/ Quarter Results
TMK Announces 1Q 2013 Operational Results
29.04.2013 / 12:46
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April 29, 2013 Press Release
TMK Announces 1Q 2013 Operational Results
The following contains forward looking statements concerning future events.
These forward looking statements are based on current information and
assumptions of TMK management concerning known and unknown risks and
uncertainties.
TMK (LSE: TMKS), a leading global manufacturer and supplier of steel pipes
for the oil and gas industry, announces its operational results for the
first quarter of 2013.
1Q 2013 Highlights
- TMK shipped a total of 1,058 thousand tonnes of steel pipe to customers
in the first quarter of 2013 almost on par with both 4Q 2012 and 1Q
2012 results. A slight quarter-on-quarter decrease was triggered by
falling demand for industrial welded pipe which was, however, largely
offset by growth in welded line pipe and OCTG shipments.
- Seamless pipe shipments fell by 1.2% year-on-year and by 1.9%
quarter-on-quarter to 625 thousand tonnes. The decrease
quarter-on-quarter was largely due to the reduction in the American
division's shipments in this segment.
- Welded pipe shipments rose by 2.8% year-on-year, reaching 433 thousand
tonnes in the first quarter of 2013 driven by the increase in demand
for large diameter pipe (LDP) and line pipe from Russian consumers,
with no substantial quarter-on-quarter change.
- Total shipments of OCTG, TMK's core product, grew to 434 thousand
tonnes, exceeding the fourth quarter of 2012 performance by 3.1%, with
a 2.5% decline year-on-year.
- Shipments of premium connections rose to 163 thousand joints,
representing an 18.3% increase year-on-year and 14% increase
quarter-on-quarter.
1Q 2013 Summary Results
(thousand tonnes)
Product 1Q 4Q Q-o-Q, % 1Q 1Q Y-o-Y, %
2013 2012 2013 2012
Seamless Pipe 625 637 -1.9% 625 632 -1.2%
Welded Pipe 433 435 -0.5% 433 421 2.8%
Total 1,058 1,072 -1.3% 1,058 1,053 0.4%
including 434 422 3.1% 434 445 -2.5%
OCTG
1Q 2013 Market Overview and Performance by Division
Russian Division
In January-March 2013, TMK's Russian division shipped 755 thousand
tonnes(1) of pipe, demonstrating a 3.5% year-on-year growth. As a result,
the Company retained its leading position in the domestic market with a
share of 26.6%.
Quarter-on-quarter shipments decreased, however, by 2.0% due to lower
demand for welded industrial pipe which was, largely compensated by growth
in welded line pipe shipments.
LDP shipments rose by 6.0% year-on-year and by 2.4% quarter-on-quarter,
driven both by TMK's involvement in supplies for the construction of the
Russian onshore section of the South Stream pipeline and by shipments to
CIS countries.
Due to increasing oilfield transportation demands in Russia, TMK's Russian
division added 19.0% and 64.5% year-on-year to shipments of seamless and
welded line pipe, respectively. Quarter-on-quarter welded line pipe
shipments increased by 32.9% although seamless line pipe shipments fell by
7.9%. Meanwhile, quarter-on-quarter seamless OCTG shipments grew by 1.6%
and decreased year-on-year by 6.8%.
Shipments in the welded and seamless industrial pipe segments demonstrated
a general year-on-year decrease due to a weakening of the market that has
continued throughout 2012 and into the current reporting period.
(1)This includes shipments from TMK's Russian facilities, TMK-Kaztrubprom
and GIPI to the Russian, CIS and non-CIS markets (excluding the North
American market).
American Division
Due to the declining rig count and customers' increasing reliance on
current inventory, first quarter 2013 shipments in the American division
decreased by 8.1% year-on-year to 263 thousand tonnes(2); the seamless pipe
business, however, saw improvement sequentially with higher capacity
utilization. The total shipments grew by 3.1% quarter-on-quarter. The
highest increases were achieved in the welded OCTG and line pipe segments:
18.8% and 29.5%, respectively.
As of March 28, 2013, the Baker Hughes rig count was 1,748 rigs as compared
to 1,763 rigs at the end of 2012 and 1,979 rigs at the end of March 2012.
Almost 75% of rig count activity is still horizontal or directional
drilling due to development of the U.S. shale plays. The split between oil
and gas rigs is still skewed towards oil, having a share of more than 77%.
Natural gas prices remain well below historical levels and crude oil prices
have been falling during the quarter.
As over previous quarters, local procurement and prices are seriously
affected by imports from South Korea and India. The situation is becoming
more complicated with the commissioning of several pipe production
facilities within the United States, as well as the fact that consumers are
switching to standardised and thus cheaper drilling technologies to
minimize costs.
(2)This includes products manufactured by TMK's Russian and Romanian
facilities and sold on the North American market.
European Division
Despite the challenging economic environment in Europe and consequently
decreasing demand for tubular products from the machine building,
automotive and power generation industries, TMK's European division shipped
40 thousand tonnes of pipe in 1Q 2013, demonstrating growth by 3.3%
quarter-on-quarter and by 3.5% year-on-year.
This performance is the result of the synergy between the division's sales,
marketing and production departments rapidly responding to turns in the
market, as well as of the significant diversification of sales geography
and distribution channels.
Premium Segment
In the first quarter of 2013, overall demand for TMK's premium connections
remained high including substantial growth in Russia. Since the start of
the year TMK shipped 163 thousand premium connections designed by the
Company's Russian and American plants, representing an 18.3% year-on-year
and 14.0% quarter-on-quarter increase. Russian-designed premium connections
grew by 55.8% year-on-year.
Expanding its premium segment, TMK launched a new pipe threading and
service facility in Edmonton (Alberta, Canada) in March, 2013. The new
plant will enable the Company to supply the full line of ULTRA TM premium
connections on pipe and accessories to its growing customer base in Canada,
including clients developing unconventional deposits such as oil sands.
Along with its premium product offering, the Edmonton facility will play a
key role in TMK's drive to expand its oil and gas field services business
in Canada.
Outlook
The Company confirms the earlier announced expectations that the Russian
division will continue to see a strong demand for OCTG and line pipe in
2013 as Russian oil and gas players fulfill their production plans. The LDP
segment is also expected to grow.
The Company maintains its positive long-term U.S. market outlook. TMK
expects that the challenging pricing environment which is likely to have
significant influence on TMK IPSCO's financial results in the first quarter
of 2013 will be gradually improving in 2013 starting from the second
quarter of the year.
The Company believes that no noticeable upturn in the European economy will
be seen before the end of 2013.
In general, the Company confirms its cautiously positive outlook for the
current year and expects 2013 shipments to be not less than in 2012.
***
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
***
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 centres 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 Russia's major
stock exchange - MICEX-RTS.
TMK Corporate Communications
Ilya Zhitomirsky
Tel: +7 (495) 775-7600
E-mail: pr@tmk-group.com
End of UK-Regulatory news
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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@tmk-group.com
Internet: tmk-group.com
ISIN: US87260R2013
Category Code: MSC
LSE Ticker: TMKS
Sequence Number: 1425
Time of Receipt: Apr 29, 2013 12:45:08
End of News EquityStory.RS, LLC News-Service
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(END) Dow Jones Newswires
April 29, 2013 06:46 ET (10:46 GMT)
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