DGAP-Regulatory: TMK Announces 4Q 2014 and FY 2014 IFRS Results

OAO TMK  / Miscellaneous 
 
05.03.2015 09:59 
 
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TMK ANNOUNCES 4Q 2014 AND FY 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 audited 
consolidated IFRS financial results for the twelve months ending December 
31, 2014. 
 
Summary 4Q and FY 2014 Results 
 
 (In millions of U.S.$, unless stated otherwise) 
 
 
 
                            4Q    3Q     Change,       FY    FY     Change, 
                          2014  2014   U.S.$ mln     2014  2013   U.S.$ mln 
Sales, thousand tonnes    1,237 1,065        172     4,402 4,287        115 
Revenue                   1,500 1,526       (26)     6,009 6,432      (423) 
Gross profit               309   294          15     1,169 1,358      (188) 
Foreign exchange gain /   (198) (73)       (125)     (301) (49)       (252) 
(loss), net 
Income / (loss) before    (265)    2       (267)     (201)  312       (514) 
tax 
Net income / (loss)       (254)  (7)       (246)     (217)  215       (431) 
Earnings / (loss) per     (1.1  (0.0      (1.14)     (1.0  0.99      (1.99) 
GDR(1), basic, U.S.$        7)    4)                   0) 
Ajusted EBITDA(2)          227   202          25      804   952       (148) 
Adjusted EBITDA margin, %  15%   13%                  13%   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. 
4Q 2014 Highlights 
 
Sales 
 
 
 
Sales (thousand tonnes)          4Q 2014          3Q 2014          Change, 
                                                                         % 
Seamless                             702              585              20% 
Welded                               534              480              11% 
Total                              1,237            1,065              16% 
 
 
 
 
  - Total pipe sales increased by 16% compared to the previous quarter 
    totaling 1,237 thousand tonnes, the result of higher large-diameter 
    pipe (LDP) volumes along with stronger sales of seamless pipe in the 
    Russian division. 
 
  - Seamless pipe volumes rose by 20% from the prior quarter to 702 
    thousand tonnes, due to higher seamless OCTG and line pipe sales in the 
    Russian division, following seasonally stronger demand. Seamless OCTG 
    sales grew by 13% compared to the third quarter of 2014. 
 
  - Welded pipe sales increased by 11% from the third quarter of 2014 to 
    534 thousand tonnes, as a result of higher volumes of LDP in Russia and 
    welded OCTG in the U.S. 
 
Financials 
 
  - Revenue decreased by $26 million or 2% from the third quarter of 2014 
    to $1,500 million, mainly due to a negative effect of currency 
    translation which amounted to $289 million. Excluding this effect, 
    revenue would have grown by $263 million. 
 
  - Adjusted EBITDA increased by $25 million or 13% quarter-on-quarter to 
    $227 million, largely as a result of stronger sales of LDP, seamless 
    OCTG and line pipe in the Russian division, as well as higher volumes 
    of welded OCTG in the American division. Adjusted EBITDA margin grew to 
    15% compared to 13% in the third quarter of 2014. 
 
  - Net loss was $254 million as compared to a net loss of $7 million for 
    the third quarter of 2014. Foreign exchange loss in the fourth quarter 
    of 2014 was $198 million compared to $73 million in the previous 
    quarter. 
 
  - The Company recognized an impairment loss of $153 million, attributable 
    mostly to the goodwill of the American division. There were no 
    impairment charges in the third quarter of 2014. 
 
  - As of December 31, 2014, total debt decreased by $323 million to $3,223 
    million compared to $3,546 million as of September 30, 2014, influenced 
    by the Rouble's depreciation against the U.S. Dollar. TMK's weighted 
    average nominal interest rate increased by 17 basis points compared to 
    September 30, 2014 and amounted to 7.26%. 
 
  - Net debt fell by $539 million to $2,969 million as of December 31, 2014 
    compared to $3,508 million as of September 30, 2014. Net Debt-to-EBITDA 
    ratio improved to 3.69x as of the end of the fourth quarter compared to 
    4.26x as of September 30, 2014. 
 
FY 2014 Highlights 
 
Sales 
 
 
 
Sales (thousand tonnes)          FY 2014          FY 2013          Change, 
                                                                         % 
Seamless                           2,560            2,422               6% 
Welded                             1,842            1,866              -1% 
Total                              4,402            4,287               3% 
 
 
 
 
  - Total pipe sales increased by 3% year-on-year to 4,402 thousand tonnes, 
    mainly as a result of stronger sales of seamless OCTG and line pipe. 
 
  - Seamless pipe volumes increased by 6% year-on-year to 2,560 thousand 
    tonnes, mostly due to higher sales of seamless OCTG in the Russian and 
    American divisions. Seamless OCTG sales grew by 7% compared to the 
    previous year. 
 
  - Welded pipe sales decreased by 1% year-on-year to 1,842 thousand 
    tonnes, as higher LDP and welded OCTG volumes were offset by weaker 
    sales of welded line and industrial pipe. 
 
Financials 
 
  - Revenue fell by $423 to $6,009 million, a 7% decrease over the prior 
    year, mainly due to a negative effect of currency translation in the 
    amount of $790 million. Excluding this effect, revenue would have 
    increased by $367 million year-on-year. 
 
  - Adjusted EBITDA decreased by $148 million or 16% year-on-year to $804 
    million, mainly due to a negative effect of currency translation and 
    higher raw materials prices in the Russian division. Adjusted EBITDA 
    margin was 13% compared to 15% for the full year 2013. 
 
  - Net loss was $217 million compared to a net income of $215 million for 
    the full year 2013. The financial result was negatively affected by a 
    foreign exchange loss in the amount of $301 million compared to $49 
    million for the full year 2013, and the $153 million impairment loss. 
 
  - As of December 31, 2014, total debt decreased by $471 million to $3,223 
    million compared to $3,694 million as of December 31, 2013, influenced 
    by the Rouble's depreciation against the U.S. Dollar. TMK's weighted 
    average nominal interest rate increased by 54 basis points compared to 
    December 31, 2013 reaching 7.26%. 
 
  - As of the end of 2014, net debt decreased by $631 million to $2,969 
    million compared to $3,600 million as of December 31, 2013. Net 
    Debt-to-EBITDA ratio improved to 3.69x as of December 31, 2014 from 
    3.78x as of December 31, 2013. 
 
Recent Developments 
 
  - In October 2014, TMK put into operation a new FQM pipe rolling mill at 
    Seversky pipe plant with a total production capacity of around 600 
    thousand tonnes. As a result, incremental increase of the Company's 
    total seamless pipe capacity will amount to around 250 thousand tonnes. 
 
  - In November 2014, TMK supplied a complete set of high-tech tubular 
    products and equipment to Surgutneftegaz, which will be used in a drill 
    column of about 5,000 meters. 
 
  - In December 2014, TMK won Transneft's LDP tender for a total volume of 
    more than 31,583 tonnes, to be supplied within January-April 2015. 
 
  - In December 2014, the extraordinary general shareholders' meeting 
    approved an interim dividend payment for the first six months of 2014 
    in the amount of RUB 393,786,159.48 ($7 million at the exchange rate as 
    of the date of approval). 
 
  - In December 2014, TMK closed the public offering of additional shares, 
    raising total proceeds of RUB 5.5 bln, which represents a 5.476% share 
    in the Company. 
 
  - In February 2015, TMK redeemed its 5.25% Convertible Bonds due 2015 
    convertible into GDRs each representing four ordinary shares of TMK. To 
    redeem the bonds TMK used cash accumulated from operating and financial 
    activities, including a four-year USD denominated credit facility from 
    one of the leading Russian commercial banks. TMK has no more 
    international public debt maturing before 2018. 
 
  - In February 2015, TMK acquired a 100% interest in 
    ChermetServis-Snabzhenie for a total amount of around RUB 2.73 billion. 
    ChS-Snabzhenie had been the main scrap supplier to TMK steel mills for 
    the last several years and fully covered the Company's needs in scrap. 
 
 
4Q 2014 and FY 2014 Segment Results 
 
(In millions of U.S.$, unless stated otherwise) 
 
 
 
                        4Q 2014 3Q 2014 Change, %     FY    FY Change, % 
                                                    2014  2013 
Sales (thousand tonnes) 
Russia                      912     772       18%  3,198 3,085        4% 
America                     277     249       11%  1,019 1,027       -1% 
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