News Column

Tenaris Announces 2013 First Quarter Results

May 1 2013 12:00AM

Marketwire

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LUXEMBOURG -- (Marketwired) -- 05/01/13 -- Tenaris S.A. (NYSE: TS) (BAE: TS) (BMV: TS) (MILAN: TEN) ("Tenaris") today announced its results for the quarter ended March 31, 2013 in comparison with its results for the quarter ended March 31, 2012.

Summary of 2013 First Quarter Results

(Comparison with fourth and first quarters of 2012)


Q1 2013 Q4 2012 Q1 2012Net sales ($ million) 2,678 2,758 (3%) 2,617 2%Operating income ($ million) 554 586 (5%) 566 (2%)Net income ($ million) 423 350 21% 448 (6%)Shareholders' net income ($ million) 425 358 19% 439 (3%)Earnings per ADS ($) 0.72 0.61 19% 0.74 (3%)Earnings per share ($) 0.36 0.30 19% 0.37 (3%)EBITDA* ($ million) 699 733 (5%) 704 (1%)EBITDA margin (% of net sales) 26.1% 26.6% 26.9%




*EBITDA is defined as operating income plus depreciation, amortization and impairment charges/(reversals)

Our first quarter sales decreased 3% sequentially as higher sales of premium OCTG products in Saudi Arabia and Sub-Saharan Africa did not fully compensate for lower sales in South America and the impact of lower market prices for less differentiated products in North America. Our EBITDA and operating margins maintained a good level in a competitive market.

Cash provided by operating activities reached $563 million during the quarter and at the end of the quarter we had a net cash position (cash and other current investments less total borrowings) of $121 million.

Market Background and Outlook

Over the past three quarters, drilling activity in North America has slowed down and should start to pick up by the end of the year, while in the rest of the world it should continue to increase slowly, supported by current oil and gas prices.

In the second quarter, the Canadian break up will affect our sales in North America. Sales in the Middle East are expected to increase further from the level of the first quarter. In the second half, sales of line pipe in Brazil will be affected by delays in project execution. Industrial customers in Europe will continue to be affected by weak economic activity.

In this environment, sales and margins for the rest of the year are expected to remain close to current levels with product mix improvements helping to offset the impact of lower prices in less differentiated segments.

Analysis of 2013 First Quarter Results


Tubes Sales volume (thousand metric tons) Q1 2013 Q4 2012 Q1 2012Seamless 657 669 (2%) 664 (1%)Welded 289 306 (6%) 289 -Total 946 975 (3%) 953 (1%) Tubes Q1 2013 Q4 2012 Q1 2012(Net sales - $ million)North America 1,143 1,155 (1%) 1,269 (10%)South America 595 693 (14%) 463 29%Europe 268 243 10% 262 2%Middle East & Africa 400 378 6% 281 42%Far East & Oceania 82 110 (25%) 126 (35%)Total net sales ($ million) 2,488 2,578 (3%) 2,400 4%Operating income ($ million) 526 572 (8%) 529 (1%)Operating income (% of sales) 21.1% 22.2% 22.1%




Net sales of tubular products and services decreased 3% sequentially but increased 4% year on year. Sales decreased sequentially as higher sales of premium in Saudi Arabia and Sub-Saharan Africa did not fully compensate for lower sales in South America and lower market prices in North America. In North America, higher sales in Canada largely offset the effect of lower market prices and less favorable product mix in the United States. In South America, sales decreased due to lower sales of line pipe in Argentina and of OCTG in Colombia. In Europe, sales increased due to higher sales of line pipe for offshore projects in Norway. In the Middle East and Africa, sales increased due to higher sales of premium products in Saudi Arabia and Sub-Saharan Africa. In the Far East and Oceania, sales decreased due to lower sales of line pipe and industrial products in the region.

Operating income from tubular products and services decreased 8% sequentially and 1% year on year, reflecting a decline in sales and in operating margin.


Others Q1 2013 Q4 2012 Q1 2012Net sales ($ million) 190 180 6% 217 (12%)Operating income ($ million) 28 14 100% 37 (24%)Operating income (% of sales) 14.5% 7.6% 17.0%




Net sales of other products and services increased 6% sequentially but declined 12% year on year. The sequential increase in sales and operating income was mainly due to higher sales and operating income of our industrial equipment business in Brazil.

Selling, general and administrative expenses, or SG&A, amounted to $476 million, or 17.8% of net sales, in the first quarter of 2013, compared to $494 million, 17.9% in the previous quarter and $444 million, 17.0% in the first quarter of 2012.

Net interest expenses amounted to $8 million in the first quarter of 2013, compared to $6 million in the previous quarter and $0.3 million in the first quarter of 2012.

Other financial results generated a loss of $1 million during the first quarter of 2013, compared to a loss of $10 million in the previous quarter and a gain of $13 million during the first quarter of 2012. These results largely reflect gains and losses on net foreign exchange transactions and the fair value of derivative instruments.

Equity in earnings of associated companies generated a gain of $12 million in the first quarter of 2013, compared to a loss of $108 million in the previous quarter and a gain of $14 million in the first quarter of 2012. These results are mainly derived from our equity investment in Ternium (NYSE: TX) and Usiminas. In the previous quarter, these results were negatively affected by the impairment recorded on our investment in Usiminas.

Income tax charges totaled $134 million in the first quarter of 2013, equivalent to 24.6% of income before equity in earnings of associated companies and income tax, compared to $112 million, or19.6% in the previous quarter and $145 million or 25.0% in the first quarter of 2012.

Results attributable to non-controlling interests amounted to losses of $2 million in the first quarter of 2013, compared to losses of $7 million in the previous quarter and gains of $10 million in the first quarter of 2012.

Cash Flow and Liquidity

Net cash provided by operations during the first quarter of 2013 was $563 million, compared to $347 million in the previous quarter and $608 million in the first quarter of 2012.

Capital expenditures amounted to $184 million for the first quarter of 2013, compared to $202 million in the previous quarter and $196 million in the first quarter of 2012.

At the end of the quarter, our net cash position (cash and other current investments less total borrowings) amounted to $121 million.

Conference call

Tenaris will hold a conference call to discuss the above reported results, on May 2, 2013, at 09:00 a.m. (Eastern Time). Following a brief summary, the conference call will be opened to questions. To access the conference call dial in +1 866 318.8618 within North America or +1 617 399.5137 Internationally. The access number is "70135173." 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 May 2 through 12:00 am on May 9. To access the replay by phone, please dial +1 888 286.8010 or +1 617 801.6888 and enter passcode "88385058" 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 Three-month period ended(all amounts in thousands of U.S. dollars) March 31, 2013 2012 ------------ ------------Continuing operations UnauditedNet sales 2,678,305 2,617,349Cost of sales (1,645,432) (1,611,097) ------------ ------------Gross profit 1,032,873 1,006,252Selling, general and administrative expenses (475,565) (444,143)Other operating income (expense) net (3,723) 4,092 ------------ ------------Operating income 553,585 566,201Interest income 6,081 9,583Interest expense (13,909) (9,925)Other financial results (1,381) 13,081 ------------ ------------Income before equity in earnings of associated companies and income tax 544,376 578,940Equity in earnings of associated companies 12,197 13,963 ------------ ------------Income before income tax 556,573 592,903Income tax (133,856) (144,674) ------------ ------------Income for the period 422,717 448,229 ============ ============Attributable to:Owners of the parent 424,777 438,641Non-controlling interests (2,060) 9,588 ------------ ------------ 422,717 448,229 ============ ============Consolidated Condensed Interim Statement of Financial Position(all amounts in thousands of U.S. dollars) At March 31, 2013 At December 31, 2012 ----------------------- ----------------------- UnauditedASSETSNon-current assets Property, plant and equipment, net 4,490,305 4,434,970 Intangible assets, net 3,161,011 3,199,916 Investments in associated companies 985,230 977,011 Other investments 2,532 2,603 Deferred tax assets 201,599 215,867 Receivables 128,921 8,969,598 142,060 8,972,427 ----------- -----------Current assets Inventories 2,894,456 2,985,805 Receivables and prepayments 256,572 260,532 Current tax assets 141,359 175,562 Trade receivables 2,076,099 2,070,778 Available for sale assets 21,572 21,572 Other investments 802,991 644,409 Cash and cash equivalents 948,777 7,141,826 828,458 6,987,116 ----------- ----------- ----------- -----------Total assets 16,111,424 15,959,543 =========== ===========EQUITYCapital and reserves attributable to owners of the parent 11,735,821 11,328,031Non-controlling interests 156,648 171,561 ----------- -----------Total equity 11,892,469 11,499,592 =========== ===========LIABILITIESNon-current liabilities Borrowings 491,049 532,407 Deferred tax liabilities 696,401 728,541 Other liabilities 308,084 302,444 Provisions 72,555 1,568,089 67,185 1,630,577 ----------- -----------Current liabilities Borrowings 1,139,799 1,211,785 Current tax liabilities 242,836 254,603 Other liabilities 333,917 318,828 Provisions 24,889 26,958 Customer advances 92,409 134,010 Trade payables 817,016 2,650,866 883,190 2,829,374 ----------- ----------- ----------- -----------Total liabilities 4,218,955 4,459,951 =========== ===========Total equity and liabilities 16,111,424 15,959,543 =========== ===========Consolidated Condensed Interim Statement of Cash Flows Three-month period ended March 31, --------------------------(all amounts in thousands of U.S. dollars) 2013 2012 ------------ ------------ UnauditedCash flows from operating activitiesIncome for the period 422,717 448,229Adjustments for:Depreciation and amortization 145,370 138,159Income tax accruals less payments 15,213 49,495Equity in earnings of associated companies (12,197) (13,963)Interest accruals less payments, net (30,725) (18,293)Changes in provisions 3,134 (8,131)Changes in working capital 16,321 (1,796)Other, including currency translation adjustment 3,578 14,237 ------------ ------------Net cash provided by operating activities 563,411 607,937 ============ ============Cash flows from investing activitiesCapital expenditures (183,885) (196,395)Acquisition of associated companies - (504,597)Proceeds from disposal of property, plant and equipment and intangible assets 4,386 1,532Dividends received from associated companies 1,196 -Changes in investments in short terms securities (158,582) 10,583 ------------ ------------Net cash used in investing activities (336,885) (688,877) ============ ============Cash flows from financing activitiesDividends paid to non-controlling interest in subsidiaries (16,671) (905)Acquisitions of non-controlling interests (538) (12)Proceeds from borrowings 625,732 545,779Repayments of borrowings (677,045) (237,103) ------------ ------------Net cash used in financing activities (68,522) 307,759 ============ ============ ============ ============Increase in cash and cash equivalents 158,004 226,819 ============ ============Movement in cash and cash equivalentsAt the beginning of the period 772,656 815,032Effect of exchange rate changes (5,106) 18,708Increase in cash and cash equivalents 158,004 226,819 ------------ ------------At March 31, 925,554 1,060,559 ============ ============ -------------------------- At March 31, --------------------------Cash and cash equivalents 2013 2012 ------------ ------------Cash and bank deposits 948,777 1,076,803Bank overdrafts (23,223) (16,244) ------------ ------------ 925,554 1,060,559 ============ ============





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





Source: Marketwire


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