Tenaris Announces 2013 Second Quarter Results

Tenaris Announces 2013 Second Quarter Results 
The Financial and Operational Information Contained in This Press
Release Is Based on Unaudited Consolidated Financial Statements
Presented in U.S. Dollars and Prepared in Accordance With
International Financial Reporting Standards as Issued by the
International Accounting Standard Board and Adopted by the European
Union, or IFRS 
LUXEMBOURG -- (Marketwired) -- 08/01/13 --  Tenaris S.A. (NYSE: TS)
(BAE: TS) (BMV: TS) (MILAN: TEN) ("Tenaris") today announced its
results for the quarter ended June 30, 2013 in comparison with its
results for the quarter ended June 30, 2012.  


 
                                                                            
Summary of 2013 Second Quarter Results                                      
                                                                            
(Comparison with first quarter of 2013 and second quarter of 2012)          
                                         Q2 2013    Q1 2013       Q2 2012   
Net sales ($ million)                     2,829   2,678   6%    2,801   1%  
Operating income ($ million)               578     554    4%     621   (7%) 
Net income ($ million)                     430     423    2%     455   (6%) 
Shareholders' net income ($ million)       418     425   (2%)    456   (8%) 
Earnings per ADS ($)                       0.71   0.72   (2%)   0.77   (8%) 
Earnings per share ($)                     0.35   0.36   (2%)   0.39   (8%) 
EBITDA* ($ million)                        730     699    4%     759   (4%) 
EBITDA margin (% of net sales)            25.8%   26.1%         27.1%       
                                                                            
*EBITDA is defined as operating income plus depreciation, amortization and  
impairment charges/(reversals)                                              

 
Our second quarter sales increased 6% sequentially driven by higher
sales of premium OCTG products in the Middle East and Far East, which
offset a strong seasonal effect in Canada and lower sales of line
pipe products in Europe. Our EBITDA and operating margins continue to
maintain a good level in a competitive market.  
Cash flow from operations reached $611 million during the second
quarter of 2013. Following a dividend payment of $354 million in May
2013, our financial position at June 30, 2013, amounted to a net cash
position (cash and other current investments less total borrowings)
of $214 million, compared with $121 million at March 31, 2013.  
Market Background and Outlook 
Drilling activity in North America, after stabilizing in the U.S.
during the second quarter following an unusually wet spring in
Canada, is expected to pick up gradually during the rest of the year
supported by the current level of oil prices. In the rest of the
world, current oil and gas price levels should continue to support
the ongoing expansion in drilling activity in the Middle East and
offshore regions. 
In the second half, our sales in the Middle East and Africa will
continue to show strong year on year growth while our sales in South
America will be affected by lower shipments of line pipe in Brazil,
reflecting project delays. In the third quarter, our sales will
additionally be affected by seasonal effects and a weak industrial
sector in Europe while we do not expect to see a pick up in North
American sales before the fourth quarter.  
Our margins in the third quarter will be affected by a lower level of
sales and a less favorable product mix but are expected to recover to
current levels in the fourth quarter.  


 
                                                                            
Analysis of 2013 Second Quarter Results                                     
                                                                            
Tubes Sales volume                                                          
 (thousand metric tons)          Q2 2013      Q1 2013           Q2 2012     
Seamless                           677      657      3%       701     (3%)  
Welded                             286      289     (1%)      287     (0%)  
Total                              963      946      2%       988     (2%)  
                                                                            
                                                                            
             Tubes               Q2 2013      Q1 2013           Q2 2012     
(Net sales - $ million)                                                     
North America                      986     1,143    (14%)    1,270    (22%) 
South America                      652      595      9%       536      21%  
Europe                             218      268     (19%)     286     (24%) 
Middle East & Africa               626      400      57%      352      78%  
Far East & Oceania                 137      82       67%      130      5%   
Total net sales ($ million)       2,619    2,488     5%      2,575     2%   
Operating income ($ million)       553      526      5%       589     (6%)  
Operating income (% of sales)     21.1%    21.1%             22.9%          

 
Net sales of tubular products and services increased 5% sequentially
and 2% year on year. Sales increased sequentially driven by higher
sales of premium OCTG products in the Middle East and Far East, which
offset a strong seasonal effect in Canada and lower sales of line
pipe products in Europe. In North America sales declined due to the
seasonal spring break up in Canada and lower activity in the north of
Mexico. In South America, sales increased due to higher sales of OCTG
in Venezuela and OCTG and line pipe in Argentina. In Europe, sales
declined due to the non repetition of line pipe sales for offshore
projects in Norway and lower sales to hydrocarbon process industry
projects. In the Middle East and Africa sales increased due to higher
sales of premium products in Saudi Arabia, UAE and Iraq as well as
higher sales of coating services in Nigeria. In the Far East and
Oceania, sales increased due to higher sales of premium products in
Australia and Indonesia. 
Operating income from tubular products and services increased 5%
sequentially but declined 6% year on year. Sequentially, the increase
in operating income was driven by the increase in sales while
operating margin remained flat, as an improvement in the gross margin
was offset by higher SG&A expenses mainly due to the lower share of
shipments to our local markets. 


 
                                                                            
               Others                Q2 2013     Q1 2013         Q2 2012    
Net sales ($ million)                  210     190     10%     226     (7%) 
Operating income ($ million)            26      28     (7%)     32    (19%) 
Operating income (% of sales)         12.2%   14.5%           14.2%         

 
Net sales of other products and services increased 10% sequentially
due to higher sales of sucker rods, but declined 7% year on year.
Sequentially, despite the increase in revenues, operating income
declined 7% mainly due to a lower operating margin. 
Selling, general and administrative expenses, or SG&A, amounted to
$529 million, or 18.7% of net sales, in the second quarter of 2013,
compared to $476 million, 17.8% in the previous quarter and $487
million, 17.4% in the second quarter of 2012. Sequentially, the
increase in SG&A expenses was mainly due to the lower share of
shipments to our local markets. 
Financial results amounted to $11 million loss in the second quarter
2013, compared to a $9 million loss in the previous quarter and a $23
million loss in the second quarter of 2012. 
Equity in earnings of associated companies generated a gain of $12
million in the second quarter of 2013, in line with the result of the
previous quarter and compared with a $6 million gain in the second
quarter of last year. These results are mainly derived from our
equity investment in Ternium (NYSE: TX) and Usiminas.  
Income tax charges totaled $150 million in the second quarter of
2013, equivalent to 26.4% of income before equity in earnings of
associated companies and income tax, compared to $134 million, or
24.6% in the previous quarter and $148 million or 24.8% in the second
quarter of 2012.  
Results attributable to non-controlling interests amounted to gains
of $12 million in the second quarter of 2013, compared to losses of
$2 million in the previous quarter and losses of $1 million in the
second quarter of 2012. The sequential increase in results
attributable to non-controlling interests are due to higher results
at our Nigerian coating services subsidiary, Pipe Coaters Nigeria,
and at our Japanese subsidiary NKKTubes. 
Cash Flow and Liquidity of 2013 Second Quarter 
Net cash provided by operations during the second quarter of 2013 was
$611 million, compared to $563 million in the previous quarter and
$414 million in the second quarter of 2012.  
Capital expenditures amounted to $180 million for the second quarter
of 2013, compared to $184 million in the previous quarter and $205
million in the second quarter of 2012.  
Following a dividend payment of $354 million in May 2013, our
financial position at June 30, 2013, amounted to a net cash position
(cash and other current investments less total borrowings) of $214
million, compared with $121 million at March 31, 2013.  


 
                                                                            
Analysis of 2013 First Half Results                                         
                                                                            
                                                                            
                                        H1 2013  H1 2012 Increase/(Decrease)
Net sales ($ million)                    5,508    5,419           2%        
Operating income ($ million)             1,132    1,187          (5%)       
Net income ($ million)                    852      904           (6%)       
Shareholders' net income ($ million)      843      895           (6%)       
Earnings per ADS ($)                     1.43     1.52           (6%)       
Earnings per share ($)                   0.71     0.76           (6%)       
EBITDA ($ million)                       1,429    1,463          (2%)       
EBITDA margin (% of net sales)           25.9%    27.0%                     

 
Net income attributable to owners of the parent during the first half
of 2013 was $843 million, or $0.71 per share ($1.43 per ADS), which
compares with $895 million, or $0.76 per share ($1.52 per ADS), in
the first half of 2012. Operating income was $1,132 million, or 20.5%
of net sales during the first half of 2013, compared to $1.187
million, or 21.9% of net sales during the first half of 2012.
Operating income plus depreciation and amortization for the first
half of 2013, was $1,429 million, or 25.9% of net sales, compared to
$1,463 million, or 27.0% of net sales during the first half of 2012. 
The following table shows our net sales by business segment for the
periods indicated below: 


 
                                                                            
Net sales ($ million)        H1 2013         H1 2012     Increase/(Decrease)
Tubes                     5,107    93%    4,975    92%            3%        
Others                     400      7%     444      8%          (10%)       
Total                     5,508    100%   5,419    100%           2%        

 
Tubes 
The following table indicates, for our Tubes business segment, sales
volumes of seamless and welded pipes for the periods indicated below: 


 
                                                                            
Sales volume                                                                
(thousand metric tons)            H1 2013      H1 2012   Increase/(Decrease)
Seamless                           1,334        1,365            (2%)       
Welded                              575          576             (0%)       
Total                              1,909        1,941            (2%)       

 
The following table indicates, for our Tubes business segment, net
sales by geographic region, operating income and operating income as
a percentage of net sales for the periods indicated below: 


 
                                                                            
               Tubes                 H1 2013    H1 2012  Increase/(Decrease)
(Net sales - $ million)                                                     
North America                         2,129      2,539          (16%)       
South America                         1,247       999            25%        
Europe                                 486        548           (11%)       
Middle East & Africa                  1,026       633            62%        
Far East & Oceania                     219        256           (14%)       
Total net sales ($ million)           5,107      4,975            3%        
Operating income ($ million)          1,079      1,118           (4%)       
Operating income (% of sales)         21.1%      22.5%                      

 
Net sales of tubular products and services increased 3% to $5,107
million in the first half of 2013, compared to $4,975 million in the
first half of 2012, reflecting a 4% increase in average selling
prices due to a richer mix of products sold, partially offset by a 2%
decrease in volumes.  
Operating income from tubular products and services decreased 4% to
$1,079 million in the first half of 2013, from $1,118 million in the
first half of 2012. Despite a 3% increase in net sales, operating
income and operating margin decreased because of an increase in
selling, general and administrative expenses. 
Others 
The following table indicates, for our Others business segment, net
sales, operating income and operating income as a percentage of net
sales for the periods indicated below: 


 
                                                                            
                                                                            
              Others                 H1 2013    H1 2012  Increase/(Decrease)
Net sales ($ million)                  400        444           (10%)       
Operating income ($ million)           53         69            (23%)       
Operating income (% of sales)         13.3%      15.5%                      

 
Net sales of other products and services decreased 10% to $400 million
in the first half of 2013, compared to $444 million in the first half
of 2012, mainly due to lower sales of industrial equipment in Brazil. 
Operating income from other products and services decreased 23%, to
$53 million in the first half of 2013, compared to $69 million during
the first half of 2012, due to a 10% decline in sales and a lower
operating margin.  
Selling, general and administrative expenses, or SG&A, increased as a
percentage of net sales to 18.2% in the first half of 2013 compared
to 17.2% in the first half of 2012, mainly due to an increase in
provisions for contingencies and doubtful accounts in addition to
higher selling expenses associated with lower share of shipments to
our local markets. 
Financial results were a loss of $20 million in the first half of
2013 compared to a loss of $11 million in the same period of 2012.
The increase in the financial loss is mainly due to higher interest
expenses associated with a higher average debt during the first half
of 2013 in comparison with the first half of 2012.  
Equity in earnings of associated companies generated a gain of $24
million in the first half of 2013, compared to a gain of $20 million
in the first half of 2012. These gains were derived mainly from our
equity investment in Ternium and Usiminas. Following the conclusion
of the investment in Usiminas's purchase price allocation, results
from equity in earnings of associated companies for the first half of
2012 were reduced by $10 million. 
Income tax charges amounted to $284 million in the first half of
2013, equivalent to 25.5% of income before equity in earnings of
associated companies and income tax, compared to $293 million in the
first half of 2012, equivalent to 24.9% of income before equity in
earnings of associated companies and income tax. 
Income attributable to non-controlling interests amounted to $10
million in the first half of 2013, compared to $9 million in the
first half of 2012. Despite the full acquisition of the minorities in
Confab in May 2012, income attributable to non-controlling interests
remained stable mainly due to improved results at our Japanese
subsidiary NKKTubes and at our Nigerian coating services subsidiary,
Pipe Coaters Nigeria. 
Cash Flow and Liquidity of 2013 First Half 
Net cash provided by operations during the first half of 2013 rose to
$1,174 million, compared to $1,022 million in the first half of 2012. 
Capital expenditures amounted to $364 million in the first half of
2013, compared to $401 million in the first half of 2012.  
Following a dividend payment of $354 million in May 2013, our
financial position at June 30, 2013, amounted to a net cash position
(cash and other current investments less total borrowings) of $214
million, compared with a net debt position of $271 million at
December 31, 2012.  
Tenaris Files Half-Year Report 
Tenaris S.A. announces that it has filed its half-year report for the
six-month period ended June 30, 2013 with the Luxembourg Stock
Exchange. The half-year report can be downloaded from the Luxembourg
Stock Exchange's website at www.bourse.lu and from Tenaris's website
at www.tenaris.com/investors. 
Holders of Tenaris's shares and ADSs, and any other interested
parties, may request a hard copy of the half-year report, free of
charge, at 1-888-300-5432 (toll free from the United States) or
52-229-989-1940 (from outside the United States). 
Conference call 
Tenaris will hold a conference call to discuss the above reported
results, on August 2, 2013, at 10:00 a.m. (Eastern Time). Following a
brief summary, the conference call will be opened to questions. To
access the conference call dial in +1 800 706.7745 within North
America or +1 617 614.3472 Internationally. The access number is
"51895039". Please dial in 10 minutes before the scheduled start
time. The conference call will be also available by webcast at
www.tenaris.com/investors  
A replay of the conference call will be available on our webpage
http://ir.tenaris.com/ or by phone from 12:00 pm on August 2 through
12:00 am on August 9. To access the replay by phone, please dial +1
888 286.8010 or +1 617 801.6888 and enter passcode "10370748" when
prompted. 
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. 


 
                                                                            
Consolidated Condensed Interim Income Statement                             
                                                                            
                                                                            
(all amounts in                                                             
 thousands of U.S.           Three-month period      Six-month period ended 
 dollars)                      ended June 30,               June 30,        
                          -----------------------   ----------------------- 
                             2013         2012         2013         2012    
                          ----------   ----------   ----------   ---------- 
Continuing operations                   Unaudited                 Unaudited 
Net sales                  2,829,270    2,801,492    5,507,575    5,418,841 
Cost of sales             (1,714,443)  (1,694,712)  (3,359,875)  (3,305,809)
                          ----------   ----------   ----------   ---------- 
Gross profit               1,114,827    1,106,780    2,147,700    2,113,032 
Selling, general and                                                        
 administrative expenses    (529,329)    (486,655)  (1,004,894)    (930,798)
Other operating income                                                      
 (expense) net                (7,302)         761      (11,025)       4,853 
                          ----------   ----------   ----------   ---------- 
Operating income             578,196      620,886    1,131,781    1,187,087 
Interest income                6,870        5,706       12,951       15,289 
Interest expense             (16,620)     (12,688)     (30,529)     (22,613)
Other financial results         (955)     (16,476)      (2,336)      (3,395)
                          ----------   ----------   ----------   ---------- 
Income before equity in                                                     
 earnings of associated                                                     
 companies and income                                                       
 tax                         567,491      597,428    1,111,867    1,176,368 
Equity in earnings of                                                       
 associated companies         11,869        6,168       24,066       20,131 
                          ----------   ----------   ----------   ---------- 
Income before income tax     579,360      603,596    1,135,933    1,196,499 
Income tax                  (149,795)    (148,325)    (283,651)    (292,999)
                          ----------   ----------   ----------   ---------- 
Income for the period        429,565      455,271      852,282      903,500 
                          ----------   ----------   ----------   ---------- 
                                                                            
                                                                            
Attributable to:                                                            
Owners of the parent         417,828      456,201      842,605      894,842 
Non-controlling                                                             
 interests                    11,737         (930)       9,677        8,658 
                          ----------   ----------   ----------   ---------- 
                             429,565      455,271      852,282      903,500 
                          ----------   ----------   ----------   ---------- 
                                                                            
                                                                            
                                                                            
Consolidated Condensed Interim Statement of Financial Position              
                                                                            
(all amounts in thousands of                                                
 U.S. dollars)                   At June 30, 2013      At December 31, 2012 
                              ----------------------  ----------------------
                                     Unaudited                              
ASSETS                                                                      
Non-current assets                                                          
  Property, plant and                                                       
   equipment, net              4,536,995               4,434,970            
  Intangible assets, net       3,131,767               3,199,916            
  Investments in associated                                                 
   companies                     929,251                 977,011            
  Other investments                2,552                   2,603            
  Deferred tax assets            192,433                 215,867            
  Receivables                    121,765   8,914,763     142,060   8,972,427
                              ----------              ----------            
                                                                            
Current assets                                                              
  Inventories                  2,697,932               2,985,805            
  Receivables and                                                           
   prepayments                   246,710                 260,532            
  Current tax assets             152,066                 175,562            
  Trade receivables            2,179,089               2,070,778            
  Available for sale assets       21,572                  21,572            
  Other investments            1,113,065                 644,409            
  Cash and cash equivalents      618,435   7,028,869     828,458   6,987,116
                              ----------  ----------  ----------  ----------
Total assets                              15,943,632              15,959,543
                                          ----------              ----------
                                                                            
EQUITY                                                                      
Capital and reserves                                                        
 attributable to owners of                                                  
 the parent                               11,724,417              11,328,031
Non-controlling interests                    165,436                 171,561
                                          ----------              ----------
Total equity                              11,889,853              11,499,592
                                          ----------              ----------
                                                                            
LIABILITIES                                                                 
Non-current liabilities                                                     
  Borrowings                     423,442                 532,407            
  Deferred tax liabilities       672,918                 728,541            
  Other liabilities              292,715                 302,444            
  Provisions                      73,379   1,462,454      67,185   1,630,577
                              ----------              ----------            
                                                                            
Current liabilities                                                         
  Borrowings                   1,093,810               1,211,785            
  Current tax liabilities        253,805                 254,603            
  Other liabilities              369,299                 318,828            
  Provisions                      20,014                  26,958            
  Customer advances               34,342                 134,010            
  Trade payables                 820,055   2,591,325     883,190   2,829,374
                              ----------  ----------  ----------  ----------
Total liabilities                          4,053,779               4,459,951
                                          ----------              ----------
Total equity and liabilities              15,943,632              15,959,543
                                          ----------              ----------
                                                                            
                                                                            
                                                                            
Consolidated Condensed Interim Statement of Cash Flows                      
                                                                            
                               Three-month period    Six-month period ended 
                                 ended June 30,             June 30,        
                             ---------------------   ---------------------- 
(all amounts in thousands                                                   
 of U.S. dollars)               2013        2012        2013         2012   
                             ---------   ---------   ----------   --------- 
                                   Unaudited                Unaudited       
Cash flows from operating                                                   
 activities                                                                 
Income for the period          429,565     455,271      852,282     903,500 
Adjustments for:                                                            
Depreciation and                                                            
 amortization                  151,602     137,725      296,972     275,884 
Income tax accruals less                                                    
 payments                        9,808    (155,274)      25,021    (105,779)
Equity in earnings of                                                       
 associated companies          (11,869)     (6,168)     (24,066)    (20,131)
Interest accruals less                                                      
 payments, net                  (4,296)         37      (35,021)    (18,256)
Changes in provisions           (4,051)     (8,426)        (917)    (16,557)
Changes in working capital      56,136      53,139       72,457      51,343 
Other, including currency                                                   
 translation adjustment        (15,841)    (61,804)     (12,263)    (47,567)
                             ---------   ---------   ----------   --------- 
Net cash provided by                                                        
 operating activities          611,054     414,500    1,174,465   1,022,437 
Cash flows from investing                                                   
 activities                                                                 
Capital expenditures          (179,674)   (204,531)    (363,559)   (400,926)
Acquisition of associated                                                   
 company                             -           -            -    (504,597)
Proceeds from disposal of                                                   
 property, plant and                                                        
 equipment and intangible                                                   
 assets                          2,360       1,383        6,746       2,915 
Dividends received from                                                     
 associated companies           14,931      18,702       16,127      18,702 
Changes in investments in                                                   
 short terms securities       (310,074)        784     (468,656)     11,367 
                             ---------   ---------   ----------   --------- 
Net cash used in investing                                                  
 activities                   (472,457)   (183,662)    (809,342)   (872,539)
                             ---------   ---------   ----------   --------- 
                                                                            
Cash flows from financing                                                   
 activities                                                                 
Dividends paid                (354,161)   (295,134)    (354,161)   (295,134)
Dividends paid to non-                                                      
 controlling interest in                                                    
 subsidiaries                   (1,858)          -      (18,529)       (905)
Acquisitions of non-                                                        
 controlling interests          (7,230)   (758,527)      (7,768)   (758,539)
Proceeds from borrowings       594,658     668,455    1,220,390   1,214,234 
Repayments of borrowings      (677,727)   (202,013)  (1,354,772)   (439,116)
                             ---------   ---------   ----------   --------- 
Net cash used in financing                                                  
 activities                   (446,318)   (587,219)    (514,840)   (279,460)
                             ---------   ---------   ----------   --------- 
                                                                            
                             ---------   ---------   ----------   --------- 
Decrease in cash and cash                                                   
 equivalents                  (307,721)   (356,381)    (149,717)   (129,562)
                             ---------   ---------   ----------   --------- 
Movement in cash and cash                                                   
 equivalents                                                                
At the beginning of the                                                     
 period                        925,554   1,060,559      772,656     815,032 
Effect of exchange rate                                                     
 changes                       (11,807)    (10,466)     (16,913)      8,242 
Decrease in cash and cash                                                   
 equivalents                  (307,721)   (356,381)    (149,717)   (129,562)
                             ---------   ---------   ----------   --------- 
At June 30,                    606,026     693,712      606,026     693,712 
                             ---------   ---------   ----------   --------- 
                                                                            
                                  At June 30,              At June 30,      
                             ---------------------   ---------------------- 
Cash and cash equivalents       2013        2012        2013         2012   
                             ---------   ---------   ----------   --------- 
Cash and bank deposits         618,435     742,618      618,435     742,618 
Bank overdrafts                (12,409)    (48,906)     (12,409)    (48,906)
                             ---------   ---------   ----------   --------- 
                               606,026     693,712      606,026     693,712 
                             ---------   ---------   ----------   --------- 

  
Giovanni Sardagna
Tenaris
1-888-300-5432
www.tenaris.com 
 
 
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