PAO TMK / Miscellaneous
TMK announces 3Q 2015 and 9M 2015 IFRS results
24-Nov-2015 / 09:43 CET/CEST
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.
TMK ANNOUNCES 3Q 2015 AND 9M 2015 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.
PAO 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 third quarter of 2015 and nine months ending
September 30, 2015.
Summary 3Q and 9M 2015 Results
(In millions of U.S.$, unless stated otherwise)
3Q 2015 2Q 2015 Change, % 9M 2015 9M Change, %
2014
Sales volumes, thousand tonnes 963 978 (2%) 2,944 3,166 (7%)
Revenue 917 1,162 (21%) 3,213 4,509 (29%)
Gross profit 178 241 (26%) 671 860 (22%)
Foreign exchange gain/(loss), net (94) 30 n/a (87) (104) (16%)
Profit/(loss) before tax (106) 53 n/a (17) 64 n/a
Net profit/(loss) (74) 47 n/a 3 37 (91)%
Earnings/(loss) per GDR(1), basic, U.S.$ (0.32) 0.21 n/a 0.03 0.18 (84%)
Adjusted EBITDA(2) 125 172 (27%) 481 577 (17%)
Adjusted EBITDA margin, % 14% 15% 15% 13%
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 2015 Highlights
Sales
Sales (thousand tonnes) 3Q 2015 2Q 2015 Change,
%
Seamless 571 604 (5%)
Welded 391 373 5%
Total 963 978 (2%)
- Total pipe sales declined by 2% compared to the prior quarter to 963 thousand tonnes, mainly due to lower LD pipe
volumes resulting from a suspension of South Corridor project, and weaker sales of seamless pipe.
- Seamless pipe volumes decreased by 5% compared to the prior quarter to 571 thousand tonnes, partially as a result of
seasonally lower seamless OCTG and line pipe sales in the Russian division coupled with preplanned capital repairs of
the main pipe rolling equipment.
- Welded pipe sales increased by 5% compared to the second quarter of 2015 to 391 thousand tonnes, mostly due to higher
volumes of welded OCTG in the American division.
Financials
- Revenue fell by 21% to $917 million over the second quarter of 2015, mainly due to a negative effect of currency
translation, unfavorable product mix resulting from lower LD pipe volumes, and seasonally weaker seamless pipe sales in
the Russian division coupled with preplanned capital repairs of the main pipe rolling equipment.
- Adjusted EBITDA fell by 27% quarter-on-quarter to $125 million, mainly as a result of a negative effect of currency
translation and lower LD pipe sales in the Russian division. Adjusted EBITDA margin declined to 14% compared to 15% in
the previous quarter.
- Net loss was $74 million as compared to net profit of $47 million in the second quarter of 2015. Foreign exchange loss
was $94 million compared to a foreign exchange gain in the amount of $30 million in the second quarter of 2015.
- As of September 30, 2015, total debt amounted to $2,829 million, a $219 million decrease compared to June 30, 2015,
which was partially a result of the rouble's depreciation against the U.S. dollar. Weighted average nominal interest
rate decreased by 28 bps compared to June 30, 2015 and amounted to 8.79%.
- Net debt decreased by $238 million compared to June 30, 2015 and amounted to $2,646 million as of September 30, 2015.
Net Debt-to-EBITDA ratio amounted to 3.73x as of September 30, 2015 compared to 3.67x as of June 30, 2015.
9M 2015 Highlights
Sales
Sales (thousand tonnes) 9M 2015 9M 2014 Change,
%
Seamless 1,806 1,858 (3%)
Welded 1,139 1,308 (13%)
Total 2,944 3,166 (7%)
- Total pipe sales decreased by 7% year-on-year to 2,944 thousand tonnes, due to lower pipe volumes in the American
division caused by the unfavorable market conditions in the U.S.
- Seamless pipe volumes declined by 3% compared to the same period of 2014 to 1,806 thousand tonnes, as a result of
lower seamless pipe sales in the American division partially compensated by higher volumes in the Russian division.
- Welded pipe sales decreased by 13% year-on-year to 1,139 thousand tonnes, largely due to lower welded OCTG pipe
volumes in the American division, which was not fully compensated by stronger LD pipe sales in the Russian division.
Financials
- Revenue fell by 29% over the same period of 2014 to $3,213 million, mainly due to a negative effect of currency
translation and a fall of sales in the American division. Excluding the negative effect of currency translation, revenue
would have increased by $330 million year-on-year.
- Adjusted EBITDA decreased by 17% year-on-year to $481 million, mainly due to weaker results of the American division.
Adjusted EBITDA margin improved to 15% compared to 13% for the first nine months of 2014, largely as a result of better
price and product mix in the Russian division.
- Net profit was $3 million as compared to $37 million for the first nine months of 2014. Foreign exchange loss amounted
to $87 million compared to $104 million for the same period of 2014.
- As of September 30, 2015, total debt decreased by $394 million compared to December 31, 2014. Net repayment amounted
to $265 million for the first nine months of 2015. Weighted average nominal interest rate increased by 153 bps to 8.79%
compared to December 31, 2014.
- Net debt decreased by $323 million for the first nine months of 2015 compared to December 31, 2014. Net Debt-to-EBITDA
ratio amounted to 3.73x as of September 30, 2015 compared to 3.69x as of December 31, 2014.
Recent Developments
- In August 2015, TMK supplied tubing pipe with ??? UPTM ?F premium threaded connections to LUKOIL Uzbekistan Operating
Company, an affiliate of LUKOIL Overseas.
- In August 2015, TMK won Gazprom tenders to supply premium tubular products by year-end 2015 for the total amount of
RUB 1.5 bn. Around 6 thousand tonnes will be utilized in developing Chayanda gas field.
- In August 2015, TMK won a major Gazprom tender to supply LD pipe for the total amount of RUB 4 bn.
- In October 2015, TMK and Sakhalin Energy signed a partnership memorandum for supply of TMK premium threaded connection
pipe for Sakhalin Energy.
- In October 2015, TMK and Gazprom signed a long-term agreement to supply a complete set of premium tubular products.
TMK will develop, manufacture and supply tubular products to Gazprom and offer maintenance.
- On October 12, 2015, shareholders voted to approve interim dividends for the first six months of 2015 of RUB 2.42 per
share, amounting to a total RUB 2,400,415,569.20 (US$ 39.16 mln at the exchange rate at the date of approval).
- In November 2015, Omani based TMK GIPI was awarded for the supply of steel pipe with three layer polyethylene external
and liquid epoxy internal coating for Muscat Sohar Pipeline Project (MSPP).
- In October-November 2015, TMK redeemed $91.78 million of $500 million 7.75% loan participation notes due 2018.
Following settlement of the transaction outstanding amount of the Eurobonds is $408.22 million.
3Q 2015 and 9M 2015 Segment Results
(In millions of U.S.$, unless stated otherwise)
3Q 2015 2Q 2015 Change, % 9M 9M Change, %
2015 2014
Sales (thousand tonnes)
Russia 826 845 (2%) 2,440 2,286 7%
America 98 83 19% 365 742 (51%)
Europe 39 50 (23%) 139 137 1%
Revenue
Russia 722 958 (25%) 2,428 3,025 (20%)
America 152 150 2% 629 1,274 (51%)
Europe 43 55 (23%) 156 210 (26%)
Gross Profit
Russia 182 236 (23%) 613 667 (8%)
America (10) (8) 37% 23 149 (85%)
Europe 6 13 (53%) 35 44 (20%)
Adjusted EBITDA
Russia 132 179 (26%) 457 451 1%
America (10) (16) (39%) 2 100 (98%)
Europe 3 9 (71%) 23 26 (10%)
Russia
3Q 2015 vs. 2Q 2015
Revenue fell by 25% to $722 million from the second quarter of 2015, mainly as a result of a negative effect of currency
translation, seasonally weaker seamless OCTG demand coupled with preplanned capital repairs of the main pipe rolling
equipment, and lower LD pipe volumes, resulting from a suspension of South Corridor project.
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November 24, 2015 03:43 ET (08:43 GMT)
