OAO TMK / Miscellaneous
21.11.2014 10:25
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 3Q 2014 AND 9M 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 interim
consolidated IFRS financial results for the nine months ending September
30, 2014.
Summary 3Q and 9M 2014 Results
(In millions of U.S.$, unless stated otherwise)
3Q 2Q Chang- 9M 9M Chang-
2014 2014 e, % 2014 2013 e, %
Sales volumes, thousand tonnes 1,065 1,075 -1% 3,166 3,197 -1%
Revenue 1,526 1,516 1% 4,509 4,861 -7%
Gross profit 294 285 3% 860 1,007 -15%
Foreign exchange gain/loss, -73 32 n/a -104 -40 n/a
net
Income/loss before tax 2 76 -97% 64 227 -72%
Net income/loss -7 60 n/a 37 160 -77%
Earnings/loss per GDR(1), -0.04 0.28 n/a 0.18 0.76 -77%
basic, U.S.$
Adjusted EBITDA(2) 202 190 6% 577 705 -18%
Adjusted EBITDA margin, % 13% 13% 13% 14%
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.
3Q 2014 Highlights
Sales
Sales (thousand tonnes) 3Q 2014 2Q 2014 Change,
%
Seamless 585 634 -8%
Welded 480 442 9%
Total 1,065 1,075 -1%
- Total pipe sales remained almost flat compared to the second quarter of
2014 and amounted to 1,065 thousand tonnes as higher large-diameter
pipe (LDP) and seamless industrial pipe volumes were offset by weaker
OCTG pipe sales.
- Seamless pipe volumes decreased by 8% from the prior quarter to 585
thousand tonnes mainly as a result of lower seamless OCTG and line pipe
sales mainly in the Russian division following a seasonally weaker
demand.
- Welded pipe sales increased by 9% from the prior quarter to 480
thousand tonnes mostly due to higher sales of LDP in Russia.
Financials
- Revenue increased by 1% to $1,526 million over the second quarter of
2014, mainly as a result of higher LDP volumes in the Russian division
and stronger seamless pipe sales in the American division.
- Adjusted EBITDA increased by 6% quarter-on-quarter to $202 million
mainly due to higher prices of seamless pipe and stronger seamless OCTG
sales in the American division and favorable product mix of welded pipe
in the Russian division. Adjusted EBITDA margin remained almost flat at
13% compared to the second quarter of 2014.
- Net loss was $7 million as compared to net profit of $60 million for
the second quarter of 2014. Foreign exchange loss in the third quarter
of 2014 was $73 million compared to a foreign exchange gain in the
amount of $32 million in the second quarter of 2014.
- As of September 30, 2014, total debt decreased by $208 million compared
to June 30, 2014 to $3,546 million as a result of the Rouble's
depreciation against the U.S. dollar. TMK's weighted average nominal
interest rate remained nearly flat compared to June 30, 2014 and
amounted to 7.09%.
- Net debt decreased by $123 million in the third quarter of 2014
compared to June 30, 2014 and amounted to $3,508 million as of
September 30, 2014.
9M 2014 Highlights
Sales
Sales (thousand tonnes) 9M 2014 9M 2013 Change,
%
Seamless 1,858 1,805 3%
Welded 1,308 1,392 -6%
Total 3,166 3,197 -1%
- Total pipe sales declined by 1% year-on-year to 3,166 thousand tonnes
as stronger seamless OCTG pipe sales were offset by lower welded pipe
volumes, particularly LDP.
- Seamless pipe volumes increased by 3% year-on-year and amounted to
1,858 thousand tonnes mostly due to higher sales of seamless OCTG pipe
in the Russian and American divisions. Seamless OCTG pipe sales grew by
8% compared to the first nine months of 2013.
- Welded pipe sales decreased by 6% year-on-year to 1,308 thousand tonnes
mostly due to lower LDP volumes.
Financials
- Revenue was $4,509 million, a decrease of 7% over the first nine months
of 2013, mainly due to a negative effect of currency translation.
- Adjusted EBITDA decreased by 18% year-on-year to $577 million mainly
due to a negative effect of currency translation and higher prices for
raw materials required for seamless pipe in the Russian division and
welded pipe in the American division. Adjusted EBITDA margin was 13%
compared to 14% for the first nine months of 2013.
- Net profit was $37 million as compared to $160 million for the first
nine months of 2013. Foreign exchange loss amounted to $104 million
compared to $40 million for the same period of 2013.
- As of September 30, 2014, total debt decreased by $148 million compared
to December 31, 2013. TMK's weighted average nominal interest rate
increased by 37 bps compared to December 31, 2013.
- Net debt decreased by $92 million in the first nine months of 2014
compared to December 31, 2013.
Recent Developments
- In September 2014, TMK ran ISO 13679:2002 CAL IV tests on the premium
connection ??? UP PF with lubricant-free coating GreenWell. All samples
successfully passed abrasion resistance, gas tightness and ultimate
load tests.
- In September 2014, TMK signed a special pricing agreement on large
diameter pipe (LPD) shipments for Gazprom's Power of Siberia project.
The new conditions will improve TMK's capacity utilization planning and
sales mix. The prepayments will enable the company to incrementally
reduce its debt.
- On October 31, 2014, TMK's Board of Directors recommended that
shareholders approve interim dividends for the first six months of 2014
for a total of RUB 393,786,159.48 (approximately USD 9.07 mln). Board
of Directors decided to convene an Extraordinary General Meeting of
Shareholders (EGM) in the form of an absentee voting on December 25,
2014.
- In November 2014, TMK signed an agreement with Magnitogorsk Iron &
Steel Works (MMK) to apply a formula-based price for wide hot rolled
sheets shipped to TMK enterprises.
-
3Q 2014 and 9M 2014 Segment Results
(In millions of U.S.$, unless stated otherwise)
3Q 2014 2Q 2014 Change, % 9M 9M Change, %
2014 2013
Sales (thousand tonnes)
Russia 772 787 -2% 2,286 2,325 -2%
America 249 242 3% 742 746 -1%
Europe 44 46 -3% 137 126 9%
Revenue
Russia 1,014 1,030 -2% 3,025 3,439 -12%
America 441 415 6% 1,274 1,208 5%
Europe 72 71 0% 210 214 -2%
Gross Profit
Russia 222 221 0% 667 824 -19%
America 56 49 15% 149 145 3%
Europe 16 15 11% 44 38 16%
Adjusted EBITDA
Russia 151 147 3% 451 588 -23%
America 42 34 23% 100 95 5%
Europe 9 9 4% 26 21 21%
Russia
3Q 2014 vs. 2Q 2014
Revenue decreased by 2% to $1,014 million from the second quarter of 2014
mainly as a result of a negative effect of currency translation. Excluding
this negative effect revenue growth would have amounted to $18 million.
Gross profit remained almost flat compared to the prior quarter and
amounted to $222 million. Gross profit margin increased to 22% from 21% for
the prior quarter.
Adjusted EBITDA amounted to $151 million, a growth of 3% compared to the
second quarter of 2014 mainly as a result of a fairly unchanged gross
profit and lower SG&A expenses. Adjusted EBITDA margin increased to 15%
compared to 14% in the prior quarter.
9M 2014 vs. 9M 2013
Revenue dropped by 12% year-on-year to $3,025 million largely due to a
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