23 Jan 2015 08:18
OAO TMK / Miscellaneous 23.01.2015 09:18 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.--------------------------------------------------------------------------- January 23, 2015 PRESS RELEASE TMK Announces 4Q 2014 and FY 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 fourth quarterof 2014 and full year 2014. 4Q 2014 and FY 2014 Highlights - In 2014, TMK shipped a total of 4,377 thousand tonnes of steel pipe, up 1.5% year-on-year. In 4Q 2014, shipments grew by 10.4% quarter-on-quarter, reaching 1,218 thousand tonnes. - Seamless pipe shipments went up by 3.8% year-on-year to 2,541 thousand tonnes. Shipments in 4Q 2014 increased by 11.5% quarter-on-quarter to 693 thousand tonnes. - Welded pipe shipments in 2014 dropped by 1.5% year-on-year to 1,836 thousand tonnes due to lower demand for welded industrial and line pipe. In 4Q 2014, welded pipe shipments were up 8.9% quarter-on-quarter, reaching 525 thousand tonnes. - Shipments of OCTG pipe, TMK's core product, grew by 5.5% year-on-year to 1,937 thousand tonnes. In 4Q 2014, shipments of this product increased by 16.4% quarter-on-quarter to 519 thousand tonnes. - Shipments of premium connections amounted to 892 thousand joints in 2014, up 15.2% year-on-year. In 4Q 2014, shipments of premium products remained almost flat quarter-on-quarter, reaching 243 thousand joints. 4Q 2014 and FY 2014 Summary Results (thousand tonnes) Product 4Q 2014 3Q Q-o-Q, % 2014 2013 Y-o-Y, % 2014Seamless pipe 693 621 11.5% 2,541 2,449 3.8%Welded pipe 525 482 8.9% 1,836 1,864 -1.5%Total 1,218 1,103 10.4% 4,377 4,313 1.5%includingOCTG 519 446 16.4% 1,937 1,835 5.5% 4Q 2014 and FY 2014 Market Overview and Performance by Division Russian Division In 2014, the Russian pipe market grew by 9% year-on-year, with TMKmaintaining leadership in the domestic pipe industry. In 2014, TMK's Russian division shipped 2,984 thousand tonnes(1) of tubularproducts, which is flat year-on-year. In 4Q 2014, the division's shipmentswere up 10.3% quarter-on-quarter, reaching 841 thousand tonnes. Seamless pipe shipments totalled 1,824 thousand tonnes, which is in linewith 2013 performance. In 4Q 2014, shipments were up 12.4%quarter-on-quarter. In 2014, shipments of seamless OCTG pipe dropped by 1.4% year-on-year to997 thousand tonnes. In 4Q 2014, the shipments were up 11.9%quarter-on-quarter due to the start of winter procurement season at oil andgas companies. The division's shipments of seamless line pipe increased by 9.1%year-on-year. In 4Q 2014, shipments were up 29.2% quarter-on-quarter due tothe launch of a number of pipeline construction and related infrastructureprojects. In 2014, shipments of seamless industrial pipe went down by 10.7%year-on-year as a result of weaker demand from engineering companies. In 4Q2014, the shipments decreased by 11.3% quarter-on-quarter. Welded pipe shipments grew by 0.5% to 1,161 thousand tonnes in 2014, whileshipments of large diameter pipe (LDP) went up by 3.8% for the same period,reaching 461 thousand tonnes as several major pipeline projects gotunderway in Russia (Bovanenkovo-Ukhta - 2, Southern Corridor,Kuyumba-Taishet and others). In 4Q 2014, LDP shipments increased by 26.7%quarter-on-quarter to 162 thousand tonnes. (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 According to Baker Hughes, the active rig count totalled 1,861 rigs for2014, which was 100 rigs or 6% above the 2013 average. The total amount ofoil rigs went up by 11%, while gas rigs lost 13%, going down from 384 unitsin 2013 to 333 in 2014. This growth in rig count, combined with an increasein the number of tonnes consumed per rig, due to greater drillingefficiencies through pad drilling and an increase in the number ofhorizontal wells, led to an estimated increase in US OCTG consumption of18%, as well as a decline in inventories of 19%. In 2014, TMK's American division increased its shipments by 5.8%year-on-year, reaching TMK IPSCO's all-time high of 1,238 thousand tonnesof tubular products(2). In 4Q 2014, the division's shipments grew by 9.5%quarter-on-quarter to 338 thousand tonnes. In 2014, shipments of seamless and welded OCTG pipe were up 22.6% and 3.3%,respectively, driven by the rise in drilling activity and development ofunconventional hydrocarbon reserves in North America. In 4Q 2014, theshipments increased by 12.2% and 21.1% quarter-on-quarter, respectively. Welded pipe shipments went down by 4.8% in 2014 due to the division'scommitment to expand the production of higher value-added pipe by reducingthe share of low-margin products. Shipments of pipe with premium connections also reached record levels,resulting in a yearly increase of 38.5% as well as an increase in US marketshare from 15% to 18% year-on-year within the premium connections marketsegment. Moreover, despite the fact that energy sector companies continuedto focus on oil drilling, which generally require semi-premium or lowervalue added premium connections, shipments of full-premium or higher valueadded premium connections increased as a percentage of the company'soverall premium connection shipments. This resulted in a higher averageselling price for these products. Furthermore, the positive ruling on the US OCTG Trade Case allowed marketprices to gradually recover during 2014. This price-improvement trendachieved in 2014, is now under threat due to expected declines in capex ofenergy sector companies on account of the recent decline in the price ofoil. With Baker Hughes' recent rig count now showing a total of 1,750 rigs,TMK's American division expects 2015 shipments to be negatively affected,particularly shipments of lower value added products. (2) This includes products manufactured by TMK's Russian, Romanian andOmani facilities and sold on the North American market. European Division In 2014, European pipe producers were affected by both weaker demand andovercapacity, which led to stronger competition and negative pricingenvironment. European pipe consumers focused on keeping inventories at aminimum level. In 4Q 2014, the pipe market environment in the region aggravated furtherdue to the Ukrainian crisis. Many European exporters, previously orientedto Russia, switched over to the European market. In addition, the Ukrainianpipe producers increased their shipments to EU countries, as the localdemand dropped considerably in recent months. The division shipped 154 thousand tonnes(3) of seamless pipe in 2014, down1.2% year-on-year. In 4Q 2014, the division's shipments were up 19.9%quarter-on-quarter, reaching 39 thousand tonnes. (3) This includes shipments from the Romanian plant TMK-ARTROM to theEuropean market Premium Segment In 2014, the demand for TMK UP premium connections remained high, sustainedby expansion of directional and horizontal drilling in America and Russia. Shipments of TMK UP premium connections amounted to 892 thousand joints, up15.2% year-on-year. In 4Q 2014, shipments of premium connections remainedalmost flat quarter-on-quarter, reaching 243 thousand joints. 2015 Outlook The pipe market environment is strongly affected by global oil prices,which have a direct impact on oil and gas companies' CAPEX. For Russianentities, the situation is further complicated by restricted access toWestern credit. With the current oil prices, the Company expects pipe consumption in Russiamight slightly go down. However, major pipeline projects in Russia(Southern Corridor, Power of Siberia) will enable TMK to boost shipmentsand improve product mix in the welded large diameter pipe segment. In the American market, TMK expects demand for OCTG to drop proportionatelyto the decrease in rig count. The Company expects the decline in demand tobe more severe during the first half of the year, as inventories adjust tothe deteriorating market conditions, with the possibility of a slightrecovery during the second half of the year contingent upon an improvementin oil and gas prices. Currently, most European pipe customers anticipate their 2015 performanceto be in line with 2014. While consumer expectations of 1Q 2015 are ratherdownbeat, they are somewhat more optimistic about 2Q 2015 onwards. ***For further information regarding TMK, please, visit www.tmk-group.ru aswell as download the YourTube iPad application from the App Storehttps://itunes.apple.com/ru/app/yourtube/id516074932?mt=8&ls=1 *** 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 2014, TMK's pipe shipments totalled4.4 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 production assets structure: 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 ZhitomirskyPhone: +7 495 775 7600E-mail: pr@tmk-group.com 23.01.2015 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: 2483Time of Receipt: Jan 23, 2015 09:17:52 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.