29 Jul 2015 13:01
OAO TMK / Miscellaneous 29.07.2015 13:01 Dissemination of a Regulatory Announcement, transmitted byEquityStory.RS, LLC - a company of EQS Group AG.The issuer is solely responsible for the content of this announcement.--------------------------------------------------------------------------- 29 July 2015 PRESS RELEASE TMK Announces 1H 2015 Operational Results The following contains forward looking statements concerning future events.These forward looking statements are based on current information andassumptions of TMK management concerning known and unknown risks anduncertainties. 2Q 2015 and 1H 2015 Highlights - In 1H 2015, TMK shipped a total of 1,957 thousand tonnes of steel pipe, down 4.8% year-on-year. In 2Q 2015, shipments decreased by 3.3% quarter-on-quarter to 962 thousand tonnes. The decline in shipments was due to lower shipments of the American Division in light of the unfavourable market situation. However, in the Russian Division, where the demand for pipe for oil and gas industry remains steady, the shipments grew by 10.2% quarter-on-quarter and year-on-year. Large diameter pipe (LDP) shipments doubled in 1H 2015 year-on-year. - In 1H 2015, seamless pipe shipments fell by 1.1% year-on-year to 1,213 thousand tonnes. Shipments in 2Q 2015 also went down by 4.1% quarter-on-quarter to 594 thousand tonnes. - In 1H 2015, welded pipe shipments fell by 10.2% year-on-year to 745 thousand tonnes. In 2Q 2015, welded pipe shipments were down 2% quarter-on-quarter. It was OCTG (the American Division) and industrial pipe that saw a decline, which is in line with the downward trend regarding the share of low-margin products in TMK's shipments. - In 1H 2015, shipments of premium threaded connections amounted to 363 thousand joints, down 11.1% year-on-year. In 2Q 2015, shipments of premium products were down 9% quarter-on-quarter, totalling 173 thousand. TMK's share in the Russian market increased to 78% in 1H 2015. 2Q 2015 and 1H 2015 Summary Results(thousand tonnes) Products 2Q 2015 1Q 2015 Q-o-Q, % 1H 2015 1H 2014 Y-o-Y, %Seamless pipe 594 619 (4.1%) 1 213 1 227 (1.1%)Welded pipe 369 376 (2.0%) 745 829 (10.2%)Total 962 995 (3.3%) 1 957 2 056 (4.8%)Including OCTG 328 425 (22.7%) 753 971 (22.5%) 1H 2015 Market Overview and Performance by Division Russian Division The Russian pipe market demonstrated moderate growth in 1H 2015. The risein demand for tubular products allowed the Company to increase shipmentvolumes and strengthen its position in the Russian market. At the end ofthe reporting period, the Company's share of the shipments to the Russianmarket grew and exceeded 25%, whereas TMK's share in seamless OCTG totalled67%. In 1H 2015, TMK's Russian Division shipped 1,521 thousand tonnes(1) oftubular products, up 10.1% year-on-year. In 2Q 2015, the division shipped797 thousand tonnes of pipe, up 10.2% quarter-on-quarter. In 1H 2015, the Russian division's seamless pipe shipments grew by 3.4%year-on-year to 918 thousand tonnes. In 2Q 2015, the division shipped 459thousand tonnes of seamless tubular products, which is almost flatquarter-on-quarter. In 1H 2015, the division's seamless OCTG shipments decreased 7.8%year-on-year to 495 thousand tonnes. The decline was driven by a generaldrop in demand for casing and drill pipe on the Russian market. However, in2Q 2015, the shipments were up 1.5% quarter-on-quarter, reaching 249thousand tonnes. In 1H 2015, the division's shipments of seamless line pipe increased by23.3% year-on-year to 263 thousand tonnes. In 2Q 2015, shipments of thisproduct decreased by 12.3% quarter-on-quarter to 123 thousand tonnes. In 1H 2015, the division's shipments of seamless industrial pipe went up by16% to 160 thousand tonnes. The second quarter saw 87 thousand tonnes ofthis product shipped, up 19% quarter-on-quarter. In 1H 2015 the Russian Division shipped 603 thousand tonnes of welded pipe,up 22.3% year-on-year. This growth was mainly driven by the increase of LDPshipments for gas trunk pipeline projects. In 2Q 2015, welded pipeshipments grew by 27.8 quarter-on-quarter to 338 thousand tonnes. In 1H 2015, the division's LDP shipments amounted to 343 thousand tonnes,achieving an almost twofold growth year-on-year. The growth was driven bythe construction under two major pipeline projects: Southern Corridor andBovanenkovo-Ukhta - 2. In 2Q 2015, the LDP shipments were up 20.9%quarter-on-quarter to 188 thousand tonnes, which results from the launch ofTMK shipments for the Power of Siberia project. (1) This includes shipments from TMK's Russian facilities, TMK-Kaztrubpromand TMK GIPI to the Russian, CIS and non-CIS markets (excluding NorthAmerica). American Division In 2Q 2015, Baker Hughes reported a decline in the average active rig countin the USA by 35% quarter-on-quarter to 907 rigs due to the continuingslump in oil prices, which resulted in a lower demand for OCTG and growthof pipe inventories. At the same time, large volumes of pipe are stillimported to the American market, which contributes to the pressure onprices. Against this backdrop, the American Division shipped a total of 352thousand tonnes of pipe in 1H 2015, down 40.6% year-on-year. In 2Q 2015,the shipments were down 47.1% quarter-on-quarter, totalling 122 thousandtonnes. In 1H 2015, shipments of seamless pipe dropped 18.1% to 209 thousandtonnes. In 2Q 2015, the division shipped 91 thousand tonnes of thisproduct, down 23% quarter-on-quarter. In 1H 2015, shipments of seamless OCTG pipe dropped by 12.3% to 173thousand tonnes. In 2Q 2015, shipments of this product fell by 32.3%quarter-on-quarter to 70 thousand tonnes. In 1H 2015, TMK's American Division shipped a total of 14 thousand tonnesof seamless line pipe, down 21.7% year-on-year. However, in 2Q 2015,shipments of this pipe product trebled to 11 thousand tonnesquarter-on-quarter. In 1H 2015, the shipments of seamless industrial pipe dropped 44.2%year-on-year to 23 thousand tonnes. In 2Q 2015, the division shipped 11thousand tonnes of this product, down 11.5% quarter-on-quarter. In 1H 2015, welded pipe shipments were down 57.8% year-on-year to 142thousand tonnes. In 2Q 2015, welded pipe shipments fell 72.7%quarter-on-quarter to 30 thousand tonnes. The decrease in low-margin weldedpipe segment was triggered by the weak demand, price drop and high volumesof welded OCTG import. In 1H 2015, TMK shipped a total of 84 thousandtonnes of welded OCTG pipe, down 63.4% year-on-year. European Division In 1H 2015, the European pipe market was still tough due to growingcompetition, which puts pressure on prices. Nevertheless, in the first halfof 2015, TMK's European Division shipped a total of 85 thousand tonnes ofseamless pipe, up 2.9% year-on-year. In 2Q 2015, the shipments were up 3.4%quarter-on-quarter, reaching 43 thousand tonnes. Premium Segment In the first half of 2015, TMK's Russian and American Divisions shipped atotal of 363 thousand TMK UP premium threaded connections, down 11.1%year-on-year. In 2Q 2015, shipments of premium products were down 9%quarter-on-quarter, which is mainly due to the decline in demand. Thepremium segment remains a strategic priority for the Russian divisionespecially in view of the opportunities for import substitution. Outlook Further Russian market outlook will stem from several factors, mainlyglobal oil prices, which have a strong impact on the oil and gas industrycapex. In the Russian Federation this factor is less significant, as itsadverse effects are smoothed out by ruble devaluation. One of the essential drivers behind the Russian pipe market growth wasmajor pipeline projects. In addition, the Company has a chance tostrengthen its positions in the seamless OCTG segment due to lower importsof this product into Russia. In the Russian market of welded and seamless industrial pipe will see adecline in demand due to a slowdown in the construction and engineeringindustries. TMK expects the OCTG demand in the American market to remain flat until theend of 2015 on the back of low drilling activity. However, no furthermarket slump is expected as the shipments have already touched their low. In case of winning the anti-dumping investigation on imports of line pipeinto the USA, this segment will be able to grow more rapidly. In 2016, thedemand for OCTG and line pipe is likely to gradually go up, provided thatoil prices and drilling volumes stabilise and inventories decline. In 3Q 2015, TMK expects no improvement in the European pipe market due tothe holiday season. Further on a subsequent slow recovery is expected. In2015, TMK expects shipments to remain broadly flat year-on-year. Lowersales in the USA will be offset by higher shipment volumes in the RussianDivision. In general, the Company retains the positive dynamics in the mostprofitable segments of the business. Along with the improvement of theterms of payment on the part of large consumers, it allows TMK to generateadditional cash flow and direct them to reduce debt. *** For further information regarding TMK, please, visit www.tmk-group.com aswell as download the YourTube iPad application from the App Storehttps://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 steelpipes for oil and gas industry, operating more than 30 production sites inthe United States, Russia, Canada, Romania, Oman, UAE, and Kazakhstan andtwo R&D centers in Russia and the USA. In 2014, TMK's pipe shipmentstotalled 4.4 million tonnes. The largest share of TMK's sales belongs tohigh margin oil country tubular goods (OCTG), shipped to customers in over80 countries. TMK delivers its products along with an extensive package ofservices in heat treating, protective coating, premium connectionsthreading, warehousing and pipe repairing. TMK's securities are listed on the London Stock Exchange, the OTCQXInternational Premier trading platform in the U.S. and on the MoscowExchange. 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 GoryunovTel: +7 (495) 775-7600E-mail: pr@tmk-group.com 29.07.2015 The EquityStory.RS, LLC Distribution Services include RegulatoryAnnouncements, Financial/Corporate News and Press Releases.Media archive at www.dgap-medientreff.de and www.dgap.de --------------------------------------------------------------------------- Language: EnglishCompany: OAO TMK 40/2a Pokrovka 105062 Moscow RussiaPhone: +7 495 775-7600Fax: +7 495 775-7601E-mail: tmk@tmk-group.comInternet: tmk-group.comISIN: US87260R2013Category Code: MSCTIDM: TMKSSequence Number: 2755Time of Receipt: Jul 29, 2015 12:59:52 End of Announcement EquityStory.RS, LLC News-Service ---------------------------------------------------------------------------UK-Regulatory-announcement transmitted by DGAP - a service of EQS Group AG.The issuer is solely responsible for the content of this announcement.