24 Apr 2015 13:44
OAO TMK / Miscellaneous 24.04.2015 13:44 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, 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 andassumptions of TMK management concerning known and unknown risks anduncertainties. TMK, one of the world's leading producers of tubular products for oil andgas industry, announces its operational results for the first quarter of2015. 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, % 2014Seamless pipe 619 693 (11)% 619 626 (1)%Welded pipe 376 525 (28)% 376 396 (5)%Total 995 1,218 (18)% 995 1,022 (3)%includingOCTG 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 oilprices. 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 inwelded industrial pipe shipments, but up 6% year-on-year. The decline inwelded industrial pipe will not negatively affect our profitability as thisbusiness 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 marketshare in this segment rose to c. 60% vs. 53% in 1Q 2014, driven by higherline pipe and OCTG shipments. Seamless OCTG shipments slightly increased quarter-on-quarter, but weredown by almost 10% year-on-year. Seamless line pipe shipments were down by 19% quarter-on-quarter, but up by23% year-on-year. Shipments of seamless industrial pipe fell by 8% quarter-on-quarter, butrose by 7% year-on-year. In 1Q 2015 shipments of large diameter pipe (LDP) amounted to 155 thousandtonnes, achieving a more than twofold growth (103%) year-on-year, butmarginally declining (4%) quarter-on-quarter. (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 Due to the continuing slump in crude oil prices in 1Q 2015, Baker Hughesreported 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 forOCTG. Against this backdrop, the American division shipped a total of 230thousand tonnes of pipe in 1Q 2015, down 23% year-on-year. The totalshipments 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 ofwelded OCTG pipe fell by 34% year-on-year and 43% quarter-on-quarter, whileshipments 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 sawa 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-yearand quarter-on-quarter, respectively). Also, the decline is in part due tothe division's decision to cut production of welded pipe to bring down theshare of low-margin welded products in response to a weaker demand from oiland 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, down5% and 26% year-on-year and quarter-on-quarter, respectively. The share of premium connections in the total threaded pipe shipments of 1Q2015 reached 31% vs. 27% in 1Q 2014 and 28% in 4Q 2014. European Division In 1Q 2015, headwinds persisted in the European market, facing furtherpressures from Ukrainian, Byelorussian, Turkish and Chinese producers,which offer lower prices as compared to local manufacturers. A substantialdecline in OCTG consumption forces major seamless pipe producers to refocuson industrial pipe, thus putting further pressure on this segment. Despite a weak demand and rising competition, the European division shipped42 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 190thousand TMK UP joints, down 1% and 22% year-on-year andquarter-on-quarter, respectively. OutlookIn 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 beyondfrom major projects like the Power of Siberia, which will enable TMK togain business momentum and improve its margin-driven product mix. This willalso be supported by increasing our OCTG market share in Russia due toimport substitutions. The demand for welded and seamless industrial pipewill likely decline due to a weaker demand from construction andengineering industries. TMK expects the OCTG demand in the American market to deteriorate furtherin 1H 2015, as the active rig count remains near record lows, while themarket players are destocking. The excessive supply of tubular productscombined with a strong US Dollar and buoyant imports will put furtherpricing pressure. The outcome of the anti-dumping investigation on OCTG andline pipe will affect imports in these two segments going forward. In 2H2015, TMK expects the demand for OCTG and line pipe to gradually rebound,provided that crude oil prices and drilling volumes stabilise resulting ina 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 inAmerican division will be redressed by higher LDP volumes in Russia. *** 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 30 production sites in the UnitedStates, Russia, Canada, Romania, Oman, UAE, and Kazakhstan and two R&Dcenters in Russia and the USA. In 2014, TMK's pipe shipments totalled 4.4million tonnes. The largest share of TMK's sales belongs to high margin oilcountry tubular goods (OCTG), shipped to customers in over 80 countries.TMK delivers its products along with an extensive package of services inheat treating, protective coating, premium connections threading,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 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 24.04.2015 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: 2630Time of Receipt: Apr 24, 2015 13:43:08 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.