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TMK Announces 1Q 2013 IFRS Results
30.05.2013 / 10:34
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TMK ANNOUNCES 1Q 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
unaudited consolidated IFRS financial results for the three months ending
March 31, 2013.
Summary 1Q 2013 Results
(In millions of $, unless stated otherwise)
1Q 2013 4Q 2012 Change, 1Q 2012 Change,
% %
Sales, thousand tonnes 1,060 1,082 -2% 1,005 5%
Revenue 1,725 1,631 6% 1,659 4%
Gross profit 369 331 11% 411 -10%
Income before tax 112 53 109% 151 -26%
Net income 85 32 170% 105 -19%
Earnings per GDR(1), basic, U.S.$ 0.40 0.12 233% 0.48 -17%
Adjusted EBITDA(2) 273 219 24% 295 -7%
Adjusted EBITDA margin, % 16% 13% 18%
Note: Certain monetary amounts, percentages and other figures included in
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.
Management amended its definition of Adjusted EBITDA to include accruals of
bonuses to management and employees into the calculation of Adjusted EBITDA
instead of actual cash payments. Management believes such an approach
better reflects the Group's quarterly performance and eliminates
fluctuations during the year. The comparative information in this press
release and in the interim consolidated financial statements was adjusted
accordingly.
1Q 2013 Highlights
Sales
Sales (thousand tonnes) 1Q 2013 4Q 2012 Change, 1Q 2012 Change, %
%
Seamless 627 619 1% 609 3%
Welded 433 463 -6% 396 9%
Total 1,060 1,082 -2% 1,005 5%
- Total pipe sales decreased by 2% from the prior quarter to 1,060
thousand tonnes, mainly due to weaker demand for welded industrial
pipe. Year-on-year growth of 5% was largely driven by higher
consumption of large diameter pipe (LDP), seamless line pipe and
seamless OCTG.
- Seamless pipe sales remained almost flat quarter-on-quarter at 627
thousand tonnes and increased by 3% year-on-year. Seamless OCTG pipe
volumes decreased by 4% from the prior quarter while growing 3%
compared to the first quarter of 2012. Seamless line pipe rose by 3%
quarter-on-quarter and by 14% year-on-year.
- Welded pipe sales decreased by 6% from the prior quarter to 433
thousand tonnes, mainly due to lower demand for welded industrial pipe.
Year-on-year growth of 9% was largely due to higher LDP sales in
connection with some large pipeline projects now underway. Welded OCTG
and line pipe sales posted 16% and 9% growth compared to the fourth
quarter of 2012 primarily due to stronger shipments in the U.S. The
year-on-year performance of welded OCTG pipe remained almost flat while
welded line pipe grew by 5%.
Financials
- Revenue rose by 6% over the prior quarter to $1,725 million on higher
volumes and improved product mix of seamless pipe and a favorable
currency translation effect. Year-on-year revenue increase of 4% was
mainly due to the growth of LDP and welded line pipe sales in the
Russian division.
- Gross profit rose by 11% over the prior quarter to $369 million,
largely as a result of improved product mix of seamless pipe in the
Russian division. Gross profit decreased by 10% year-on-year mainly due
to lower volumes and pricing in the American division in the first
quarter of 2013.
- Gross profit margin improved to 21% from 20% in the fourth quarter of
2012 but was down from 25% in the first quarter of 2012.
- Adjusted EBITDA increased by 24% quarter-on-quarter to $273 million,
supported by an improved product mix of seamless pipe and lower
operational expenses in the Russian division. Adjusted EBITDA fell 7%
year-on-year due to lower sales and weaker pricing in the American
division in the first quarter of 2013.
- Adjusted EBITDA margin was 16% for the first quarter of 2013, up from
13% in the fourth quarter of 2012 but down from 18% in the first
quarter of 2012.
- Net income was $85 million for the first quarter as compared to $32
million in the fourth quarter of 2012 and $105 million in the first
quarter of 2012. Net income adjusted for the gain/(loss) on changes in
fair value of derivative instruments(3), amounted to $80 million;
adjusted net income margin was 5% for the first quarter of 2013.
- As of 31 March 2013, total debt decreased to $3,849 million compared to
$3,885 million as of 31 December 2012, mainly due to the Rouble's
depreciation against the U.S. dollar.
- Net debt increased to $3,727 million as of 31 March 2013 from $3,656
million as of 31 December 2012, due to a decrease of cash and cash
equivalents at the end of the reporting period. The net Debt-to-EBITDA
ratio was 3.7x.
(3) 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 January 2013, casing with TMK PF premium connections was run in the
onshore and offshore portions of one of the wells in NOVATEK's
Yurkharovskoye field. ??? supplied the casing column and supervised its
running in the well.
- In March 2013, TMK shipped its first pilot batch of vacuum insulated
tubing (VIT) made of 13CrS steel (super-chrome steel) for Gazprom's
Bovanenkovo oil and gas condensate field in the Yamal peninsula.
- In March 2013, Gulf International Pipe Industry LLC (GIPI), the first
manufacturer of 8' to 24' high pressure carbon steel pipes in Oman and
part of the TMK Group, received a recognition award from Petroleum
Development of Oman LLC (PDO) for the successful production and
delivery of the 158 km South Oman Gas Line project.
- In March 2013, TMK IPSCO, the American division of TMK, opened a new
pipe threading and service facility in Edmonton, Alberta, Canada, that
will supply the full line of ULTRATM premium connections on pipe and
accessories to TMK IPSCO's growing customer base in Alberta and
neighboring British Columbia.
- In April 2013, the Company acquired pipe services and precision
manufacturing assets located northeast of Houston with a production
capacity of more than 700 thousand joints of threaded pipe and around
250 thousand couplings. In addition, the facility provides pipe
inspection services and manufactures down-hole tools and accessories
for a wide range of oil and gas applications.
- 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 May 2013, TMK's Board of Directors recommended that the AGM adopt a
resolution to pay a final dividend for 2012 in the amount of RUR 788
million ($25 million on 16 May, 2013) or RUR 0.84 ($0.03) per ordinary
share bringing, together with previously distributed interim dividends,
the total dividend for the year to RUR 2,194 million (around $71
million) which is in line with TMK's dividend policy of a 25% dividend
pay-out ratio.
1Q 2013 Segment Results
(In millions of $, unless stated otherwise)
1Q 2013 4Q 2012 Change, 1Q 2012 Change, %
%
Sales (thousand tonnes)
Russia 786 826 -5% 720 9%
Americas 228 211 8% 241 -5%
Europe 46 45 2% 44 5%
Revenue
Russia 1,277 1,212 5% 1,133 13%
Americas 369 352 5% 440 -16%
Europe 79 67 19% 86 -8%
Gross profit
Russia 321 277 16% 284 13%
Americas 36 42 -14% 106 -66%
Europe 12 13 -5% 22 -44%
Adjusted EBITDA
Russia 247 188 31% 187 32%
Americas 20 23 -13% 92 -78%
Europe 6 8 -30% 15 -62%
Russia
In the first quarter of 2013, revenue for the Russian division increased by
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