PAO TMK / Miscellaneous - Urgent Priority
TMK Announces 1Q 2016 Operational Results
20-Apr-2016 / 10:33 CET/CEST
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20 April 2016 PRESS RELEASE
TMK Announces 1Q 2016 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 first quarter of 2016.
1Q 2016 Summary Results
(thousand tonnes)
Products 1Q 2016 4Q Q-o-Q, % 1Q 1Q 2015 Y-o-Y, %
2015 2016
Seamless pipe 564 613 -8.1% 564 619 -8.9%
Welded pipe 281 325 -13.4% 281 376 -25.2%
Total 845 938 -9.9% 845 995 -15.1%
including 312 388 -19.6% 312 425 -26.5%
OCTG
1Q 2016 Highlights
- In the first quarter of 2016, TMK shipped a total of 845 thousand tonnes of steel pipe to consumers, down 9.9% q-o-q
and 15.1% y-on-y. The drop in shipments was mainly due to the continuing decline in shipments in the American division.
- In 1Q 2016, seamless pipe shipments amounted to 564 thousand tonnes, down 8.1% q-o-q and 8.9% y-o-y due to American
division shipments decline. However, European division showed growth of shipments.
- In 1Q 2016, shipments of welded pipe dropped by 13.4% q-o-q and 25.2% y-o-y to 281 thousand tonnes, due to lower
shipments of welded pipe in the American division.
OCTG pipe shipments amounted to 312 thousand tonnes in 1Q 2016, down 19.6% q-o-q and 26.5% y-o-y. The decline was due to
lower shipments of welded OCTG pipe in the American division, as well as changes in Russian division OCTG sales
structure.
1Q 2016 Results by Division
Russian division
1Q 2016 vs. 4Q 2015
In 1Q 2016, TMK's Russian division saw a 6.5% quarter-on-quarter decline in its shipments of tubular products to 741
thousand tonnes (1).
Seamless pipe shipments were down 3.4% to 481 thousand tonnes. In 1Q 2016, OCGT shipments amounted to 271 thousand
tonnes, down 9.2% q-o-q.
Welded pipe shipments dropped by 11.8% to 260 thousand tonnes. In 1Q 2016, LDP shipments were down 10.7% to 141 thousand
tonnes, against the backdrop of a record-high consumption of large diameter pipe in 4Q 2015.
Yet TMK kept its market share in main business segments.
(1) This includes shipments from TMK's Russian facilities, TMK-Kaztrubprom and TMK GIPI to the Russian, CIS and non-CIS
markets (excluding North America).
1Q 2016 vs. 1Q 2015
The total amount of shipments by the Russian division grew 2.4% y-o-y.
Seamless pipe shipments were up 4.7%. Seamless OCTG shipments grew 8.5%, driven by the rise in oil drilling activity
across Russia in 2016. In 1Q 2016, welded pipe shipments were almost flat year-on-year. LDP shipments were down 9.0%
y-o-y, against the backdrop of a record-high demand for large diameter pipe in 2015.
American division
1Q 2016 vs. 4Q 2015
According to Baker Hughes, in 1Q 2016, the active rig count in the USA totalled 464 rigs, a 34% drop q-o-q, as many oil
and gas production projects continue to be suspended due to low global oil prices. Besides, the continued significant
supply of imports to the American pipe market is putting pressure on prices.
In 1Q 2016, TMK's American division shipped 63 thousand tonnes of tubular products, down 40.9% q-o-q.
Shipments of seamless pipe dropped 45.6% to 42 thousand tonnes. Seamless OCGT shipments amounted to 38 thousand tonnes,
a 45.8% drop quarter-on-quarter.
Welded pipe shipments declined 28.9% q-o-q to 21 thousand tonnes.
1Q 2016 vs. 1Q 2015
In 1Q 2016, the American division's shipments were down 72.5% y-o-y, due to significant declines in drilling in the USA
throughout 2015, coupled with a significant inventory build-up.
Seamless pipe shipments were down 64.5% in 1Q 2016, while seamless OCTG shipments dropped 62.7% y-o-y.
In 1Q 2016, welded pipe shipments in the American division declined 80.9% y-o-y.
European division
1Q 2016 vs. 4Q 2015
Despite the flatness of European industrial pipe market in 1Q 2016, the European division increased its shipments of
seamless pipe by 6.9% to 41 thousand tonnes.
1Q 2016 vs. 1Q 2015
In 1Q 2016, total shipments of tubular products in the European division remained virtually flat year-on-year.
Premium Segment
In 1Q 2016, the demand for TMK UP premium threaded connections remained weak, due to the suspension of complex oil
and gas production projects in Russia and the USA, where premium products are widely used. Nevertheless, TMK
successfully bid for tenders of oil and gas companies for supplies and maintenance of premium tubular products during
the first quarter. In particular, in 2Q 2016, TMK will supply about 14 thousand tonnes of casing pipe with TMK UP
premium threaded connections to Rosneft. In addition, TMK NGS-Buzuluk, the part of TMK Oilfield Services, won a tender
to provide technology and engineering supervision services for running casing with TMK UP into wells off the coast
of Sakhalin for Gazprom.
2Q 2016 Outlook
According to TMK, the Russian oil and gas pipe market will be flat in 2Q 2016. The company expects to maintain current
shipment volumes of OCTG and line pipe.
In the United States, the demand for oil and gas pipes will remain weak due to further declines in drilling volumes,
large inventories, and continued low-priced imports. The American pipe market is not expected to recover before the end
of 2016.
Industrial pipe consumption in the European pipe market will be stable in 2Q 2016, with the demand expected to increase
slightly as the construction and repair season starts.
***
For further information regarding TMK, please, visit www.tmk-group.com as well as download the YourTube iPad application
from the App Store https://itunes.apple.com/ru/app/yourtube/id516074932?mt=8&ls=1
TMK on Facebook - https://www.facebook.com/TMKGroupEN
***
TMK (www.tmk-group.com)
TMK (LSE: TMKS) is a leading global manufacturer and supplier of steel pipe for oil and gas industry, operating more
than 30 production sites in the United States, Russia, Canada, Romania, Oman, UAE and Kazakhstan and two R&D centers in
Russia and the USA. In 2015, TMK's pipe shipments totaled 3.9 million metric tons. The largest share of TMK's sales
belongs to high margin oil country tubular goods (OCTG), shipped to customers in over 80 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 assets structure by division:
Russian division: American division:
Volzhsky Pipe Plant; 12 plants of TMK IPSCO;
Seversky Tube Works; OFS International LLC;
Taganrog Metallurgical Works; TMK Completions.
Sinarsky Pipe Plant; European division:
TMK-CPW; TMK-ARTROM;
TMK-Kaztrubprom; TMK-RESITA.
TMK-INOX; Middle East Division:
TMK-Premium Service; TMK GIPI (Oman).
TMK Oilfield Services;
TMK CHERMET.
TMK Corporate Communications
Alexander Goryunov
Tel: +7 (495) 775-7600
E-mail: pr@tmk-group.com
20-Apr-2016 The EquityStory.RS, LLC Distribution Services include Regulatory Announcements, Financial/Corporate News
and Press Releases.
Media archive at www.dgap.de/ukreg
Language: English
Company: PAO 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: MSCU
TIDM: TMKS
Sequence Number: 3104
Time of Receipt: 20-Apr-2016 / 10:30 CET/CEST
End of Announcement EquityStory.RS, LLC News Service
455821 20-Apr-2016
(END) Dow Jones Newswires
April 20, 2016 04:33 ET (08:33 GMT)
