OAO TMK / Miscellaneous
23.05.2014 09:47
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.
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TMK ANNOUNCES 1Q 2014 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, 2014.
Summary 1Q 2014 Results
(In millions of U.S.$, unless stated otherwise)
1Q 4Q Change, 1Q Change,
2014 2013 % 2013 %
Sales volumes, thousand tonnes 1,026 1,090 -6% 1,058 -3%
Revenue 1,466 1,571 -7% 1,725 -15%
Gross profit 281 351 -20% 369 -24%
Foreign exchange loss, net -63 -9 n/a -5 n/a
Income/loss before tax -14 86 n/a 112 n/a
Net income/loss -16 55 n/a 85 n/a
Earnings/loss per GDR(1), basic, -0.07 0.25 n/a 0.40 n/a
U.S.$
Adjusted EBITDA(2) 184 247 -25% 273 -32%
Adjusted EBITDA margin, % 13% 16% 16%
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.
1Q 2014 Highlights
Sales
Sales (thousand tonnes) 1Q 2014 4Q 2013 Change, 1Q 2013 Change, %
%
Seamless 640 617 4% 625 2%
Welded 386 473 -18% 433 -11%
Total 1,026 1,090 -6% 1,058 -3%
1Q 2014 vs. 4Q 2013
- Total pipe sales decreased by 6% from the prior quarter to 1,026
thousand tonnes, mainly due to lower sales of welded pipe.
- Seamless pipe volumes increased by 4% over the prior quarter to 640
thousand tonnes. Seamless OCTG pipe sales grew by 2% from the fourth
quarter of 2013.
- Welded pipe sales decreased by 18% from the prior quarter to 386
thousand tonnes mostly due to lower sales of welded line and industrial
pipe, as well as weaker consumption of LDP in Russia.
1Q 2014 vs. 1Q 2013
- Total pipe sales decreased by 3% year-on-year largely due to lower
consumption of large diameter pipe (LDP).
- Seamless pipe sales grew by 2% compared to the first quarter of 2013
mostly due to higher volumes in the American division. Seamless OCTG
pipe sales increased by 12% year-on-year.
- Welded pipe volumes decreased by 11% compared to the first quarter of
2013 mostly due to lower sales of LDP and welded line pipe.
Financials
1Q 2014 vs. 4Q 2013
- Revenue was $1,466 million, a decrease of 7% over the fourth quarter of
2013, mainly due to lower welded pipe sales and a negative effect of
currency translation.
- Adjusted EBITDA decreased by 25% quarter-on-quarter to $184 million
mainly due to lower volumes and unfavorable product mix of welded pipe
in the Russian division and decreasing prices in the American division
coupled with growing coil prices. Adjusted EBITDA margin was 13%
compared to 16% in the fourth quarter of 2013.
- Net loss was $16 million as compared to net profit of $55 million for
the fourth quarter of 2013. Net loss was affected by the foreign
exchange loss in the amount of $63 million for the first quarter of
2014.
- As of March 31, 2014, total debt decreased by $100 million compared to
December 31, 2013 to $3,594 million partially as a result of the
Rouble's depreciation against the U.S. dollar. TMK's weighted average
nominal interest rate decreased by 14 bps compared to December 31, 2013
and amounted to 6.58%.
- Net repayment of borrowings for the first quarter of 2014 amounted to
$8 million.
- Net debt decreased by $75 million in the first quarter of 2014 compared
to December 31, 2013 and amounted to $3,526 million as of March 31,
2014.
1Q 2014 vs. 1Q 2013
- Revenue fell by 15% compared to the first quarter of 2013 mostly due to
lower LDP volumes as well as a negative effect of currency translation.
- Adjusted EBITDA dropped by 32% year-on-year mostly due to unfavorable
pricing and product mix of seamless pipe and lower LDP volumes in the
Russian division. Adjusted EBITDA margin was 13% compared to 16% in the
first quarter of 2013.
- Net loss was $16 million for the first quarter of 2014 as compared to
net profit of $85 million for the first quarter of 2013.
- As of March 31, 2014, total debt decreased by $255 million compared to
March 31, 2013. TMK's weighted average nominal interest rate decreased
by 44 bps compared to March 31, 2013.
- Net debt decreased by $201 million in the first quarter of 2014
compared to March 31, 2013.
Recent Developments
- In March 2014, TMK and Baker Hughes Incorporated announced their
intention to jointly develop integrated well completion solutions.
Targeted at both onshore and offshore fields, the solutions will
provide turnkey well completions based on the technical and
manufacturing capabilities of both companies.
- In April 2014, TMK signed an agreement with Gazprom Neft to apply a
pricing formula to pipe products. The pricing formula is based on
market prices for commodities and raw materials used in pipe
production.
- On April 24, 2014, the Board of Directors recommended the AGM to adopt
a resolution to pay final dividends for 2013 in the amount of RUB 0.78
per ordinary share. Total dividends will amount to RUB 731,317,153.32
(approximately $20.5 (3) million). Given the payment of interim
dividends for the first 6 months of 2013 in the amount of RUR
975,089,537.76 (approximately $29.9 million), overall dividends for
2013 will correspond to 25% of TMK's consolidated 2013 IFRS net income,
which is in compliance with the Company's Dividend policy.
- In May 2014, TMK signed a long-term contract with Yamal LNG for
2014-2020, with overall demand for premium tubular products during this
period estimated at 48 thousand tonnes.
- In May 2014, TMK shipped LD pipe for Gazprom's Bovanenkovo-Ukhta
pipeline construction. Under the project, TMK plans to ship a total of
45,000 tonnes.
- In May 2014, TMK signed a memorandum of understanding with Sakhalin
Energy Investment Company Ltd. (Sakhalin Energy), operator at
Sakhalin-II. The memorandum provides a framework for cooperation on
TMK's tubular product qualification and certification with a view to
testing its suitability for Sakhalin Energy's operations.
(3) As of April 24, 2014, the Russian Central Bank exchange rate stood at
35.6625 RUB/USD
1Q 2014 Segment Results
(In millions of U.S.$, unless stated otherwise)
1Q 2014 4Q 2013 Change, % 1Q 2013 Change, %
Sales (thousand tonnes)
Russia 727 760 -4% 786 -8%
America 251 281 -11% 228 10%
Europe 48 49 -3% 44 9%
Revenue
Russia 981 1,044 -6% 1,277 -23%
America 418 457 -8% 369 13%
Europe 67 70 -5% 79 -15%
Gross Profit
Russia 224 268 -16% 321 -30%
America 44 67 -35% 36 21%
Europe 13 16 -15% 12 11%
Adjusted EBITDA
Russia 153 188 -19% 247 -38%
America 24 50 -51% 20 21%
Europe 7 10 -24% 6 26%
Russia
1Q 2014 vs. 4Q 2013
Revenue decreased by 6% to $981 million from the fourth quarter of 2013 due
to a negative effect of currency translation.
Gross profit declined by 16% quarter-on-quarter to $224 million mainly due
to lower welded pipe volumes, unfavorable LDP sales mix and a negative
effect of currency translation. Gross profit margin decreased to 23% for
the first quarter of 2014 from 26% for the prior quarter.
Adjusted EBITDA amounted to $153 million, a decline of 19% compared to the
fourth quarter of 2013, following the decrease in gross profit. Adjusted
EBITDA margin fell to 16% in the first quarter of 2014 compared to 18% in
the prior quarter.
1Q 2014 vs. 1Q 2013
Revenue dropped by 23% year-on-year largely as a result of lower LDP
volumes and a negative effect of currency translation.
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