24 Apr 2014 09:10
OAO TMK / Miscellaneous 24.04.2014 09:10 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.--------------------------------------------------------------------------- April 24, 2014 PRESS RELEASE TMK Announces 1Q 2014 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 quarterof 2014. 1Q 2014 Highlights - In the first quarter of 2014, TMK shipped a total of 1,022 thousand tonnes of steel pipe to consumers, down 3% and 8% year-on-year and quarter-on-quarter respectively. The drop in shipments is mainly due to lower demand for seamless and welded line pipe, as well as large diameter pipe (LDP). - Seamless pipe shipments amounted to 626 thousand tonnes, which is flat year-on-year but down 3% quarter-on-quarter. - Welded pipe shipments in the reporting period fell by 9% year-on-year to 396 thousand tonnes. It was LDP and welded line pipe segments that saw a decline. Welded pipe shipments dropped by 16% quarter-on-quarter. - The total shipments of OCTG pipe, TMK's core product, remained flat as compared to the previous quarter and were up 13% year-on-year, reaching 491 thousand tonnes. - Shipments of premium connections in the first quarter of 2014 amounted to 193 thousand joints, up 18% year-on-year, but down 4% quarter-on-quarter. - Decrease in shipments and less favorable product mix of OCTG pipe (including premium connections) and seamless line pipe, coupled with the rouble devaluation, will put some downward pressure on TMK's 1Q financials in comparison to the expectations. 1Q 2014 Summary Results (thousand tonnes) Product 1Q 2014 4Q Q-o-Q, % 1Q 2014 1Q 2013 Y-o-Y, % 2013Seamless Pipe 626 642 -3% 626 625 0.1%Welded Pipe 396 471 -16% 396 433 -9%Total 1,022 1,113 - 8% 1,022 1,058 - 3%includingOCTG 491 493 -0.5% 491 434 13% 1Q 2014 Market Overview and Performance by Division Russian Division By 2014, key tubular products consumers had stocked up considerableinventories, which reduced demand for oil and gas pipe and and industrialpipe in the first quarter of 2014. In the first quarter, TMK's Russian division shipped 682 thousand tonnes(1)of tubular products, down 9% and 10% quarter-on-quarter and year-on-yearrespectively. The Russian division's seamless pipe shipments decreased by 5%quarter-on-quarter to 454 thousand tonnes. The Russian division increasedseamless OCTG pipe shipments by 5% quarter-on-quarter and 7% year-on-year,with a total of 272 thousand tonnes shipped. Seamless line pipe shipments were down by 22% quarter-on-quarter and by 31%year-on-year. Shipments of seamless industrial pipe fell by 7% quarter-on-quarter, butrose by 3% year-on-year. In the first quarter of 2014, large diameter pipe shipments amounted to 77thousand tonnes, down 19% quarter-on-quarter. This decline is due to thecompletion of several pipeline projects in late 2013. (1) This includes shipments from TMK's Russian facilities, TMK-Kaztrubpromand TMK GIPI to the Russian, CIS and non-CIS markets (excluding the NorthAmerican market) American Division Due to expansion of horizontal drilling and an increasing number of activerigs in the U.S. and Canada, the demand for OCTG pipe in the Americanmarket grew by 4% in the first quarter of 2014. Nevertheless, the marketcontinues to be affected by considerable volumes of tubular productimports, the majority of which is under current review by the U.S.Department of Commerce to determine compliance to fair trade practices. In the reporting period, TMK's American division increased its shipments by14% year-on-year, reaching a total of 298 thousand tonnes of tubularproducts(2). As compared to the fourth quarter of 2013, the total shipmentsfell by 7% due to a decline in shipments of welded OCTG and line piperelated to the extreme winter weather conditions in the U.S. and Canada,which impacted both railroad and truck service. Seamless OCTG pipe shipments amounted to 98 thousand tonnes, virtuallyunchanged quarter-on-quarter and up 21% year-on-year. In the first quarter of 2014, the American division shipped 114 thousandtonnes of welded OCTG pipe, down 13% quarter-on-quarter, but up 15%year-on-year. Welded line pipe shipments went down by 33% quarter-on-quarter due to aseasonal decline in demand, as well as, the impact on transportationlogistics previously mentioned. The same factors accounted for the drop inwelded industrial pipe shipments, which were down 7% quarter-on-quarter.Also, during the first quarter of 2014, the American division took a seriesof steps to reduce the production and share of low-margin welded productsin its total output in response to low priced imports. (2) This includes products manufactured by TMK's Russian and Romanianfacilities and sold on the North American market. European Division The first quarter of 2014 saw early signs of recovery in the European pipemarket. While consumption remains low, demand is mainly driven by tubularproduct distributors stocking up their inventories. In the reporting period, the European division shipped a total of 41thousand tonnes of pipe, up 3% year-on-year, but down 5%quarter-on-quarter. Premium Segment TMK ships pipe with premium connections and also provides threadingservices for third parties. The demand for TMK UP premium connectionsremains high, sustained by expansion of directional and horizontal drillingin America. However, many American energy companies continue transition tooil drilling, reducing the overall number of gas rigs and restrainingdemand for premium connections, a product widely used in natural gasproduction. During the reporting period, TMK shipped more than 193 thousand joints ofpremium connections, up 18% year-on-year. Outlook TMK expects the 2014 demand for tubular products in Russia to follow aslight downward trend due to the unstable macroeconomic environment,exchange rate volatility and uncertainty in commodity markets. Still, theCompany is planning to increase its shipments of seamless OCTG pipe,including those with premium connections. In the American market, TMK expects demand for OCTG to continue to improveas the number of wells and footage drilled increases with the average rigcount, both in total number and particularly in the number of horizontalrigs. However, the American division expects a minor decline in welded pipeshipments due to continued pressure from unfairly priced imports. TMK alsoexpects a stronger demand for line pipe in the U.S. The Eurozone economy is projected to return to cautious growth in 2014,which will gradually drive tubular product consumption in Europe up. In general, the Company expects a marginal decrease in its pipe shipmentsfor 2014. ***For further information regarding TMK please visit www.tmk-group.ru ordownload 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 *** ТМК (www.tmk-group.ru) TMK (LSE: TMKS) is a leading global manufacturer and supplier of steelpipes for the oil and gas industry, operating 28 production sites inRussia, the U.S., Canada, Romania, Oman, the UAE, and Kazakhstan, and twoR&D centres in Russia and the U.S. In 2013, TMK's pipe shipments totaled4.3 million tonnes. The largest share of TMK's sales belongs to high marginoil 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 on the London Stock Exchange, the OTCQXInternational Premier trading platform in the U.S. and on the MoscowExchange 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 European division:Works; TMK-ARTROM;Sinarsky Pipe Plant; TMK-RESITA.TMK-CPW; Middle East division:TMK-Kaztrubprom; TMK GIPI (Oman);TMK-INOX; Threading & Mechanical Key Premium LLC (Abu-TMK-Premium Service; Dhabi);TMK Oilfield Services. TMK Corporate CommunicationsIlya ZhitomirskyTel.: +7 495 775 7600E-mail: pr@tmk-group.com 24.04.2014 EquityStory.RS, LLC's 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: 2006Time of Receipt: Apr 24, 2014 09:09:15 End of Announcement EquityStory.RS, LLC News-Service ---------------------------------------------------------------------------UK-Regulatory-announcement transmitted by DGAP - a company of EQS Group AG.The issuer is solely responsible for the content of this announcement.