*Operating income includes impairment reversals of US$67.3 million in Q4 2010
Net sales of tubular products and services increased 10% sequentially, mainly due to an increase in shipments volumes. Year on year, sales increased 34%, due to a 22% increase in shipments and an 11% increase in average selling prices. In North America, sales rose sequentially throughout the region, mainly driven by higher OCTG sales in Canada and Mexico and line pipe in United States. In South America, sales increased 6% sequentially, mainly driven by Ecuador and Colombia and partially offset by lower sales on credit issues in Venezuela. In Europe, sales were negatively affected by weak demand from distributors and Euro depreciation. In the Middle East and Africa, sales increased sequentially mainly due to resumption of sales in Libya and higher sales to hydrocarbon process industry projects. In the Far East and Oceania, sales grew strongly due to higher shipments of deepwater line pipe.
Operating income from tubular products and services increased 15% sequentially as sales rose 10% and operating margin increased 100 basis points, reflecting lower SG&A expenses as a percentage of sales.
Projects Q4 2011 Q3 2011 Q4 2010Net sales ($ million) 186.0 150.8 23% 146.2 27%Cost of sales (% of sales) 71% 67% 69%Operating income ($ million) 28.3 27.3 4% 23.6 20%Operating income (% of sales) 15% 18% 16%
Net sales of Projects amounted to US$186.0 million in the fourth quarter of 2011, 23% higher than the third quarter and 27% higher compared to the fourth quarter of 2010. Sequentially, the increase in sales was mainly on lower margin shipments made to Peru.
Others Q4 2011 Q3 2011 Q4 2010Net sales ($ million) 198.6 193.7 3% 158.6 25%Cost of sales (% of sales) 72% 73% 72%Operating income ($ million) 32.0 28.7 11% 29.3 9%Operating income (% of sales) 16% 15% 18%
Net sales of other products and services amounted to US$198.6 million in the fourth quarter of 2011, 3% higher sequentially and 25% higher compared to the fourth quarter of 2010. The sequential increase in sales was mainly due to higher sales at our Brazilian industrial equipment business and higher sales of excess raw materials and power, partially offset by lower sales of welded steel pipes for electric conduits.
Selling, general and administrative expenses, or SG&A, amounted to 17.2% of net sales in the fourth quarter of 2011, compared to 18.5% in the previous quarter and 19.7% in the fourth quarter of 2010. The decrease of SG&A as a percentage of sales was mainly due to the better absorption of fixed and semi-fixed expenses on higher sales.
Other operating income (expense) amounted to a net gain of US$0.7 million in the fourth quarter of 2011, compared with a gain of US$1.7 million in the previous quarter and a gain of US$74.8 million in the fourth quarter of 2010, mainly due to the reversal of an impairment at our Canadian welded operations.
Net interest expenses amounted to US$2.0 million in the fourth quarter of 2011, compared to US$8.5 million in the previous quarter and US$4.8 million in the same period of 2010.
