26 Jul 2016 12:43
PAO TMK / Miscellaneous - Urgent PriorityTMK Announces 1H 2016 Operational Results 26-Jul-2016 / 13:43 CET/CESTDissemination 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 andassumptions of TMK management concerning known and unknown risks anduncertainties. TMK, one of the world's leading producers of tubular products for the oiland gas industry, announces its operational results for the first half of2016. 2Q 2016 and 1H 2016 Summary Results(thousand tonnes) Product 2Q 2016 1Q Q-o-Q, % 1H 2016 1H 2015 Y-o-Y, % 2016Seamless 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% 1,736 1,957 -11.3%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) oftubular products, up 2.1% q-o-q. OCTG shipments grew by 2.5% q-o-q to 278thousand tonnes. Seamless pipe shipments remained flat quarter-on-quarter at 480 thousandtonnes. Welded pipe shipments grew by 6% to 276 thousand tonnes. Welded industrialpipe shipments were up 34.5% to 73 thousand tonnes. The increase inshipments was driven by consumers resupplying their inventories on the backof higher metal prices expectations. At the same time, large-diameter pipeshipments were down 5.5% q-o-q to 134 thousand tonnes. (1) This includes shipments from TMK's Russian facilities, TMK-Kaztrubpromand TMK GIPI to the Russian, CIS and non-CIS markets (excluding NorthAmerica). 1H 2016 vs. 1H 2015 In 1H 2016, despite the shrinking size of the Russian pipe market, theCompany increased its market share. The Russian division shipped 1,497thousand 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 inRussia. 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 by19.8%, due to lower volumes of pipe purchased for trunk pipeline projectsin 2016 compared to record-high sales in 1H 2015. At the same time, TMK'sshare 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 USAtotalled 421 rigs, a 9% decrease q-o-q, as many oil and gas projects weresuspended due to low global oil prices. Additionally, significant cheapimports 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 toshow first signs of recovery in 2Q 2016, after steadily declining for twoyears and hitting the bottom in 1Q 2016. Shipments of seamless pipe grew by 42.6% to 60 thousand tonnes. SeamlessOCTG 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 1Q2016. Growth of shipments in 2Q 2016 did not compensate for the low levelof 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 lowconsumption levels and strong competition from non-EU pipe producers.Seamless pipe shipments of the Company's European division totalled 46thousand 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(TM) premium threaded connections remainedweak, due to the suspension of a number of complex oil and gas projects. Atthe same time, in 2Q 2016, shipments of TMK UP(TM) premium threadedconnections were up 7.4% q-o-q. In 2Q 2016, the Company made the first shipment of tubular products forproduction wells in the offshore Arctic construction. Casing pipe with ТМКUP PF premium threaded connections and GreenWell lubricant-free coating,including H2S-resistant grades, were shipped to 'Gazprom neft shelf' todevelop the Prirazlomnoye oil field in the Pechora Sea. Overall, TMK remains the leading supplier of premium tubular products inthe Russian market with a market share of over 70%. 3Q Outlook As for the Russian market, in 3Q 2016 LDP shipments will show a downwardtrend, following a slowdown in the implementation of pipeline projects. The American market situation will remain challenging. There is cautiousoptimism prompted by the start of preparation activities for the launch ofrigs in shale formations (the Permian basin and the Eagle Ford field). Atthe same time, shipments of the American division are not expected to growsignificantly before 2017, due to large inventories of tubular products inthe USA. In 3Q 2016, following the traditional slowdown in business activity duringthe 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 aswell 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 pipefor oil and gas industry, operating more than 30 production sites in theUnited States, Russia, Canada, Romania, Oman, UAE and Kazakhstan and twoR&D centers in Russia and the USA. In 2015, TMK's pipe shipments totaled3.9 million metric tons. The largest share of TMK's sales belongs to highmargin oil country tubular goods (OCTG), shipped to customers in over 80countries. 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 onthe London Stock Exchange, the OTCQX International Premier trading platformin 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 GoryunovTel: +7 (495) 775-7600PR@tmk-group.com TMK IR Department:Marina BadudinaTel: +7 (495) 775-7600IR@tmk-group.com --------------------------------------------------------------------------- 26-Jul-2016 The EquityStory.RS, LLC Distribution Services include RegulatoryAnnouncements, Financial/Corporate News and Press Releases.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, RU000A0B6NK6 Category Code: MSCU TIDM: TMKS Sequence Number: 3274 Time of Receipt: 26-Jul-2016 / 13:41 CET/CEST End of Announcement EquityStory.RS, LLC News Service --------------------------------------------------------------------------- 486057 26-Jul-2016UK-Regulatory-announcement transmitted by DGAP - a service of EQS Group AG.The issuer is solely responsible for the content of this announcement.