the Information contained in this press release includes statements concerning future events. These statements are based on current views and assumptions of management of the Company subject to known and unknown risks and uncertainties.
Data on the shipment of products in the 4th quarter of 2019 are preliminary and may be adjusted.
pipe Metallurgical Company (TMK), one of the world's largest producers of pipes for the oil and gas industry, announces its operational results for the fourth quarter and 12 months of 2019.
Operating results include the results of the American division (IPSCO Tubulars Inc.) for the full 2019. 2 January 2020 TMK has completed the sale of 100% of shares of IPSCO Tubulars Inc. Tenaris. Under the terms of the contract of purchase and sale of shares, concluded on 22 March 2019, the price of the transaction was 1 209 million US dollars excluding cash and debt on the balance sheet, but included a $ 270 million US in working capital.
following the closing of the transaction both parties entered into a General agreement for six years, according to which, starting on 2 January 2020, Tenaris will act as the exclusive distributor of OCTG and line pipe TMK in the USA and Canada.
After the closing of the transaction, the Group includes TMK's Russian and European divisions, the company's production assets are located in Russia, Romania and Kazakhstan.
Final results for the 12 months and 4th quarter of 2019
Results for the 12 months 2019, compared with the 12 months 2018
- Total pipe shipments decreased by 5% compared to the year 2018 because of lower shipments of both seamless and welded pipes (5% and 5% compared with 2018, respectively), mainly due to the weak results of the Us division.
the Impact of the results of the Us division partly offset by a rise of shipments of pipes in the Russian division by 5% compared to the year 2018, driven by higher shipments of seamless OCTG (4% compared to 2018 year) and large diameter pipe (56% compared to 2018).
- the Total shipments of OCTG decreased by 11% compared with 2018, while shipments of OCTG in the Russian division increased by 3% compared to the previous year (4% compared with 2018, excluding shipments of welded OCTG from the company TMK GIPI, are excluded from the consolidation perimeter in the 4th quarter of 2018) due to increasing complexity of projects on extraction of hydrocarbons in Russia and the increase in the share of horizontal drilling.
- the Total shipments of premium threaded connections decreased by 10% compared to 2018, while shipments of premium threaded connections in the Russian division increased by 15% compared to a year earlier.
results for the 4th quarter of 2019 compared to the 3rd quarter of 2019
- the Total volume of shipments of pipes decreased, mainly due to the decline in total shipments in the American division and shipments of welded pipe in the Russian division.
- shipment volumes of seamless pipes decreased by 5% compared to the 3rd quarter of 2019, mainly due to lower shipments of OCTG and line pipe in the American division against the continued slowing activity in the North American market.
- shipments of welded pipe decreased by 14% compared to the 3rd quarter of 2019, mainly due to lower shipments of large diameter pipes in the Russian division due to the change in the structure of production in the 4th quarter of 2019, as well as due to the reduction of shipments of OCTG and line pipe in the American division.
- shipments of OCTG decreased by 10% compared to the 3rd quarter of 2019, mainly due to lower shipments in the American division.
Comment of the General Director of TMK Igor Korytko:
"In 2019 TMK showed strong growth in total shipments in the Russian division at the 5% level. Shipments of seamless OCTG, which is our key products – increased by 4% compared to the 2018 year due to stable demand from Russian oil and gas companies, while shipments of premium threaded connections in the Russian division at the end of 2019 increased by 15% compared to a year earlier. This was possible largely due to the fact that TMK continued to pay special attention to the development and production of high-tech products to meet the growing demand from key customers, implementing more complex projects in the field of exploration and production. In order to further develop scientific-technical capacity in the fourth quarter of 2019, TMK commissioned a new research center in SKOLKOVO.
In the early 2020 TMK has completed the sale of 100% of shares of IPSCO Tubulars Inc. Tenaris implemented in accordance with the strategic goal of the Company to reduce debt through the monetization of foreign assets. The funds will provide financial stability and further development of the Company."
Forecast until the end of 2020
the company expects that in 2020, the consumption of pipes by companies in the fuel and energy complex in Russia will remain at a stable level. It is expected that the increase in complexity of projects for the extraction of hydrocarbons in Russia will lead to increased demand for high-tech products.
the company expects that the volume of shipments of seamless industrial pipe in the European division will remain stable compared to the 2019 year, mainly due to the demand for high-margin tubular products.
TMC announces operating results for the year 2019