Tenaris Announces 2015 Fourth Quarter and Annual Results
The Financial and Operational Information Contained in this Press Release Is Based on Audited Consolidated Financial Statements Presented in U.S. Dollars and Prepared in Accordance With International Financial Reporting Standards as Issued by the International Accounting Standard Board and Adopted by the European Union, or IFRS
(firmenpresse) - LUXEMBOURG -- (Marketwired) -- 02/24/16 -- Tenaris S.A. (NYSE: TS) (BAE: TS) (BMV: TS) (MILAN: TEN) ("Tenaris") today announced its results for the fourth quarter and year ended December 31, 2015 with comparison to its results for the fourth quarter and year ended December 31, 2014.
(Comparison with third quarter of 2015 and fourth quarter of 2014)
Sales continue to decline sequentially affected by the ongoing decline in drilling activity and the impact of the intense competitive environment on selling prices. Our EBITDA margin, however, remained stable sequentially as cost reductions continued. Net of restructuring charges, our EBITDA margin for the fourth quarter was down 8.5% year on year and, at 18%, remains at a competitive level. Net income was affected by non-cash deferred income tax charges resulting from currency depreciations in Argentina and losses on our share of investments in non-consolidated companies.
Operating cash flow amounted to $203 million in the fourth quarter of 2015. After a dividend payment of $177 million and capital expenditures of $307 million, our net cash position at the end of the year amounted to $1.8 billion.
In 2015, our net sales declined 31% compared to 2014, affected by adverse market conditions. Sales of Tubes were down 45% in North America and 21% in the rest of the world where they were supported by our positioning in Argentina and a good level of shipments to South American pipeline projects. EBITDA, which included restructuring costs of $177 million, declined 54% year on year to $1.3 billion in 2015, with the margin affected by lower absorption of fixed costs on lower sales. In our operating income, we recorded impairment charges of $400 million on the value of our welded pipe assets in the USA, reflecting the decline in oil prices, and their impact on drilling activity and the demand outlook for welded pipe products in the regions served by these facilities. Our net result was further affected by non-cash deferred income tax charges of $131 million resulting from currency depreciation in Argentina and Mexico and a net loss of $40 million on our share of the earnings of non-consolidated companies. Net loss attributable to owners of the parent during 2015 was $80 million.
Cash flow from operations amounted to $2.2 billion for the year. After capital expenditure of $1.1 billion and dividend payments of $531 million, we had a net cash position (cash, other current investments and fixed income investments held to maturity less total borrowings) of $1.8 billion at December 31, 2015, compared with $1.3 billion at December 31, 2014.
The board of directors proposes, for the approval of the annual general shareholders' meeting to be held on May 4, 2016, the payment of an annual dividend of $0.45 per share ($0.90 per ADS), or approximately $531 million, which includes the interim dividend of $0.15 per share ($0.30 per ADS), or approximately $177 million, paid in November, 2015. If the annual dividend is approved by the shareholders, a dividend of $0.30 per share ($0.60 per ADS), or approximately $354 million will be paid on May 25, 2016, with an ex-dividend date on May 23, 2016 and record date on May 24, 2016.
As we enter 2016, oil and gas prices have fallen further and are now reaching levels which, in some areas, are close to or even below operating costs. At these levels, oil and gas companies are cutting back further on their investment plans, with a second successive year of substantial capital expenditure reductions expected in North America and the rest of the world. Drilling activity continues to decline and the US rig count has reached levels below those seen in previous downturns.
Global demand for OCTG will decline further in 2016, particularly in the United States and Canada where substantial activity reductions are expected and inventories remain high in relation to the level of consumption. In the rest of the world, demand in the Middle East will benefit from the end of last year's inventory reductions but in many other regions it will be affected by further declines in activity and inventory reductions. Absent a significant improvement in market conditions during the year, we expect global OCTG demand in 2016 to fall around 20% over the level of 2015.
Our sales in 2016 will be further affected by lower selling prices reflecting the intense competitive environment and lower shipments for South American pipeline projects. We will continue to adjust our operations in these unfavorable conditions, reducing costs and strengthening our market position in preparation for an eventual recovery. Despite the adverse market conditions we expect to maintain our EBITDA margin around the level of the fourth quarter.
Net sales of tubular products and services declined 48% year on year and 7% sequentially. The decline in sales reflects the continued decine in drilling activity and inventory adjustments, which put pressure on the price for our products. Sequentially, sales declined in North America, due to lower sales in Mexico and the Gulf of Mexico, partially offset by a seasonal increase in Canada. In South America the decline was mainly attributed to lower sales in Argentina. In Europe sales declined due to lower OCTG sales, mainly to Norway and Romania. In the Middle East and Africa, the decline was mainly due to a decline of sales in North Africa following a concentration of shipments in the previous quarter. In the Far East and Oceania, sales remained stable as there was a marginal recovery of shipments to Indonesia.
Operating income from tubular products and services decreased 99% year on year and recovered from the previous quarter loss when results included a goodwill impairment charge of $400 million on our North American business. Tubes EBITDA, which excludes impairments, amounted to $199 million in the current quarter compared to $218 million in the previous quarter and $706 million in the fourth quarter of 2014. The 9% sequential decline in Tubes EBITDA is mainly due to sales declines mostly attributed to price reductions. Tubes EBITDA margin declined slightly sequentially as the decline in prices was partially offset by costs of raw material, depreciation of currencies against the U.S. dollar and better efficiency at the mills.
Net sales of other products and services decreased 29% year on year and 23% sequentially. The sequential decline is mainly due to lower sales of energy related products, sucker rods and coiled tubing, while when compared to the fourth quarter of 2014, the main decline is on the industrial equipment business in Brazil. Despite the sequential decline in sales, operating income increased mainly reflecting an improved operating performance and margins at our industrial equipment business in Brazil.
, or SG&A, amounted to $369 million, 26.0% of net sales in the fourth quarter of 2015, compared to $382 million, 24.5% in the previous quarter and $477 million, 17.8% in the fourth quarter of 2014. Sequentially SG&A declined 3% mainly due to lower labor costs, partially offset by an increase in amortizations of $31 million, from the acceleration of the amortization of customer relationships at our welded pipe Canadian operations. Year on year, despite a 23% reduction in expenses, SG&A increased as a percentage of sales mainly due to the effect of fixed and semi fixed costs on lower sales (e.g., depreciation and amortization and others).
amounted to a loss of $3 million in the fourth quarter of 2015, compared to a loss of of $401 million in the previous quarter and a loss of $190 million in the fourth quarter of 2014. Losses in the previous quarters are associated to asset impairment charges.
amounted to a gain of $19 million in the fourth quarter of 2015, compared to a gain of $5 million in the previous quarter and a loss of $6 million in the fourth quarter of 2014.
generated a loss of $46 million in the fourth quarter of 2015, compared to loss of $5 million in the previous quarter and a gain of $29 million in the same period of 2014. Fourth quarter 2015 includes an impairment of $29 million on our direct investment in Usiminas. Apart from the Usiminas impairment result, these results were mainly derived from our equity investment in Ternium (NYSE: TX).
totalled $42 million in the fourth quarter of 2015, primarily reflecting the Argentine peso devaluation on the tax base for deferred tax calculation.
Net cash provided by operations during the fourth quarter of 2015 was $203 million, compared to $586 million in the previous quarter and $206 million in the fourth quarter of 2014. Working capital decreased by $24 million during the fourth quarter of 2015.
Capital expenditures amounted to $307 million for the fourth quarter of 2015, compared to $301 million in the previous quarter and $375 million in the fourth quarter of 2014.
During the quarter, our net cash position (cash, other current investments and fixed income investments held to maturity less total borrowings) declined by $268 million to $1.8 billion at the end of the quarter, following the payment of an interim dividend of $177 million in November 2015.
Net sales of tubular products and services decreased 33% to $6,444 million in 2015, compared to $9,582 million in 2014, reflecting a 28% decline in volumes and a 6% decrease in average selling prices. Sales were negatively affected by the adjustment in oil and gas drilling activity in response to the collapse in oil and gas prices and inventory adjustments taking place particularly in the Middle East and Africa and in the United States. We estimate that demand for OCTG products in 2015 declined 36% when compared to 2014. In North America, sales decreased 45%, mainly due to lower sales in the the US onshore and Canada reflecting a decline in average drilling activity and pricing pressures due to inventory adjustments. In South America, sales remained stable as higher sales of pipeline products in Brazil and Argentina were offset by lower shipments of OCTG products in the region. In Europe, sales decreased mainly due to a lower level of sales of OCTG and line pipe products in continental Europe. In the Middle East and Africa, sales decreased mainly due to lower sales in the Middle East reflecting OCTG destocking and lower sales to offshore projects in sub-Saharan Africa. In the Far East and Oceania, sales decreased due to lower activity in the region.
Operating income from tubular products and services, decreased 93% to $138 million in 2015, from $1,866 million in 2014. Operating income in 2015 includes an impairment charge of $400 million on our welded pipe operations in the United States, while in 2014 it includes an impairment charge of $206 million on our welded pipe operations in Colombia and Canada. Additionally, in 2015 we had severance costs in the Tubes segment, to adjust the workforce to current market conditions, which amounted to $164 million. Excluding these non-recurring events, Tubes operating income declined 66%, as it was negatively affected by a decline in sales of 33% and a decline in operating margins of 10 percentage points, mostly due to industrial inefficiencies associated with low levels of capacity utilization.
Net sales of other products and services decreased 13% to $657 million in 2015, compared to $756 million in 2014, mainly due to lower sales of energy related products, e.g., sucker rods and coiled tubing.
Operating income from other products and servicesincreased 74% to $58 million in 2015, from $33 million in 2014, mainly reflecting an improved operating performance and margins at our industrial equipment business in Brazil.
, or SG&A, decreased by $ 340 million (17%) in 2015 from $1,964 million in 2014 to $1,624 million in 2015. However, SG&A expenses increased as a percentage of net sales to 22.9% in 2015 compared to 19.0% in 2014, mainly due to the effect of fixed and semi fixed expenses on lower sales (e.g., depreciation and amortization and labor costs).
resulted in losses of $396 million in 2015, compared to losses of $188 million in 2014, mainly due to asset impairment charges amounting to $400 million in 2015 and $206 million in 2014. These impairment charges mainly reflect the decline in oil prices, and its impact on drilling activity and therefore on the expected demand for OCTG products, particularly on our welded pipe operations in the United States, Colombia and Canada.
amounted to a gain of $14 million in 2015, compared to a gain of $33 million in 2014.
generated a loss of $40 million in 2015, compared to a loss of $165 million in 2014. During 2015 we recorded an impairment charge of $29 million on our direct investment in Usiminas, while during 2014 we recorded an impairment charge of $161 million related to our direct investment in Usiminas. Apart from the impairment result, these results were mainly derived from our equity investment in Ternium (NYSE: TX).
totalled $245 million in 2015, including a deferred tax charge of $131 million on the effect of currency translation on tax base.
for the year amounted to $74 million in 2015, compared to a gain of $1,181 million in 2014. The decline in net income mainly reflects a challenging operating environment affected by lower shipments and prices, inefficiencies associated with low utilization of production capacity, severance costs to adjust the workforce to current market conditions, impairments and a high deferred-tax charge affected by the effect of currency translation on tax base.
was $6 million in 2015, compared to $23 million in 2014. These results are mainly attributable to NKKTubes, our Japanese subsidiary.
Net cash provided by operations during 2015 was $2.2 billion, compared to $2.0 billion during 2014 (includes working capital reductions of $1.4 billion in 2015 and an increase of $72 million in 2014). Capital expenditures amounted to $1.1 billion, both in 2015 and 2014. Dividends paid were equal during 2015 and 2014 amounting to $531 million each year. During 2015, our net cash position increased from $1.3 billion at the beginning of the year to $1.8 billion at December 31, 2015.
Tenaris will hold a conference call to discuss the above reported results, on February 25, 2016, at 09:00 a.m. (Eastern Time). Following a brief summary, the conference call will be opened to questions. To access the conference call dial in +1 877 730.0732 within North America or +1 530 379.4676 Internationally. The access number is "44465809". Please dial in 10 minutes before the scheduled start time. The conference call will be also available by webcast at .
A replay of the conference call will be available on our webpage or by phone from 12:00 pm ET on February 25 through 11:59 pm on March 3. To access the replay by phone, please dial +1 855 859.2056 or +1 404 537.3406 and enter passcode "44465809" when prompted.
Some of the statements contained in this press release are "forward-looking statements". Forward-looking statements are based on management's current views and assumptions and involve known and unknown risks that could cause actual results, performance or events to differ materially from those expressed or implied by those statements. These risks include but are not limited to risks arising from uncertainties as to future oil and gas prices and their impact on investment programs by oil and gas companies.
Giovanni Sardagna
Tenaris
1-888-300-5432
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Datum: 24.02.2016 - 21:30 Uhr
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