DJ DGAP-Regulatory: TMK Announces 1Q 2015 Operational Results
OAO TMK / Miscellaneous
24.04.2015 13:44
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April 24, 2015 PRESS RELEASE
TMK Announces 1Q 2015 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 oil and
gas industry, announces its operational results for the first quarter of
2015.
1Q 2015 Highlights
- In the first quarter of 2015 TMK shipped a total of 995 thousand tonnes
of steel pipe to consumers, down 3% and 18% year-on-year and
quarter-on-quarter, respectively. The decline in shipments is mainly
due to lower operational performance of the American division.
- Seamless pipe shipments amounted to 619 thousand tonnes, down 1% and
11% year-on-year and quarter-on-quarter, respectively.
- Welded pipe shipments in the reporting period fell by 5% year-on-year
to 376 thousand tonnes and dropped by 28% quarter-on-quarter. It was
OCTG and industrial pipe segments, that saw a decline. This will not
significantly affect TMK's profits as these products have
lower-margins.
- In 1Q 2015 shipments of premium connections amounted to 190 thousand
joints, declining marginally vs. 1Q 2014 (193 thousand joints) and by
22% vs. 4Q 2014 (243 thousand joints).
1Q 2015 Summary Results
(thousand tonnes)
Product 1Q 2015 4Q Q-o-Q, % 1Q 2015 1Q 2014 Y-o-Y, %
2014
Seamless pipe
619 693 (11)% 619 626 (1)%
Welded pipe
376 525 (28)% 376 396 (5)%
Total
995 1,218 (18)% 995 1,022 (3)%
including
OCTG 425 519 (18)% 425 490 (13)%
1Q 2015 Market Overview and Performance by Division
Russian Division
The Russian oil and gas pipe market proved resilient to falling crude oil
prices. In Q1 2015, TMK's Russian division shipped 724 thousand tonnes(1)
of tubular products, down 14% quarter-on-quarter mainly due to a drop in
welded industrial pipe shipments, but up 6% year-on-year. The decline in
welded industrial pipe will not negatively affect our profitability as this
business has relatively low margins
The Russian division's seamless pipe shipments shrank by 7%
quarter-on-quarter to 459 thousand tonnes, up 1% year-on-year. TMK's market
share in this segment rose to c. 60% vs. 53% in 1Q 2014, driven by higher
line pipe and OCTG shipments.
Seamless OCTG shipments slightly increased quarter-on-quarter, but were
down by almost 10% year-on-year.
Seamless line pipe shipments were down by 19% quarter-on-quarter, but up by
23% year-on-year.
Shipments of seamless industrial pipe fell by 8% quarter-on-quarter, but
rose by 7% year-on-year.
In 1Q 2015 shipments of large diameter pipe (LDP) amounted to 155 thousand
tonnes, achieving a more than twofold growth (103%) year-on-year, but
marginally declining (4%) quarter-on-quarter.
(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).
American Division
Due to the continuing slump in crude oil prices in 1Q 2015, Baker Hughes
reported a decline in the average active rig count in USA by 28%
quarter-on-quarter to 1,380 rigs, resulting in a much lower demand for
OCTG. Against this backdrop, the American division shipped a total of 230
thousand tonnes of pipe in 1Q 2015, down 23% year-on-year. The total
shipments fell by 32% vs. 4Q 2014.
In 1Q 2015, OCTG pipe shipments amounted to 179 thousand tonnes, down 16%
and 32% year-on-year and quarter-on-quarter, respectively. Shipments of
welded OCTG pipe fell by 34% year-on-year and 43% quarter-on-quarter, while
shipments of seamless OCTG were up 5% year-on-year and down 20%
quarter-on-quarter. Since welded OCTG are mostly used in vertical wells,
their shipments showed more dramatic decline as the vertical rig count saw
a sharper slump (down 45% and 39% year-on-year and quarter-on-quarter,
respectively), than that of horizontal rigs (down 12% and 24% year-on-year
and quarter-on-quarter, respectively). Also, the decline is in part due to
the division's decision to cut production of welded pipe to bring down the
share of low-margin welded products in response to a weaker demand from oil
and gas industry, price pressures and rising imports of welded OCTG pipe.
In 1Q 2015, welded pipe shipments fell by 34% year-on-year and 38%
quarter-on-quarter, while welded industrial pipe shipments shortened by 31%
and 2% year-on-year and quarter-on-quarter, respectively.
Shipments of premium connection pipe amounted to 129 thousand joints, down
5% and 26% year-on-year and quarter-on-quarter, respectively.
The share of premium connections in the total threaded pipe shipments of 1Q
2015 reached 31% vs. 27% in 1Q 2014 and 28% in 4Q 2014.
European Division
In 1Q 2015, headwinds persisted in the European market, facing further
pressures from Ukrainian, Byelorussian, Turkish and Chinese producers,
which offer lower prices as compared to local manufacturers. A substantial
decline in OCTG consumption forces major seamless pipe producers to refocus
on industrial pipe, thus putting further pressure on this segment.
Despite a weak demand and rising competition, the European division shipped
42 thousand tonnes of tubular products to consumers, up 1% and 6%
year-on-year and quarter-on-quarter, respectively.
Premium Segment
In 1Q 2015, TMK's Russian and North American plants produced a total of 190
thousand TMK UP joints, down 1% and 22% year-on-year and
quarter-on-quarter, respectively.
Outlook
In 1Q 2015 the demand for pipe in the Russian market rose by 7%
year-on-year. We expect a stronger LDP consumption in 2Q 2015 and beyond
from major projects like the Power of Siberia, which will enable TMK to
gain business momentum and improve its margin-driven product mix. This will
also be supported by increasing our OCTG market share in Russia due to
import substitutions. The demand for welded and seamless industrial pipe
will likely decline due to a weaker demand from construction and
engineering industries.
TMK expects the OCTG demand in the American market to deteriorate further
in 1H 2015, as the active rig count remains near record lows, while the
market players are destocking. The excessive supply of tubular products
combined with a strong US Dollar and buoyant imports will put further
pricing pressure. The outcome of the anti-dumping investigation on OCTG and
line pipe will affect imports in these two segments going forward. In 2H
2015, TMK expects the demand for OCTG and line pipe to gradually rebound,
provided that crude oil prices and drilling volumes stabilise resulting in
a moderate growth.
The Eurozone economy is projected to return to cautious growth in 2015,
which will incrementally drive tubular product consumption in Europe up.
Generally TMK expects 2015 annual shipments close to 2014, as drop in
American division will be redressed by higher LDP volumes in Russia.
***
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
pipes for oil and gas industry, operating 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 2014, TMK's pipe shipments totalled 4.4
million tonnes. 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 TMK Completions.
Works; European division:
Sinarsky Pipe Plant; TMK-ARTROM;
TMK-CPW; TMK-RESITA.
TMK-Kaztrubprom; Middle East Division:
TMK-INOX; TMK GIPI (Oman);
TMK-Premium Service; Threading & Mechanical Key Premium LLC (Abu-
TMK Oilfield Services; Dhabi).
TMK CHERMET.
TMK Corporate Communications
Alexander Goryunov
Tel: +7 (495) 775-7600
E-mail: pr@tmk-group.com
24.04.2015 The EquityStory.RS, LLC Distribution Services include Regulatory
Announcements, Financial/Corporate News and Press Releases.
Media archive at www.dgap-medientreff.de and www.dgap.de
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Language: English
Company: OAO 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: MSC
TIDM: TMKS
Sequence Number: 2630
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