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TMK Announces 4Q and 12M 2018 IFRS Results

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Inside Information: This press release does not contain inside information.

Forward-looking statements: The information contained in this press release includes forward-looking statements. events. These statements are based on the current opinions and assumptions of the Company's management, taking into account known and unknown risks and uncertainties.

PJSC TMK (“TMK” or the “Group”), one of the world's leading manufacturers of pipes for the oil and gas industry, announces its audited consolidated financial results for the year ended 31 December 2018, in accordance with international financial reporting standards (IFRS).

Key figures for 12 months and 4Q 2018

Financial results

- Revenue for 2018 increased by 16% compared to 2017 and amounted to USD 5,099 million; Q4 2018 revenue increased 5% qoq to $ 1,264 million - 2018 Adjusted EBITDA increased 16% qoq to $ 700 million; Adjusted EBITDA in 4Q 2018 was US $ 179 million, up 9% qoq - Adjusted EBITDA margin was 14% in 2018 and 14% in 4Q 2018 - Net debt as of December 31, 2018 amounted to USD 2,437 million - Net debt to EBITDA ratio as of December 31, 2018 decreased to 3.48x compared to 4.44x as of December 31, 2017

Key Company events for the 4th quarter of 2018

- December TMK shipped to Sakhalin Energy the first batch of casing pipes with premium TMK UP PF threaded connections produced by Volzhsky pipe plant, which has recently been increasingly specialized in the supply of pipes for offshore projects. The tubular string was successfully launched from the Molikpaq platform at the Piltun-Astokhskoye field in the Sea of ​​Okhotsk.

The order was completed under a long-term contract for the supply of premium tubular products for crude oil products until 2022, signed by the companies in October 2017 This is the first experience of industrial application of OCTG pipes with premium threaded connections of a Russian manufacturer in an offshore field on the Sakhalin shelf.

Forecast

TMK expects that in 2019 The consumption of pipes by fuel and energy companies in Russia will remain at a high level. The increasing complexity of hydrocarbon production projects in Russia is expected to further increase demand for high-tech products.

In the United States, the number of rigs continued to grow in 2018, leading to an increase in demand for OCTG pipe. Consumption in the North American pipe market remained flat in Q4. 2018 against the background of a slight increase in the volume of drilling operations in the United States due to the fact that operators took a wait and see attitude in the face of falling oil prices. As of the end of 2018, the volume of warehouse stocks returned to normalized levels.

TMK expects a stable level of demand for seamless industrial pipes in the European market in 2019, as well as an improvement in the sales structure of the European division due to an increase in the share of high-margin pipe products.

In general, TMK expects an increase in EBITDA in 2019 against the background of further growth in the performance of all three divisions of the Company, while the EBITDA margin will also slightly increase compared to 2018

Comment of TMK General Director Alexander Shiryaev:

“2018 was the first year of implementation of the Company's new strategy. Throughout the year, TMK maintained its position as the leading supplier in the global OCTG market and the dominant supplier of tubular products for the Russian oil and gas industry. We continued to develop relationships with customers by expanding our offer of high-tech products and services, as well as further implementing strategic partnerships with major oil and gas companies in the joint development of breakthrough technologies and services. In 2018, TMK took important steps towards digital business transformation. We believe that in order to effectively respond to the changing needs of our key customers in the global energy sector, it is necessary to maintain our position at the forefront of the development of innovations and the latest technologies for the oil and gas industry.

Despite the difficulties in key markets, TMK has consistently demonstrated strong results and achieved further growth: at the end of 2018, the Group's revenue and adjusted EBITDA increased by 16% amid improved performance in all three divisions of the Company. In addition, the continued decrease in the debt burden contributed to the further strengthening of the Company's financial position. In 2018, the ratio of net debt to E

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