28 Jan 2016 10:58
PAO TMK / MiscellaneousTMK Announces 4Q 2015 and FY 2015 Operational Results 28-Jan-2016 / 11:58 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. --------------------------------------------------------------------------- 28 January 2016 PRESS RELEASE TMK Announces 4Q 2015 and FY 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 the oiland gas industry, announces its operational results for the fourth quarterof 2015 and full year 2015. 4Q 2015 and FY 2015 Summary Results (thousand tonnes) Products 4Q 2015 3Q Q-o-Q, % 2015 2014 Y-o-Y, % 2015Seamless pipe 613 586 4.6% 2,413 2,541 (5.0)Welded pipe 325 391 (16.8%) 1,460 1,836 (20.5%)Total 938 977 (4.0%) 3,873 4,377 (11.5%)Including OCTG 388 339 14.4% 1,480 1,937 (23.6%) 4Q 2015 and FY 2015 Highlights - In 2015, TMK shipped a total of 3,873 thousand tonnes of steel pipe, down 11.5% y-o-y. The decline was due to a significant drop in shipments in the American division, driven by a slowdown in drilling across the United States. In 4Q 2015, shipments were down 4.0% q-o-q to 938 thousand tonnes. - In 2015, seamless pipe shipments fell by 5.0% y-o-y to 2,413 thousand tonnes. Shipments in 4Q 2015 increased by 4.6% q-o-q to 613 thousand tonnes. - Welded pipe shipments in 2015 dropped by 20.5% y-o-y to 1,460 thousand tonnes due to lower shipments of welded OCTG in the American division, being hardly recouped by increased LDP shipments in the Russian division. In 4Q 2015, welded pipe shipments were down 16.8% q-o-q to 325 thousand tonnes. - In 2015, OCTG pipe shipments dropped by 23.6% y-o-y to 1,480 thousand tonnes. The drop was due to a significantly lower demand for these products in the American market as well. In 4Q 2015, OCTG shipments were up 14.4% q-o-q, reaching 388 thousand tonnes, due to seasonal procurement of tubular products by Russian oil and gas companies. - In 4Q 2015, shipments of TMK UP(TM) premium threaded connections amounted to 152 thousand joints, down 9.3% q-o-q. In 2015, shipments of TMK UP(TM) premium threaded connections totalled 684 thousand joints, a drop of 23.3% y-o-y. The decline resulted from suspension of many oil and gas production projects in the United States, due to the decline in global oil prices. 4Q 2015 and FY 2015 Results by Divisions Russian division 4Q 2015 vs. 3Q 2015 In 4Q 2015, TMK's Russian division saw a decline in shipments of tubularproducts, which fell 3.7% q-o-q to 793 thousand tonnes(1) due to weldedindustrial and line pipes shipments seasonal downturn. Seamless pipe shipments were up 4.5% q-o-q, totalling 498 thousand tonnes. OCTG shipments increased by 20.6% q-o-q to 304 thousand tonnes due to highdrilling volumes in Russia and the start of procurement season for tubularproducts at oil and gas companies. Welded pipe shipments were down 14.9% q-o-q to 295 thousand tonnes due tolower consumption of welded industrial and line pipe. In 4Q 2015, large diameter pipe (LDP) shipments grew by 21.4% q-o-q to 158thousand tonnes. (1) This includes shipments from TMK's Russian facilities, TMK-Kaztrubpromand TMK GIPI to the Russian, CIS and non-CIS markets (excluding NorthAmerica). FY 2015 vs. FY 2014 In 2015, TMK's Russian division shipped a total of 3,137 thousand tonnes ofsteel pipe, up 5.1% y-o-y thanks to drilling growth and LDP high demand. In the full year 2015, TMK increased its share in virtually every segmentof the Russian pipe market except low-margin welded industrial and linepipes. Shipments of seamless pipe in 2015 were up 3.7% to 1,892 thousand tonnes. In 2015, OCTG shipments were up 2.8% y-o-y to 1,051 thousand tonnes, drivenby the rise in drilling activity across Russia and import substitutioninitiatives vigorously pursued by TMK. In 2015, the Russian division shipped 1,244 thousand tonnes of welded pipe,up 7.2% y-o-y. The growth is mainly driven by an increase in large diameterpipe shipments to support the implementation of the Power of Siberia,Southern Corridor, Bovanenkovo-Ukhta-2 and Ukhta-Torzhok-2 pipelineprojects. In 2015, TMK's Russian division shipped 632 thousand tonnes ofLDP, up 37.0% y-o-y. American division 4Q 2015 vs. 3Q 2015 According to Baker Hughes, in 4Q 2015, the active rig count in the USAtotalled 698 rigs, a 14% drop q-o-q, as many oil and gas productionprojects were suspended due to the decline in global oil prices. Besides,the continued significant supply of imports to the American pipe market isputting further pressure on prices. In 4Q 2015, the American division saw its shipments decline by 7.7% q-o-qto 107 thousand tonnes. Shipments of seamless pipe were up 6.9% q-o-q to 77thousand tonnes. OCTG shipments were down by 3.2% q-o-q to 84 thousandtonnes. Welded pipe shipments totalled 30 thousand tonnes, down 31.8%q-o-q. FY 2015 vs. FY 2014 In 2015, the division's shipments declined 53.6% y-o-y to 575 thousandtonnes, due to a slump in drilling and a high proportion of pipe imports inthe US market, coupled with a significant inventory build-up. In 2015, seamless pipe shipments totalled 359 thousand tonnes, down 36.1%y-o-y. OCTG shipments dropped 53.1% y-o-y to 428 thousand tonnes. Welded pipe shipments were 216 thousand tonnes, down 68.1% y-o-y. European division 4Q 2015 vs. 3Q 2015 The European pipe market continued to be challenging in 4Q 2015 andthroughout the year, with low consumption of tubular products andsignificant inventories. Growing competition from non-EU pipe producers(Ukraine, Belarus) put pressure on prices as well. Many European pipeproducers faced production capacity under-utilisation, and had to resort tolayoffs or suspend production. Despite these contrarious conditions, TMK's European division increased itsshipments of tubular products in 4Q 2015 by 2.2% q-o-q to 39 thousandtonnes of seamless pipe. FY 2015 vs. FY 2014 Despite the decline in pipe consumption in the European market in 2015 theEuropean division increased its seamless pipe shipments by 4.3% to 161thousand tonnes. Premium Segment In 2015, the demand for TMK UP(TM) premium threaded connections wasshrinking, mainly due to the suspension of complex hydrocarbons productionprojects in the USA, where premium products were widely used. Low globaloil prices also had an impact on investment programmes pursued by Russianoil and gas companies, with some of them opting for cheaper products underthe circumstances. In October 2015, TMK signed a partnership memorandum for tubular productswith TMK's premium threaded connections to be used by Sakhalin Energy atits Sakhalin-II project. In December 2015, TMK supplied casing and fittings with threaded TMK UP(TM)PF ET connections featuring GreenWell lubricant-free coating toLUKOIL-Nizhnevolzhskneft, which develops the Korchagin oil and gascondensate field in the Caspian Sea. This is the first project to use TMK'spremium products with lubricant-free coating in an offshore well. In 4Q 2015, shipments of premium threaded connections amounted to 152thousand joints, down 9.3% q-o-q. In 2015, shipments of premium threadedconnections totalled 684 thousand joints, a drop of 23.3% y-o-y. 2016 Outlook According to TMK there will be no major changes in 2016 in the Russianmarket: oil and gas pipe consumption will remain at the 2015 level, whileLDP will be in demand both to meet repair and maintenance needs and supporttrunk pipeline construction projects. The industrial pipe segment will mostprobably show further decline, although with a lower rate. TMK will seek to maintain high shipment volumes in the best-sellingsegments of the pipe market, above all in OCTG. In the United States, the demand for oil and gas pipe will remain weak dueto low drilling volumes, large inventories, and continued low-pricedimports. The American pipe market is not expected to recover before the endof 2016. Pipe consumption in the European pipe market will also remain low in 1Q2016. A gradual improvement is expected no earlier than 2H 2016. In 2016 TMK intends to increase general shipments both in the Russiandivision and in the Group compared to 2015. ***For further information regarding TMK please visit www.tmk-group.com ordownload the YourTube iPad application from the App Storehttps://itunes.apple.com/ru/app/yourtube/id516074932?mt=8&ls=1 ТМК at Facebook - https://www.facebook.com/TMKGroupRU *** TMK (www.tmk-group.com) TMK (LSE: TMKS) is a leading global manufacturer and supplier of steel pipefor oil and gas industry, operating 30 production sites in the UnitedStates, Russia, Canada, Romania, Oman, UAE and Kazakhstan with 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 CompletionsWorks; 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 PR Department:Alexander GoryunovTel: +7 (495) 775-7600PR@tmk-group.com --------------------------------------------------------------------------- 28-Jan-2016 The EquityStory.RS, LLC Distribution Services include RegulatoryAnnouncements, Financial/Corporate News and Press Releases.Media 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 Category Code: MSC TIDM: TMKS Sequence Number: 2971 Time of Receipt: 28-Jan-2016 / 11:57 CET/CEST End of Announcement EquityStory.RS, LLC News Service --------------------------------------------------------------------------- 432843 28-Jan-2016UK-Regulatory-announcement transmitted by DGAP - a service of EQS Group AG.The issuer is solely responsible for the content of this announcement.