DJ DGAP-Regulatory: TMK Announces 1Q 2014 Operational Results
OAO TMK / Miscellaneous
24.04.2014 09:10
Dissemination of a Regulatory Announcement, transmitted by
EquityStory.RS, LLC - a company of EQS Group AG.
The issuer is solely responsible for the content of this announcement.
=--------------------------------------------------------------------------
April 24, 2014 PRESS RELEASE
TMK Announces 1Q 2014 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, one of the world's leading producers of tubular products for the oil
and gas industry, announces its operational results for the first quarter
of 2014.
1Q 2014 Highlights
- In the first quarter of 2014, TMK shipped a total of 1,022 thousand
tonnes of steel pipe to consumers, down 3% and 8% year-on-year and
quarter-on-quarter respectively. The drop in shipments is mainly due to
lower demand for seamless and welded line pipe, as well as large
diameter pipe (LDP).
- Seamless pipe shipments amounted to 626 thousand tonnes, which is flat
year-on-year but down 3% quarter-on-quarter.
- Welded pipe shipments in the reporting period fell by 9% year-on-year
to 396 thousand tonnes. It was LDP and welded line pipe segments that
saw a decline. Welded pipe shipments dropped by 16% quarter-on-quarter.
- The total shipments of OCTG pipe, TMK's core product, remained flat as
compared to the previous quarter and were up 13% year-on-year, reaching
491 thousand tonnes.
- Shipments of premium connections in the first quarter of 2014 amounted
to 193 thousand joints, up 18% year-on-year, but down 4%
quarter-on-quarter.
- Decrease in shipments and less favorable product mix of OCTG pipe
(including premium connections) and seamless line pipe, coupled with
the rouble devaluation, will put some downward pressure on TMK's 1Q
financials in comparison to the expectations.
1Q 2014 Summary Results
(thousand tonnes)
Product 1Q 2014 4Q Q-o-Q, % 1Q 2014 1Q 2013 Y-o-Y, %
2013
Seamless Pipe
626 642 -3% 626 625 0.1%
Welded Pipe
396 471 -16% 396 433 -9%
Total
1,022 1,113 - 8% 1,022 1,058 - 3%
including
OCTG 491 493 -0.5% 491 434 13%
1Q 2014 Market Overview and Performance by Division
Russian Division
By 2014, key tubular products consumers had stocked up considerable
inventories, which reduced demand for oil and gas pipe and and industrial
pipe in the first quarter of 2014.
In the first quarter, TMK's Russian division shipped 682 thousand tonnes(1)
of tubular products, down 9% and 10% quarter-on-quarter and year-on-year
respectively.
The Russian division's seamless pipe shipments decreased by 5%
quarter-on-quarter to 454 thousand tonnes. The Russian division increased
seamless OCTG pipe shipments by 5% quarter-on-quarter and 7% year-on-year,
with a total of 272 thousand tonnes shipped.
Seamless line pipe shipments were down by 22% quarter-on-quarter and by 31%
year-on-year.
Shipments of seamless industrial pipe fell by 7% quarter-on-quarter, but
rose by 3% year-on-year.
In the first quarter of 2014, large diameter pipe shipments amounted to 77
thousand tonnes, down 19% quarter-on-quarter. This decline is due to the
completion of several pipeline projects in late 2013.
(1) This includes shipments from TMK's Russian facilities, TMK-Kaztrubprom
and TMK GIPI to the Russian, CIS and non-CIS markets (excluding the North
American market)
American Division
Due to expansion of horizontal drilling and an increasing number of active
rigs in the U.S. and Canada, the demand for OCTG pipe in the American
market grew by 4% in the first quarter of 2014. Nevertheless, the market
continues to be affected by considerable volumes of tubular product
imports, the majority of which is under current review by the U.S.
Department of Commerce to determine compliance to fair trade practices.
In the reporting period, TMK's American division increased its shipments by
14% year-on-year, reaching a total of 298 thousand tonnes of tubular
products(2). As compared to the fourth quarter of 2013, the total shipments
fell by 7% due to a decline in shipments of welded OCTG and line pipe
related to the extreme winter weather conditions in the U.S. and Canada,
which impacted both railroad and truck service.
Seamless OCTG pipe shipments amounted to 98 thousand tonnes, virtually
unchanged quarter-on-quarter and up 21% year-on-year.
In the first quarter of 2014, the American division shipped 114 thousand
tonnes of welded OCTG pipe, down 13% quarter-on-quarter, but up 15%
year-on-year.
Welded line pipe shipments went down by 33% quarter-on-quarter due to a
seasonal decline in demand, as well as, the impact on transportation
logistics previously mentioned. The same factors accounted for the drop in
welded industrial pipe shipments, which were down 7% quarter-on-quarter.
Also, during the first quarter of 2014, the American division took a series
of steps to reduce the production and share of low-margin welded products
in its total output in response to low priced imports.
(2) This includes products manufactured by TMK's Russian and Romanian
facilities and sold on the North American market.
European Division
The first quarter of 2014 saw early signs of recovery in the European pipe
market. While consumption remains low, demand is mainly driven by tubular
product distributors stocking up their inventories.
In the reporting period, the European division shipped a total of 41
thousand tonnes of pipe, up 3% year-on-year, but down 5%
quarter-on-quarter.
Premium Segment
TMK ships pipe with premium connections and also provides threading
services for third parties. The demand for TMK UP premium connections
remains high, sustained by expansion of directional and horizontal drilling
in America. However, many American energy companies continue transition to
oil drilling, reducing the overall number of gas rigs and restraining
demand for premium connections, a product widely used in natural gas
production.
During the reporting period, TMK shipped more than 193 thousand joints of
premium connections, up 18% year-on-year.
Outlook
TMK expects the 2014 demand for tubular products in Russia to follow a
slight downward trend due to the unstable macroeconomic environment,
exchange rate volatility and uncertainty in commodity markets. Still, the
Company is planning to increase its shipments of seamless OCTG pipe,
including those with premium connections.
In the American market, TMK expects demand for OCTG to continue to improve
as the number of wells and footage drilled increases with the average rig
count, both in total number and particularly in the number of horizontal
rigs. However, the American division expects a minor decline in welded pipe
shipments due to continued pressure from unfairly priced imports. TMK also
expects a stronger demand for line pipe in the U.S.
The Eurozone economy is projected to return to cautious growth in 2014,
which will gradually drive tubular product consumption in Europe up.
In general, the Company expects a marginal decrease in its pipe shipments
for 2014.
***
For further information regarding TMK please visit www.tmk-group.ru or
download the YourTube iPad application from the App Store
https://itunes.apple.com/ru/app/yourtube/id516074932?mt=8&ls=1
TMK on Facebook - https://www.facebook.com/TMKGroupEN
***
??? (www.tmk-group.ru)
TMK (LSE: TMKS) is a leading global manufacturer and supplier of steel
pipes for the oil and gas industry, operating 28 production sites in
Russia, the U.S., Canada, Romania, Oman, the UAE, and Kazakhstan, and two
R&D centres in Russia and the U.S. In 2013, TMK's pipe shipments totaled
4.3 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 assets structure by division:
Russian division: American division:
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.
TMK Corporate Communications
Ilya Zhitomirsky
Tel.: +7 495 775 7600
E-mail: pr@tmk-group.com
24.04.2014 EquityStory.RS, LLC's Distribution Services include Regulatory
Announcements, Financial/Corporate News and Press Releases.
Media archive at www.dgap-medientreff.de and www.dgap.de
=--------------------------------------------------------------------------
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
TIDM: TMKS
Sequence Number: 2006
Time of Receipt: Apr 24, 2014 09:09:15
(MORE TO FOLLOW) Dow Jones Newswires
April 24, 2014 03:10 ET (07:10 GMT)
End of Announcement EquityStory.RS, LLC News-Service =--------------------------------------------------------------------------
(END) Dow Jones Newswires
April 24, 2014 03:10 ET (07:10 GMT)
