DJ DGAP-Regulatory: TMK Announces 1H 2016 Operational Results
PAO TMK / Miscellaneous - Urgent Priority
TMK Announces 1H 2016 Operational Results
26-Jul-2016 / 13:43 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.
*26 July 2016 PRESS RELEASE*
*TMK Announces 1H 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 half of
2016.
*2Q 2016 and 1H 2016 Summary Results *
(thousand tonnes)
*Product* *2Q 2016* *1Q * *Q-o-Q, %* *1H *1H *Y-o-Y, %*
*2016* 2016* 2015*
Seamless pipe 587 564 4.0% 1,151 1,213 -5.1%
Welded pipe 304 281 7.9% 585 745 -21.5%
*Total* *890* *845* *5.3%* *1,73 *1,95 *-11.3%*
6* 7*
including 333 312 6.8% 645 753 -14.3%
OCTG
*2Q 2016 Highlights *
- In 2Q 2016, TMK shipped 890 thousand tonnes of steel pipe, up 5.3%
quarter-on-quarter. The increase was due to the improved demand for tubular
products for the oil and gas industry as oil prices started to rise.
Shipments growth along with ongoing efforts to reduce costs can be expected
to improve TMK's financial performance in the second quarter.
- Seamless pipe shipments grew by 4.0% q-o-q to 587 thousand tonnes. The
growth was driven by an increase in seamless OCTG and seamless industrial
pipe shipments.
- Welded pipe shipments were up 7.9% q-o-q to 304 thousand tonnes following
an increase in welded industrial pipe shipments driven by an expected price
growth in Russia, as well as in welded line pipe shipments in the USA and
Russia.
- OCTG shipments increased by 6.8% q-o-q to 333 thousand tonnes as the
levels of drilling activity grew across Russia and oil and gas companies in
the US market started to recover their business operations.
- Shipments of premium threaded connections amounted to 112 thousand joints,
up 7.4% q-o-q.
*1H 2016 Highlights *
- Over the first half of 2016, the Company shipped 1,736 thousand tonnes of
pipe, down 11.3% year-on-year, mainly due to lower sales of welded pipe.
- Seamless pipe shipments totalled 1,151 thousand tonnes, down 5.1% y-o-y,
mainly due to lower shipments of the American division.
- Welded pipe shipments were decreased by 21.5% y-o-y to 585 thousand tonnes
on the back of weaker demand for LDP due to adjustments of pipeline
construction plans in Russia, as well as welded OCTG pipe in the USA.
- OCTG shipments amounted to 645 thousand tonnes, down 14.3% y-o-y, due to
lower shipments by the American division resulting from the unfavourable
market situation in 1Q 2016.
- Shipments of premium threaded connections amounted to 216 thousand joints,
down 40.6% y-o-y. The decline was due to the suspension of complex
hydrocarbons production projects in Russia and the USA, where premium
products are used, in a low oil price environment.
*2Q and 1H 2016 Results by Division*
RUSSIAN DIVISION
_2Q 2016 vs. 1Q 2016_
In 2Q 2016, TMK's Russian division shipped 756 thousand tonnes(1) of tubular
products, up 2.1% q-o-q. OCTG shipments grew by 2.5% q-o-q to 278 thousand
tonnes.
Seamless pipe shipments remained flat quarter-on-quarter at 480 thousand
tonnes.
Welded pipe shipments grew by 6% to 276 thousand tonnes. Welded industrial
pipe shipments were up 34.5% to 73 thousand tonnes. The increase in
shipments was driven by consumers resupplying their inventories on the back
of higher metal prices expectations. At the same time, large-diameter pipe
shipments were down 5.5% q-o-q to 134 thousand tonnes.
(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).
_1H 2016 vs. 1H 2015_
In 1H 2016, despite the shrinking size of the Russian pipe market, the
Company increased its market share. The Russian division shipped 1,497
thousand tonnes of pipe, down 1.6% y-o-y.
Seamless pipe shipments were up 4.7% to 961 thousand tonnes.
OCTG shipments grew by 9.1%, as drilling activity continued to rise in
Russia.
In 1H 2016, TMK shipped 536 thousand tonnes of welded pipe, down 11.1%
y-o-y. Welded line pipe shipments fell by 10.9%. LDP shipments decreased by
19.8%, due to lower volumes of pipe purchased for trunk pipeline projects in
2016 compared to record-high sales in 1H 2015. At the same time, TMK's share
on the Russian LDP market was up year-on-year.
AMERICAN DIVISION
_2Q 2016 vs. 1Q 2016_
According to Baker Hughes, in 2Q 2016, the active rig count in the USA
totalled 421 rigs, a 9% decrease q-o-q, as many oil and gas projects were
suspended due to low global oil prices. Additionally, significant cheap
imports to the American pipe market put pressure on prices.
In 2Q 2016, the American division shipped 88 thousand tonnes pipe, up 38.6%
q-o-q, as demand for tubular products in the American market started to show
first signs of recovery in 2Q 2016, after steadily declining for two years
and hitting the bottom in 1Q 2016.
Shipments of seamless pipe grew by 42.6% to 60 thousand tonnes. Seamless
OCTG shipments amounted to 53 thousand tonnes, up 36.5% q-o-q.
Welded pipe shipments were up 30.8% q-o-q to 28 thousand tonnes.
_1H 2016 vs. 1H 2015_
In 1H 2016, shipments of the American division fell by 57.0% y-o-y,
totalling 151 thousand tonnes. The decline was due to low shipments in 1Q
2016. Growth of shipments in 2Q 2016 did not compensate for the low level of
sales in 1Q 2016.
In 1H 2016, TMK shipped 102 thousand tonnes of seamless pipe, down 51.3%
y-o-y. Welded pipe shipments fell by 65.4% y-o-y to 49 thousand tonnes.
EUROPEAN DIVISION
_2Q 2016 vs. 1Q 2016_
In 2Q 2016, the European seamless pipe market remained stable with low
consumption levels and strong competition from non-EU pipe producers.
Seamless pipe shipments of the Company's European division totalled 46
thousand tonnes, up 12.5% q-o-q.
_1H 2016 vs. 1H 2015_
In 1H 2016, seamless pipe shipments of the European division grew by 3.4% to
88 thousand tonnes.
*Premium Segment*
In 1H 2016, the demand for TMK UP premium threaded connections remained
weak, due to the suspension of a number of complex oil and gas projects. At
the same time, in 2Q 2016, shipments of TMK UP premium threaded
connections were up 7.4% q-o-q.
In 2Q 2016, the Company made the first shipment of tubular products for
production wells in the offshore Arctic construction. Casing pipe with ???
UP PF premium threaded connections and GreenWell lubricant-free coating,
including H2S-resistant grades, were shipped to 'Gazprom neft shelf' to
develop the Prirazlomnoye oil field in the Pechora Sea.
Overall, TMK remains the leading supplier of premium tubular products in the
Russian market with a market share of over 70%.
*3Q Outlook*
As for the Russian market, in 3Q 2016 LDP shipments will show a downward
trend, following a slowdown in the implementation of pipeline projects.
The American market situation will remain challenging. There is cautious
optimism prompted by the start of preparation activities for the launch of
rigs in shale formations (the Permian basin and the Eagle Ford field). At
the same time, shipments of the American division are not expected to grow
significantly before 2017, due to large inventories of tubular products in
the USA.
In 3Q 2016, following the traditional slowdown in business activity during
the holiday season, the European market is expected to show a
quarter-on-quarter decline in industrial pipe orders.
In 2016, TMK expects shipments to remain broadly flat year-on-year.
*****
*For further information regarding TMK, please, visit *www.tmk-group.com [1]
*as well as download the YourTube iPad application from the App Store
*https://itunes.apple.com/ru/app/yourtube/id516074932?mt=8&ls=1 [2]
*TMK on Facebook - *https://www.facebook.com/TMKGroupEN [3]
*****
*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 PR Department:*
Alexander Goryunov
Tel: +7 (495) 775-7600
PR@tmk-group.com
*TMK IR Department:*
Marina Badudina
Tel: +7 (495) 775-7600
IR@tmk-group.com
26-Jul-2016 The EquityStory.RS, LLC Distribution Services include Regulatory
Announcements, Financial/Corporate News and Press Releases.
Archive at www.dgap.de/ukreg
Language: English
Company: PAO TMK
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July 26, 2016 07:43 ET (11:43 GMT)
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, RU000A0B6NK6
Category Code: MSCU
TIDM: TMKS
Sequence Number: 3274
Time of Receipt: 26-Jul-2016 / 13:41 CET/CEST
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