14 Oct 2015 16:33
PAO TMK / MiscellaneousTMK Announces 9M 2015 Operational Results 14-Oct-2015 / 16:33 CET/CESTDissemination 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. --------------------------------------------------------------------- October 14, 2015 PRESS RELEASE TMK Announces 9M 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 nine months of2015. 3Q 2015 and 9M 2015 Highlights - In 9M 2015, TMK shipped a total of 2,934 thousand tonnes of steel pipe, down 7.1% y-o-y due to a decrease in sales at the American Division, which was partially offset by increased shipments at the Russian Division, where total shipments increased 9% y-o-y. In 3Q 2015 TMK shipments increased by 1.5% q-o-q to 977 thousand tonnes. - During the first nine months of 2015 total seamless pipe shipments fell by 2.7% y-o-y to 1,799 thousand tonnes. In 3Q 2015, shipments decreased by 1.3% q-o-q to 586 thousand tonnes. At the same time, TMK's share grew on the back of total seamless pipe consumption decrease at Russian market. - In 9M 2015, total welded pipe shipments were down 13.4% y-o-y, amounting to 1,135 thousand tonnes, mainly due to a decline in sales of welded OCTG and welded line pipe across the American Division. In 3Q 2015, welded pipe shipments rose 6% q-o-q to 391 thousand tonnes as a result of the increased shipments of welded industrial and line pipe by the Russian Division. - During the first nine months of 2015, total shipments of premium threaded connections amounted to 482 thousand joints, down 31.2% y-o-y. In 3Q 2015, shipments of premium products were down 25.3% q-o-q, totalling 119 thousand items. The decrease in shipments of premium products was triggered by the suspension of a number of complex oil and gas projects in North America due to the slump in global hydrocarbon prices. - Strong performance of the Russian division, more efficient working capital management and better financial terms of contracts with key Russian customers allowed TMK to generate strong cash flow and significantly reduce debt in 3Q. 3Q 2015 and 9M 2015 Summary Results(thousand tonnes) Products 3Q 2015 2Q 2015 Q-o-Q, % 9M 2015 9M 2014 Y-o-Y, %Seamless pipe 586 594 (1.3%) 1 799 1 848 (27%)Welded pipe 391 369 6.0% 1 135 1 311 (13.4%)Total 977 962 1.5% 2 934 3 159 (7.1%)Including OCTG 339 328 3.4% 1 092 1 417 (23.0%) 3Q 2015 and 9M 2015 Market Overview and Performance by Division Russian Division In 3Q 2015, Russia's pipe market saw no major changes. Reduced imports oftubular products to Russia helped TMK gain the local market share. In 9M 2015, the Russian Division increased total shipments to 2,344thousand tonnes(1), up 9.3% y-o-y. In 3Q 2015, the Division shipped 823thousand tonnes of pipe, up 3.2% q-o-q. In 9M 2015, the Russian Division's seamless pipe shipments grew by 4.9%y-o-y to 1,394 thousand tonnes. In 3Q 2015, the Division shipped 476thousand tonnes of seamless tubular products, up 3.6% q-o-q. In 9M 2015, the Division's seamless OCTG shipments declined by 1.3% y-o-yto 745 thousand tonnes, while in 3Q 2015, shipments were flat q-o-q (249thousand tonnes). In 9M 2015, the Russian Division's seamless industrial pipe shipments grewby 16% y-o-y to 264 thousand tonnes. In 3Q 2015, the Division shipped 104thousand tonnes of seamless industrial pipe, up 19.5% q-o-q. In 3Q 2015, line seamless pipe shipments were flat q-o-q and totalled 123thousand tonnes. In 9Q 2015, the Division shipped 386 thousand tonnes ofthis product, up 11.2% y-o-y. In 9M 2015, TMK's Russian Division shipped a total of 950 thousand tonnesof welded pipe, up 16.5% y-o-y. In 3Q 2015, welded pipe shipments grew by2.6% q-o-q to 347 thousand tonnes. In 9M 2015, TMK's Russian Division shipped 474 thousand tonnes of largediameter pipe (LDP), up 58% y-o-y. The growth was fuelled by major gaspipeline projects, including the Southern Corridor, Bovanenkovo-Ukhta - 2and the Power of Siberia. 3Q 2015 saw reduced LDP shipments by 30.5% q-o-qtotalling 131 thousand tonnes, as LDP supplies for Gazprom's trunk pipelineprojects in 2Q were close to the record high. (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 In 3Q 2015, Baker Hughes reported a decline in the overall active rig countin the USA by 12% q-o-q to 809 rigs. This resulted from low oil pricesaffecting US demand for OCTG products and increasing local pipeinventories. The American Division shipped a total of 468 thousand tonnes of steel pipein 9M 2015, a 48.1% drop y-o-y. In 3Q 2015, shipments went down by 4.6%q-o-q to 116 thousand tonnes. In 9M 2015, seamless pipe shipments fell by 30.2% to 282 thousand tonnes.In 3Q 2015, the Division shipped 72 thousand tonnes of this product, down20.8% q-o-q. During the nine months of 2015, seamless OCTG shipments slimmed down by22.9% y-o-y to 241 thousand tonnes. In 3Q 2015, shipments of this productfell by 2.6% q-o-q to 68 thousand tonnes. In 9M 2015, TMK's American Division shipped a total of 186 thousand tonnesof welded pipe, down 62.6% y-o-y. In 3Q 2015, 44 thousand tonnes of weldedpipe were shipped, an increase of 43.7% q-o-q. In 9M 2015, the American Division's welded OCTG pipe shipments dropped by69.6% y-o-y to 103 thousand tonnes. In 3Q 2015, the Division shipped 19thousand tonnes of this product, up 137.9% q-o-q. European Division Throughout the year, the European pipe market environment has beenchallenging due to low demand for tubular products and tough competition.These factors continue to drive prices for tubular and all steel productsdown. Sluggish pipe demand in the USA forced many European producers whichusually export to North America to pull back from this market, which hasincreased competition in Europe. In 9M 2015, TMK's European Division shipped a total of 122 thousand tonnesof seamless industrial pipe, up 6.4% y-o-y. In 3Q 2015, shipments decreasedby 12.4% q-o-q to 38 thousand tonnes. Premium Segment The premium segment remains a strategic priority for the Russian Division,especially in the context of its import substitution capabilities. In 3Q 2015, TMK shipped H2S-resistant pipes complete with ТМК UP FMTpremium threaded connections to LUKOIL Uzbekistan Operating Company, anaffiliate of LUKOIL Overseas, to be used at the gas condensate fields ofthe Kandym group in the southwest Uzbekistan. TMK has also completed shipment of 1,716 tonnes of premium tubular productsas part of a long-term agreement with Yamal LNG, in line with agreeddelivery targets for 2015. In August 2015, the Company took part in Gazprom's tender for premiumtubular products. In 3Q and 4Q 2015, TMK will supply Gazprom with over 13thousand tonnes of TMK UP FMC, TMK UP GF and TMK UP FJ, TMK UP FMT, and ТМКUP PF seamless steel threaded connection pipes. In October, Sakhalin Energy and TMK signed a memorandum of partnership forTMK's premium threaded connection pipes to be used by Sakhalin-2 Project. During a meeting held at the Sochi 2015 International Investment Forum TMKand Gazprom signed a long-term agreement to supply a complete set ofpremium tubular products to Gazprom. TMK will supply high strength specialpipes with premium threaded connections of carbon, alloy and special steelsdesigned for adverse climate conditions and aggressive environments. Outlook The Russian pipe market will retain a high level of demand due to increasedoil production, the launch of new wells and growth in drilling activity.The Company will focus on bolstering its positions in the line pipe andOCTG segments, taking advantage of lower imports of this product intoRussia. The Russian welded and seamless industrial pipe market will see low demanddue to challenges facing construction and engineering companies. LDP volumes will be supported by supplies for the Power of Siberia projectand demand from Gazprom and Transneft for repair and maintenance activity. US demand for OCTG will remain low for the remainder of the year asdrilling volumes continue to reduce. A gradual recovery of the NorthAmerican pipe market is not expected until 2016, subject to oil pricestabilisation, drilling volumes and inventory reduction. In our view, the European pipe market will not decrease, remaining on thecurrent level. Generally, despite difficulties in some markets TMK expects to maintain2015 shipments on the previous year level. Lower US volumes will be offsetby increased shipments of the Russian Division, with the EuropeanDivision's performance remaining at the same level. *** 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 more than 30 production sites inthe United States, Russia, Canada, Romania, Oman, UAE, and Kazakhstan andtwo R&D centers in Russia and the USA. In 2014, TMK's pipe shipmentstotalled 4.4 million tonnes. The largest share of TMK's sales belongs tohigh margin oil country tubular goods (OCTG), shipped to customers in over80 countries. 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. 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 --------------------------------------------------------------------- 14-Oct-2015 The EquityStory.RS, LLC Distribution Services includeRegulatory Announcements, 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: 2866 Time of Receipt: 14-Oct-2015 / 16:31 CET/CEST End of Announcement EquityStory.RS, LLC News Service --------------------------------------------------------------------- 402689 14-Oct-2015UK-Regulatory-announcement transmitted by DGAP - a service of EQS Group AG.The issuer is solely responsible for the content of this announcement.