
favorable payment terms. Customers preferred to keep inventories at a
minimum level for their ongoing needs creating additional pressure on
prices and volumes. The shrinking number of active projects coupled with
investor pessimism resulted in lower consumption of tubular goods.
Moreover, lower exports by the European companies led to an increased
competition between pipe producers pushing the prices further down.
2H and 2013 Outlook
Based on the activities observed through August, TMK reiterates its outlook
for the full-year 2013 and, despite some usual slowdown in the third
quarter, expects the financial performance for 2013 to approximately
maintain at the level of full-year 2012 results.
2Q / 1H 2013 IFRS Financial Statements are available at:
http://www.tmk-group.com/files/IFRS_TMK_6m2013_USD.pdf
2Q / 1H 2013 IFRS Results Conference Call:
TMK's management will hold a conference call to present the second quarter
/ first half 2013 financial results today, August 27, 2013, at 09:00 New
York / 14:00 London / 17:00 Moscow.
To join the conference call please register on-line
https://eventreg1.conferencing.com/webportal3/reg.html?Acc=097741&Conf=188
299
or dial:
International call-in Number: +44 20 7162 0025
US call-in Number: +1 334 323 6201
Conference ID: 935985
(We recommend that participants register on-line to avoid waiting in a
queue or to start dialing in 5-10 minutes prior to ensure a timely start to
the conference call)
The conference call replay will be available through August 30, 2013:
UK replay number: +44 20 7031 4064
US toll replay number: +1 954 334 0342
Replay access code: 935985
Capital Markets Day in October 2013:
TMK will be hosting its first Capital Markets Day for investors and
analysts in New York on Tuesday, October 8, 2013 and London on Thursday,
October 10, 2013.
Both events will consist of a series of presentations from TMK's senior
management and Board members to provide a valuablefirst-hand insight into
its business.
The New York presentations and lunch will be held at Bank of New York
Mellon's Offices at 101 Barclay Street, New York, NY 10286 at 12:00.
The London presentations and lunch will be held at The London Stock
Exchange at 10 Paternoster Square, London, EC4M 7LS at 12.30.
Attendance is by registration only.
Please, register here:
http://irpages2.equitystory.com/cgi-bin/show.ssp?companyName=tmk&language=
English&id=2000
***
For further information regarding TMK please visit www.tmk-group.com or
download the YourTube iPad application from the App Store
https://itunes.apple.com/ru/app/yourtube/id516074932?mt=8&ls=1
or contact:
TMK IR Department:
Marina Badudina
Tel: +7 (495) 775-7600
IR(at)tmk-group.com
TMK PR Department:
Ilya Zhitomirsky
Tel: +7 (495) 775-7600
PR(at)tmk-group.com
***
TMK (www.tmk-group.com)
TMK (LSE: TMKS) is a leading global manufacturer and supplier of steel
pipes for the oil and gas industry, operating 28 production sites in the
United States, Russia, Canada, Romania, Oman, UAE, and Kazakhstan and two
R&D centers in Russia and the USA. In 2012, TMK's pipe shipments totaled
4.22 million tonnes. The largest share of TMK's sales belongs to high
margin oil country tubular goods (OCTG), shipped to customers in over 80
countries. TMK delivers its products along with an extensive package of
services in heat treating, protective coating, premium connections
threading, warehousing and pipe repairing.
TMK's securities are listed on the London Stock Exchange, the OTCQX
International Premier trading platform in the U.S. and on the Moscow
Exchange MICEX-RTS.
TMK's production assets structure:
Russian division: American division:End of Corporate News
Volzhsky Pipe Plant; 12 plants of TMK IPSCO;
Seversky Tube Works; OFS International LLC.
Taganrog Metallurgical European division:
Works; TMK-ARTROM;
Sinarsky Pipe Plant; TMK-RESITA.
TMK-CPW; Middle East Division:
TMK-Kaztrubprom; TMK GIPI (Oman);
TMK-INOX; Threading&Mechanical Key Premium LLC (Abu-
TMK-Premium Service; Dhabi).
TMK Oilfield Services.
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Language: English
Company: OAO TMK
40/2a Pokrovka
105062 Moscow
Russia
Phone: +7 495 775-7600
Fax: +7 495 775-7601
E-mail: tmk(at)tmk-group.com
Internet: tmk-group.com
ISIN: US87260R2013
End of News EquityStory.RS, LLC News-Service
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