OAO TMK / Miscellaneous
12.03.2014 09:48
Dissemination of a Regulatory Announcement, transmitted by
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The issuer is solely responsible for the content of this announcement.
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TMK ANNOUNCES 4Q 2013 AND FY 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 audited
consolidated IFRS financial results for the twelve months ending December
31, 2013.
Summary 4Q 2013 and FY 2013 Results
(In millions of U.S.$, unless stated otherwise)
4Q 3Q Chang- FY FY Chang-
2013 2013 e, % 2013 2012 e, %
Sales volumes, thousand 1,090 1,022 7% 4,287 4,238 1%
tonnes
Revenue 1,571 1,487 6% 6,432 6,688 -4%
Gross profit 351 283 24% 1,358 1,479 -8%
Income before tax 86 54 60% 312 400 -22%
Net income 55 35 59% 215 278 -23%
Earnings per GDR(1), basic, 0.25 0.16 59% 0.99 1.26 -22%
U.S.$
Adjusted EBITDA(2) 247 182 36% 952 1,028 -7%
Adjusted EBITDA margin, % 16% 12% 15% 15%
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.
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.
4Q 2013 Highlights
Sales
Sales (thousand tonnes) 4Q 2013 3Q 2013 Change,
%
Seamless 617 534 15%
Welded 473 488 -3%
Total 1,090 1,022 7%
- Total pipe sales increased by 7% quarter-on-quarter to 1,090 thousand
tonnes, mainly due to the growth of OCTG and line pipe sales in the
Russian division.
- Seamless pipe sales increased by 15% over the prior quarter to 617
thousand tonnes. Seamless OCTG and line pipe volumes grew by 21% and
19% quarter-on-quarter respectively, due to seasonally higher demand
from oil and gas producers.
- Welded pipe sales decreased by 3% quarter-on-quarter to 473 thousand
tonnes mostly due to lower welded industrial and large diameter pipe
(LDP) volumes.
Financials
- Revenue for the fourth quarter was $1,571 million, an increase of 6%
over the third quarter of 2013, mainly due to higher sales in the
Russian and American divisions.
- Adjusted EBITDA increased by 36% quarter-on-quarter to $247 million
mainly due to higher sales of seamless pipe in the Russian division and
better product mix of welded pipe in the Russian and American
divisions. Adjusted EBITDA margin was 16%.
- Net income was $55 million for the fourth quarter, as compared to $35
million in the third quarter of 2013. Net income margin was 3% for the
fourth quarter of 2013.
- As of December 31, 2013, total debt decreased by $82 million compared
to the level as of September 30, 2013 and amounted to $3,694 million.
TMK's weighted average nominal interest rate amounted to 6.72% as
compared to 6.77% as of September 30, 2013.
- Net repayment of borrowings for the fourth quarter of 2013 amounted to
$65 million compared to the net repayment of $7 million in the third
quarter of 2013.
- Net debt decreased by $97 million in the fourth quarter of 2013
compared to the level as of September 30, 2013 and amounted to $3,600
million as of December 31, 2013. The Net Debt-to-EBITDA ratio was 3.8x.
FY 2013 Highlights
Sales
Sales (thousand tonnes) FY 2013 FY 2012 Change,
%
Seamless 2,422 2,495 -3%
Welded 1,866 1,743 7%
Total 4,287 4,238 1%
- Total pipe sales grew by 1% to 4,287 thousand tonnes compared to the
prior year mainly due to higher volumes of welded OCTG pipe.
- Seamless pipe sales decreased by 3% compared to the full year 2012 and
amounted to 2,422 thousand tonnes due to lower line pipe volumes in the
Russian division. Seamless OCTG pipe volumes increased by 1%
year-on-year.
- Welded pipe sales increased by 7% year-on-year to 1,866 thousand tonnes
largely as a result of higher volumes of welded OCTG and LD pipe.
Financials
- Revenue decreased by 4% year-on-year to $6,432 million mainly due to
lower sales of seamless pipe in the Russian division and a negative
effect of currency translation.
- Adjusted EBITDA decreased by 7% year-on-year to $952 million negatively
affected by unfavorable market conditions in the U.S. and Europe.
Adjusted EBITDA margin remained flat year-on-year and amounted to 15%.
- Net income was $215 million for the full year 2013 as compared to $278
million for the full year 2012, negatively affected by foreign exchange
loss in the amount of $49 million.
- As of December 31, 2013, total debt decreased by $191 million to $3,694
million compared to $3,885 million as of December 31, 2012, partially
as a result of the Rouble's depreciation against the U.S. dollar. TMK's
weighted average nominal interest rate decreased by 27 basis points to
6.72% as of December 31, 2013 compared to December 31, 2012.
- Net repayment of the debt amounted to $93 million for the full year
2013.
- Net debt decreased by $56 million as of December 31, 2013 compared to
the level as of December 31, 2012.
Recent Developments
- In November 2013, TMK united its two premium connections families TMK
Premium and ULTRA under a single brand - TMK Ultra Premium (TMK UP).
Bringing the two premium connections lines under the single brand will
help expand bidding opportunities for the Company's premium tubular
products worldwide, unify its portfolio of global packaged product
offering, and raise global awareness of TMK's premium solutions.
- In January 2014, TMK IPSCO was awarded two three-year contracts to
provide both oil country tubular goods and line pipe to Shell for
onshore and offshore applications. Five of TMK IPSCO's plants are
currently providing pipe to Shell under the OCTG contract, TMK's
Volzhsky and Sinarsky mills in Russia will provide line pipe under
Shell's specification.
- In February 2014, Threading and Mechanical Key Premium LLC, TMK's
service and support center in Abu-Dhabi was certified by Abu Dhabi
Company for Offshore Oil Operations (ADCO) to supply oilfield services.
- In February 2014, TMK received official confirmation that its pipes
made of the Company's Russian-produced billets are eligible for use by
Iraq's South Oil Company (SOC).
- In March 2014, Taganrog Metallurgical Works (TAGMET) was qualified by
Kuwait Oil Company (KOC), one of the Middle East oil majors, as an
approved supplier of ??? UP PF and ??? UP PF ET premium connections.
4Q and FY 2013 Segment Results
(In millions of U.S.$, unless stated otherwise)
4Q 3Q Change, FY FY Change,
2013 2013 % 2013 2012 %
Sales (thousand tonnes)
Russia 760 719 6% 3,085 3,159 -2%
America 281 263 7% 1,027 903 14%
Europe 49 41 21% 175 176 -0.3%
Revenue
Russia 1,044 998 5% 4,483 4,714 -5%
America 457 426 7% 1,665 1,650 1%
Europe 70 63 12% 284 324 -12%
Gross Profit
Russia 268 212 26% 1,092 1,119 -2%
America 67 58 15% 212 285 -26%
Europe 16 12 29% 54 75 -28%
Adjusted EBITDA
Russia 188 134 41% 776 759 2%
America 50 42 20% 145 218 -34%
Europe 10 7 45% 31 52 -40%
Russia
4Q 2013 Highlights
In the fourth quarter of 2013, revenue increased by 5% to $1,044 million
from the prior quarter largely due to an increase in seamless pipe sales.
Gross profit for the fourth quarter of 2013 grew by 26% quarter-on-quarter
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