DJ DGAP-Regulatory: TMK Announces 9M 2014 Operational Results
OAO TMK / Miscellaneous
20.10.2014 09:07
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October 20, 2014 PRESS RELEASE
TMK Announces 9M 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 nine months of
2014.
3Q 2014 and 9M 2014 Highlights
- During the nine months of 2014, TMK shipped a total of 3,159 thousand
tonnes of steel pipe, down 1.3% year-on-year. In 3Q 2014, shipments
grew by 6.7% quarter-on-quarter.
- During the nine months of 2014, seamless pipe shipments grew by 2.3%
year-on-year to 1,848 thousand tonnes. Shipments in 3Q 2014 increased
by 3.3% quarter-on-quarter to 621 thousand tonnes.
- During the nine months of 2014, welded pipe shipments dropped by 5.9%
year-on-year to 1,311 thousand tonnes due to weaker demand for large
diameter pipe (LDP) and industrial pipe. In 3Q 2014, welded pipe
shipments were up 11.4% quarter-on-quarter, reaching 482 thousand
tonnes.
- Shipments of OCTG pipe, TMK's core product, were up 5.5% year-on-year,
reaching 1,417 thousand tonnes in the nine months of 2014. In 3Q 2014,
the shipments of this product dropped by 7.1% quarter-on-quarter to 446
thousand tonnes due to a seasonal reduction in oil and gas drilling in
Russia.
- Shipments of premium connections for the nine months of 2014 increased
to 649 thousand joints, up 13.3% year-on-year. In 3Q 2014, shipments of
premium products were up 20.7% quarter-on-quarter, reaching 245
thousand joints.
3Q 2014 and 9M 2014 Summary Results
(thousand tonnes)
Product 3Q 2014 2Q Q-o-Q, % 9M 2014 9M 2013 Y-o-Y, %
2014
Seamless pipe
621 601 3.3% 1,848 1,806 2.3%
Welded pipe
482 433 11.4% 1,311 1,393 -5.9%
Total
1,103 1,034 6.7% 3,159 3,200 -1.3%
including
OCTG 446 480 -7.1% 1,417 1,343 5.5%
3Q 2014 and 9M 2014 Market Overview and Performance by Division
Russian Division
In the nine months of 2014, TMK's Russian division shipped 2,144 thousand
tonnes (1) of tubular products, down 4.3% year-on-year. In 3Q 2014, the
division's shipments were up 9% quarter-on-quarter, reaching 762 thousand
tonnes.
In January-September 2014, seamless pipe shipments totalled 1,329 thousand
tonnes, a decline of 2% year-on-year. In 3Q 2014, shipments were up 1.3%
quarter-on-quarter to 440 thousand tonnes.
In the nine months of 2014, shipments of seamless OCTG pipe remained almost
flat year-on-year at 754 thousand tonnes, while dropping by 18.3%
quarter-on-quarter to 217 thousand tonnes in 3Q 2014 due to a seasonal
reduction in oil and gas drilling in Russia.
In the nine months of 2014, shipments of seamless line pipe remained flat
year-on-year at 347 thousand tonnes, while growing 34.6% quarter-on-quarter
to 134 thousand tonnes in 3Q 2014. The increase was due to the launch of a
number of pipeline construction and related infrastructure projects.
In 3Q 2014, shipments of seamless industrial pipe went up by 28.4%
quarter-on-quarter to 89 thousand tonnes, driven by a seasonal rise in
demand for this product. During the nine months of 2014, as a result of
considerably weaker demand from industrial companies in 1H 2014, shipments
went down by 11.8% year-on-year to 227 thousand tonnes.
Welded pipe shipments declined by 7.7% to 815 thousand tonnes in the nine
months of 2014 as a result of lower demand for LDP and line pipe. During
the nine months of 2014, LDP shipments were down 14.3% to 300 thousand
tonnes due to the completion of several projects in the CIS countries. In
3Q 2014, LDP shipments were up 33.1% quarter-on-quarter to 128 thousand
tonnes as several major pipeline projects got underway in Russia
(Bovanenkovo-Ukhta - 2, Southern Corridor, Kuyumba-Taishet and others). In
the same quarter, welded line and industrial pipe shipments amounted to 91
and 100 thousand tonnes, up 18.3% and 9% quarter-on-quarter, respectively.
(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
In the nine months of 2014, TMK's American division increased its shipments
to consumers by 6.1% year-on-year, reaching a total of 900 thousand tonnes
of tubular products (2). In 3Q 2014, the division's shipments were up 4.9%
quarter-on-quarter to 308 thousand tonnes.
In the nine months of 2014, seamless pipe shipments were 404 thousand
tonnes, up 19.7%. In 3Q 2014, 148 thousand tonnes were shipped, which is an
increase of 17.9% quarter-on-quarter.
In the nine months of 2014, shipments of seamless OCTG pipe were up 19.9%
to 313 thousand tonnes, driven by the ongoing rise in drilling activity and
development of unconventional hydrocarbon reserves in North America. In 3Q
2014, shipments of this pipe were up 16.7% quarter-on-quarter, reaching 115
thousand tonnes.
In the nine months of 2014, shipments of seamless line pipe were down 33.9%
to 26 thousand tonnes. In 3Q 2014, the division shipped 8 thousand tonnes
of this pipe, up 2.5% quarter-on-quarter. These changes in demand are
typically inherent in the field development cycle.
The division's shipments of seamless industrial pipe increased by 73.8% to
66 thousand tonnes in the nine months of 2014, driven by a rise in demand
from regional and industrial markets. In 3Q 2014, 25 thousand tonnes of
seamless industrial pipe were shipped, up 30.7% quarter-on-quarter.
In the nine months of 2014, shipments of welded pipe were down 2.8% to 496
thousand tonnes. In 3Q 2014, shipments of welded pipe amounted to 160
thousand tonnes, down 4.8% quarter-on-quarter.
In January-September of 2014, the division's shipments of welded OCTG pipe
rose 4.1% to 339 thousand tonnes, while dropping 4.4% quarter-on-quarter to
110 thousand tonnes in 3Q 2014, as planned reductions in the production of
low margin items prior to the U.S. OCTG trade case decision took effect in
3Q 2014 deliveries.
Welded line pipe shipments in the nine months of 2014 fell by 2.8%
year-on-year to 73 thousand tonnes and rose by 7.6% quarter-on-quarter to
26 thousand tonnes.
In the nine months of 2014, welded industrial pipe shipments were down
23.4% to 84 thousand tonnes. In 3Q 2014, shipments of this pipe amounted to
24 thousand tonnes, down 16.2% quarter-on-quarter. These reductions were
the results of the division's continued efforts to shift production from
low margin products to more complex, higher value-added products.
(2) This includes products manufactured by TMK's Russian and Romanian
facilities and sold on the North American market.
European Division
The European pipe market continues its gradual recovery after a lasting
stagnation. However, the growth in demand for seamless industrial pipe, the
division's core product, remains limited.
The division shipped 115 thousand tonnes of seamless pipe in the nine
months of 2014, up 2% year-on-year. In 3Q 2014, the division's shipments
were down 20.4% quarter-on-quarter to 33 thousand tonnes due to a
traditional summer slowdown in business activity in Europe.
Premium Segment
The demand for TMK UP premium connections remains high, sustained by
expansion of directional and horizontal drilling in America and Russia.
TMK shipped a total of 649 thousand joints of TMK UP premium connections in
the nine months of 2014, up 13.3% year-on-year, while also boosting the
quarter-on-quarter figure by 20.7% to 245 thousand joints in 3Q 2014.
4Q 2014 Outlook
The Russian pipe market is likely to grow in 4Q 2014, driven by an increase
expected in horizontal drilling and development of oil and gas fields, as
well as by the start of the new procurement season. Owing to that, TMK
expects a steady demand for oil and gas pipe, particularly seamless OCTG.
The implementation of major pipeline projects in Russia will enable the
Company to increase shipments and improve product mix in the welded pipe
segment, especially LDP. TMK also awaits the expansion of demand for
seamless line pipe as the infrastructure projects related to trunk pipeline
construction are carried out.
In August, the US International Trade Commission (ITC) confirmed the
Department of Commerce's decision to impose anti-dumping and countervailing
duties on manufacturers from nine countries. The ITC ruling is expected to
contribute to more fair competition in the US market, better pricing
environment, and improved performance of TMK's American division.
In 4Q 2014, TMK expects shipments to remain broadly flat compared to 3Q
2014, while improved product mix gives grounds to project stronger
financials.
***
For further information regarding TMK, please, visit www.tmk-group.ru as
well as download the YourTube iPad application from the App Store
https://itunes.apple.com/ru/app/yourtube/id516074932?mt=8&ls=1
***
??? (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
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October 20, 2014 03:07 ET (07:07 GMT)
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 production assets structure: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 Phone: +7 495 775 7600 E-mail: pr@tmk-group.com 20.10.2014 The EquityStory.RS, LLC 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: 2331 Time of Receipt: Oct 20, 2014 09:05:07 End of Announcement EquityStory.RS, LLC News-Service =--------------------------------------------------------------------------
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October 20, 2014 03:07 ET (07:07 GMT)
