LUXEMBOURG — (Marketwire) — 11/07/12 — Tenaris S.A. (NYSE: TS) (BAE: TS) (BVM: TS) (MILAN: TEN) (“Tenaris”) today announced its results for the quarter and nine months ended September 30, 2012 with comparison to its results for the quarter and nine months ended September 30, 2011.
Sales increased year on year led by higher demand in North and South America, but, sequentially, they were affected by lower shipments to the Middle East and lower demand for industrial products in Europe, in addition to seasonal factors.
EBITDA, excluding extraordinary items, declined 10% sequentially with margins being affected by product mix (a lower proportion of seamless products in the sales mix) and efficiency losses related to operational issues at the Tamsa steel shop and plant maintenance shutdowns.
Cash flow from operations remains strong and amounted to US$491.4 million for the quarter. Our net debt (total borrowings less cash and other current investments) decreased to US$265.8 million, at the end of the third quarter of 2012, from US$540.5 million at the end of the previous quarter.
Our board of directors approved the payment of an interim dividend of US$0.13 per share (US$0.26 per ADS), or approximately US$153 million. The payment date will be November 22, 2012 (however, because such date is not a business day in the U.S., shareholders in all jurisdictions may receive their interim dividend on or after November 23, 2012, which is the first business day following the stated payment date), and the ex-dividend date will be November 19, 2012.
Following the acquisition of the non-controlling interests in Confab Industrial S.A. (Confab) and its further delisting, we have changed our internal organization and therefore combined the Tubes and Projects segments.
Therefore, starting with the financial statements for the period ended September 30, 2012, we will report under segments: Tubes (tubular products and services) and Others (other products and services).
Additionally, the coiled tubing operations, which were previously included in the Tubes segment and which accounted for 1% of total sales in 2011, have been reclassified to Others.
In spite of the weak economic recovery, demand for energy has remained stable and oil prices are at levels which should continue to support investment in exploration and production activity worldwide during 2013.
North American natural gas prices have risen above their early year lows as demand shows strong year on year growth. In 2013, we expect drilling activity for gas to recover gradually.
In the fourth quarter of 2012, however, our sales in North America will be affected by the current market uncertainty that is driving a reduction in OCTG inventories.
In the rest of the world, drilling activity should increase gradually led by the growth in the exploration and development of deepwater and unconventional reserves. In the coming quarters, sales to oil and gas customers in the Middle East are expected to recover from the low level of the third quarter.
Sales to industrial markets, particularly in Europe, are expected to remain at low levels.
EBITDA margins are expected to remain at the level of this third quarter, as the impact of lower prices in less differentiated segments is likely to offset product mix and industrial efficiency improvements.
Net sales of tubular products and services increased 8% year on year but decreased 4% sequentially as sales were mainly affected by lower shipments to the Middle East and lower demand for industrial products in Europe. In North America, sequentially lower sales of deepwater line pipe in the Gulf of Mexico were largely offset by higher sales in Mexico. Sales increased in South America, mainly in Argentina and Colombia. In Europe, lower demand from the industrial sector and seasonally lower sales to distributors were the main causes of the sequential decrease. In the Middle East and Africa sales decreased sequentially due to lower shipments relating to the timing of orders. In the Far East and Oceania sales decreased sequentially due to lower sales of OCTG and structural products.
Operating income from tubular products and services, which, in the third quarter of 2012, included a non-recurring gain of US$49.2 million, increased 27% year on year but decreased 5% sequentially. The sequential decline in operating income reflects a lower proportion of seamless pipes in the sales mix and efficiency losses related to operational issues at the Tamsa steel shop and plant maintenance shutdowns.
Net sales of other products and services decreased 14% year on year and 17% sequentially, reflecting lower sales of industrial equipment in Brazil, which also impacted operating income and margins.
, or SG&A, amounted to 17.3% of net sales in the third quarter of 2012, compared to 17.4% in the previous quarter and 18.5% in the third quarter of 2011.
amounted to US$44.2 million in the third quarter of 2012, compared to US$0.8 million in the previous quarter and US$1.6 million in the third quarter of 2011. In August, 2012, Confab, our Brazilian subsidiary, collected US$49 million from the Brazilian government, in interest and monetary adjustment over a tax benefit received in 1991.
amounted to US$8.8 million in the third quarter of 2012, compared to US$7.0 million in the previous quarter and US$8.5 million in the third quarter of 2011.
generated a loss of US$15.2 million during the third quarter of 2012, compared to a loss of US$16.5 million in the previous quarter and a gain of US$28.0 million during the third quarter of 2011. These results largely reflect gains and losses on net foreign exchange transactions and the fair value of derivative instruments and are partially offset by changes to our net equity position. During the third quarter of 2011, these gains were mainly attributable to the revaluation of the US dollar against the Brazilian real (+18.6%), as our Brazilian subsidiaries held a positive net financial position in US dollar in the quarter.
generated a gain of US$14.4 million in the third quarter of 2012, compared to a gain of US$11.1 million in the previous quarter and a gain of US$1.5 million in the third quarter of 2011. These gains were derived mainly from our equity investment in Ternium and reflected higher results at Ternium.
totaled US$136.5 million in the third quarter of 2012, equivalent to 24% of income before equity in earnings of associated companies and income tax, compared to 25% in the previous quarter and in the third quarter of 2011.
amounted to gains of US$1.1 million in the third quarter of 2012, compared to losses of US$0.9 million in the previous quarter and to gains of US$40.5 million in the third quarter of 2011. Year on year, the reduction in gains attributable to non-controlling interests is due to the acquisition of all the non-controlling interests in Confab in the second quarter of 2012.
Net cash provided by operations during the third quarter of 2012 was US$491.4 million, compared to US$414.5 million in the previous quarter and US$336.3 million in the third quarter of 2011. Working capital increased by US$107.1 million during the third quarter of 2012, compared to a decrease of US$53.1 million in the previous quarter and a negligible increase in the third quarter of 2011. The increase in working capital in the third quarter of 2012, was mainly due to a decrease in trade payables, following the conclusion of several plant maintenance shutdowns.
Capital expenditures amounted to US$187.0 million in the third quarter of 2012, compared to US$204.5 million in the previous quarter and US$212.1 million in the third quarter of 2011.
Our net debt (total borrowings less cash and other current investments) decreased to US$265.8 million, at the end of the third quarter of 2012, from US$540.5 million at the end of the previous quarter.
Net sales of tubular products and services increased 13% to US$7,445.2 million in the first nine months of 2012, compared to US$6,586.1 million in the first nine months of 2011, reflecting a 6% increase in volumes and a 4% increase in average selling prices.
Operating income from tubular products and services increased 40% to US$1,679.6 million in the first nine months of 2012, from US$1,200.5 million in the first nine months of 2011, reflecting a 13% increase in sales and an improvement in the operating margin, mainly reflecting a better absorption of fixed and semi-fixed expenses on higher sales.
Net sales of other products and services decreased 1% to US$630.7 million in the first nine months of 2012, compared to US$635.8 million in the first nine months of 2011, mainly due to lower sales of industrial equipment in Brazil and coiled tubing, almost offset by higher sales of sucker rods.
Operating income from other products and services decreased 14% to US$91.0 million in the first nine months of 2012, compared to US$106.5 million during the first nine months of 2011, reflecting lower sales and operating margins.
amounted to 17.2% of net sales during the first nine months of 2012, compared to 19.2% in the same period of 2011.
amounted to US$16.2 million in the first nine months of 2012 compared to US$19.6 million in the same period of 2011.
amounted to a loss of US$18.5 million during the first nine months of 2012, compared to a gain of US$16.7 million during the first nine months of 2011. These results largely reflect gains and losses on net foreign exchange transactions and the fair value of derivative instruments and are partially offset by changes to our net equity position. These gains and losses are mainly attributable to variations in the exchange rates between our subsidiaries– functional currencies (other than the US dollar) and the US dollar, in accordance with IFRS.
generated a gain of US$44.6 million in the first nine months of 2012, compared to a gain of US$48.5 million in the first nine months of 2011. These gains were derived mainly from our equity investment in Ternium.
totaled US$429.5 million in the first nine months of 2012, equivalent to 25% of income before equity in earnings of associated companies and income tax, compared to US$358.1 million in the first nine months of 2011, equivalent to 27% of income before equity in earnings of associated companies and income tax.
declined to US$9.7 million in the first nine months of 2012, compared to US$62.8 million in the first nine months of 2011, as in the second quarter of 2012, we acquired all the non-controlling interests in Confab.
During the first nine months of 2012, net cash provided by operations was US$1,513.8 million, compared to US$827.1 million in the same period of 2011. Working capital increased by US$55.7 million in the first nine months of 2012, compared with an increase of US$492.6 million in the first nine months of 2011.
Capital expenditures amounted to US$587.9 million in the first nine months of 2012, compared with US$673.9 million in the same period of 2011.
Following our investments in Brazil during the first half of the year, amounting to US$1.3 billion (US$504.6 million in Usiminas and US$758.5 million in Confab) and the payment of a dividend of US$295.1 million, our financial position at September 30, 2012, amounted to a net debt position (total borrowings less cash and other current investments) of US$265.8 million, compared with a net cash position of US$323.6 million at December 31, 2011.
Some of the statements contained in this press release are “forward-looking statements.” Forward-looking statements are based on management–s current views and assumptions and involve known and unknown risks that could cause actual results, performance or events to differ materially from those expressed or implied by those statements. These risks include but are not limited to risks arising from uncertainties as to future oil and gas prices and their impact on investment programs by oil and gas companies.
Press releases and financial statements can be downloaded from Tenaris–s website at .
Giovanni Sardagna
Tenaris
1-888-300-5432