News Feed Item

Tenaris Announces 2014 First 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 Intern

LUXEMBOURG -- (Marketwired) -- 05/01/14 -- Tenaris S.A. (NYSE: TS) (BAE: TS) (BMV: TS) (MILAN: TEN) ("Tenaris") today announced its results for the quarter ended March 31, 2014 in comparison with its results for the quarter ended March 31, 2013.

Summary of 2014 First Quarter Results

(Comparison with fourth and first quarters of 2013)

                                     Q1 2014     Q4 2013         Q1 2013
                                     ------- --------------- ---------------
Net sales ($ million)                 2,580   2,674    (4%)   2,678    (4%)
Operating income ($ million)           566     589     (4%)    554      2%
Net income ($ million)                 428     408      5%     423      1%
Shareholders' net income ($ million)   423     409      3%     425     (1%)
Earnings per ADS ($)                   0.72    0.69     3%     0.72    (1%)
Earnings per share ($)                 0.36    0.35     3%     0.36    (1%)
EBITDA* ($ million)                    718     745     (4%)    699      3%
EBITDA margin (% of net sales)        27.8%   27.8%           26.1%
*EBITDA is defined as operating income plus depreciation, amortization and
 impairment charges/(reversals)

In the first quarter, although we benefited from improving trends in the U.S. market and the usual seasonal effect in Canada, our sales declined 4% sequentially, due primarily to lower sales in the Middle East, following the exceptional level of sales we had in the fourth quarter of 2013, as well as in Mexico, Colombia and Venezuela. We maintained our EBITDA and operating margins at a high level reflecting operating efficiencies and a continuing good mix of products.

Cash provided by operating activities reached $612 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 $1.3 billion.

Market Background and Outlook

In the United States, drilling activity is picking up, particularly in the Permian basin, but during the first quarter drilling efficiencies were affected by the cold weather. Looking into the second half of the year, the final determination in the anti-dumping trade case will have an impact on our sales. In Canada, drilling activity in the first quarter was in line with the previous year and we expect that to continue through the year in accordance with the usual seasonal variations.

In Mexico, Pemex is concentrating on its most productive regions and reorganizing as the reform of the energy sector moves forward. We expect a recovery in sales in the second half as additional rigs are being contracted.

In South America, shale drilling activity is increasing in Argentina while, in Brazil, projects continue to be delayed and our sales of line pipe and OCTG products in Brazil will be affected throughout the year.

In the Eastern Hemisphere, drilling activity has been increasing led by the Middle East and deepwater drilling in sub-Saharan Africa. However, purchases of OCTG in the Middle East in the last few quarters have been at an exceptionally high level and we expect an inventory adjustment in the coming quarters, which should be partially compensated by higher sales in sub-Saharan Africa and other countries of the region.

Considering these various factors, we expect our overall results for 2014 to be in line with those for 2013.

Analysis of 2014 First Quarter Results

Tubes Sales volume
(thousand metric tons)               Q1 2014     Q4 2013         Q1 2013
                                     ------- --------------- ---------------
Seamless                               669     665      1%     657      2%
Welded                                 241     249     (3%)    289    (17%)
Total                                  910     914     (1%)    946     (4%)

                Tubes                Q1 2014     Q4 2013         Q1 2013
                                     ------- --------------- ---------------
(Net sales - $ million)
North America                         1,085   1,019     6%    1,143    (5%)
South America                          440     516    (15%)    595    (26%)
Europe                                 256     205     25%     268     (4%)
Middle East & Africa                   536     628    (15%)    400     34%
Far East & Oceania                     101     112    (10%)     82     23%
Total net sales ($ million)           2,418   2,480    (3%)   2,488    (3%)
Operating income ($ million)           561     585     (4%)    526      6%
Operating income (% of sales)         23.2%   23.6%           21.1%

Net sales of tubular products and services decreased 3% sequentially and 3% year on year. In North America, sales increased reflecting higher seasonal sales in Canada and higher onshore drilling activity from our customers in the Permian, partially offset by lower activity in Mexico. In South America, sales decreased due to lower OCTG sales in Colombia and Venezuela. In Europe, sales increased due to higher OCTG and line pipe offshore sales in the North Sea. In the Middle East and Africa, sales remained strong but declined from the exceptional level of the previous quarter, when we had a record level of sales to Saudi Arabia. In the Far East and Oceania, the decline in sales reflected lower sales of line pipe in the region and lower sales for Australian offshore developments.

Operating income from tubular products and services decreased 4% sequentially, mainly reflecting a reduction in sales, but increased 6% year on year. The year on year increase in operating income is mainly due to a richer mix of products sold together with improved operational efficiencies.

               Others                Q1 2014     Q4 2013         Q1 2013
                                     ------- --------------- ---------------
Net sales ($ million)                  162     194    (16%)    190    (15%)
Operating income ($ million)            4       5     (20%)     28    (79%)
Operating income (% of sales)          2.8%    2.4%           14.5%

Net sales of other products and services decreased 16% sequentially and 15% year on year. The sequential decline in sales was mainly due to lower sales at our industrial equipment business in Brazil and of sucker rods, while the decline in operating income was mainly due to lower margins at our industrial equipment business in Brazil.

Selling, general and administrative expenses, or SG&A, amounted to $489 million, or 18.9% of net sales, in the first quarter of 2014, compared to $497 million, 18.6% in the previous quarter and $476 million, 17.8% in the first quarter of 2013.

Financial results amounted to a gain of $42 million in the first quarter of 2014, compared to a gain of $8 million in the previous quarter and a loss of $9 million in the same period of 2013. During the quarter we had a $51 million gain on foreign exchange results, mainly resulting from the Argentine peso devaluation (22.3%) on our short operative and financial position in Argentine pesos.

Equity in earnings of associated companies generated a gain of $19 million in the first quarter of 2014, compared to a gain of $12 million in the previous quarter and in the first quarter of 2013. These results are mainly derived from our equity investment in Ternium (NYSE: TX) and Usiminas (BSP: USIM).

Income tax charges totaled $199 million in the first quarter of 2014, 32.7% of income before equity in earnings of associated companies and income tax, compared to $202 million, or 33.8% in the previous quarter and $134 million or 24.6% in the first quarter of 2013. As in the previous quarter, our tax rate was negatively affected primarily by the effect of the Argentine peso devaluation on the tax base used to calculate deffered tax at our Argentine subsidiaries which have the U.S. dollar as their functional currency.

Results attributable to non-controlling interests amounted to gains of $6 million in the first quarter of 2014, compared to losses of $1 million in the previous quarter and of $2 million in the first quarter of 2013. These results are mainly attributable to NKKTubes, our Japanese subsidiary.

Cash Flow and Liquidity

Net cash provided by operations during the first quarter of 2014 was $612 million, compared to $427 million in the previous quarter and $556 million in the first quarter of 2013.

Capital expenditures amounted to $189 million for the first quarter of 2014, compared to $184 million in the previous quarter and in the first quarter of 2013.

At the end of the quarter, our net cash position (cash and other current investments less total borrowings) amounted to $1.3 billion.

Conference call

Tenaris will hold a conference call to discuss the above reported results, on May 2, 2014, 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 +1 877 474.9502 within North America or +1 857 244.7555 Internationally. The access number is "64180052". 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 2:00 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 "11333713" 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,
                                                    2014           2013
                                               -------------- --------------
Continuing operations                                    Unaudited
Net sales                                           2,579,944      2,678,305
Cost of sales                                     (1,527,034)    (1,645,432)
                                               -------------- --------------
Gross profit                                        1,052,910      1,032,873
Selling, general and administrative expenses        (488,860)      (475,565)
Other operating income (expense) net                    1,720        (3,723)
                                               -------------- --------------
Operating income                                      565,770        553,585
Interest income                                         9,062          6,081
Interest expense                                     (13,003)       (13,909)
Other financial results                                46,434        (1,381)
                                               -------------- --------------
Income before equity in earnings of associated
 companies and income tax                             608,263        544,376
Equity in earnings of associated companies             18,821         12,197
                                               -------------- --------------
Income before income tax                              627,084        556,573
Income tax                                          (199,065)      (133,856)
                                               -------------- --------------
Income for the period                                 428,019        422,717
                                               ============== ==============

Attributable to:
Owners of the parent                                  422,505        424,777
Non-controlling interests                               5,514        (2,060)
                                               -------------- --------------
                                                      428,019        422,717
                                               ============== ==============

Consolidated Condensed Interim Statement of Financial Position

(all amounts in thousands of
 U.S. dollars)                     At March 31, 2014    At December 31, 2013
                                 --------------------- ---------------------
Non-current assets
  Property, plant and equipment,
   net                            4,754,390             4,673,767
  Intangible assets, net          3,027,964             3,067,236
  Investments in associated
   companies                        932,822               912,758
  Other investments                   1,816                 2,498
  Deferred tax assets               201,401               197,159
  Receivables                       209,129  9,127,522    152,080  9,005,498
                                 ----------            ----------

Current assets
  Inventories                     2,705,667             2,702,647
  Receivables and prepayments       199,777               220,224
  Current tax assets                134,675               156,191
  Trade receivables               2,064,390             1,982,979
  Available for sale assets          21,572                21,572
  Other investments               1,531,776             1,227,330
  Cash and cash equivalents         659,765  7,317,622    614,529  6,925,472
                                 ---------- ---------- ---------- ----------
Total assets                                16,445,144            15,930,970
                                            ==========            ==========

Capital and reserves
 attributable to owners of the
 parent                                     12,724,313            12,290,420
Non-controlling interests                      136,992               179,446
                                            ----------            ----------
Total equity                                12,861,305            12,469,866
                                            ==========            ==========

Non-current liabilities
  Borrowings                        175,894               246,218
  Deferred tax liabilities          744,204               751,105
  Other liabilities                 281,510               277,257
  Provisions                         70,925  1,272,533     66,795  1,341,375
                                 ----------            ----------

Current liabilities
  Borrowings                        736,213               684,717
  Current tax liabilities           320,600               266,760
  Other liabilities                 305,367               250,997
  Provisions                         26,509                25,715
  Customer advances                 102,592                56,911
  Trade payables                    820,025  2,311,306    834,629  2,119,729
                                 ---------- ---------- ---------- ----------
Total liabilities                            3,583,839             3,461,104
                                            ==========            ==========
Total equity and liabilities                16,445,144            15,930,970
                                            ==========            ==========

Consolidated Condensed Interim Statement of Cash Flows

                                                  Three-month period ended
                                                         March 31,
(all amounts in thousands of U.S. dollars)          2014           2013
                                               -------------- --------------
Cash flows from operating activities
Income for the period                                 428,019        422,717
Adjustments for:
Depreciation and amortization                         152,664        145,370
Income tax accruals less payments                      70,790         15,213
Equity in earnings of associated companies           (18,821)       (12,197)
Interest accruals less payments, net                  (8,099)       (30,725)
Changes in provisions                                   4,924          3,134
Changes in working capital                             16,660         16,321
Other, including currency translation
 adjustment                                          (34,293)        (4,168)
                                               -------------- --------------
Net cash provided by operating activities             611,844        555,665
                                               ============== ==============

Cash flows from investing activities
Capital expenditures                                (189,045)      (183,885)
Advance to suppliers of property, plant and
 equipment                                           (28,651)          7,746
Investment in associated companies                    (1,380)              -
Loan to associated companies                         (18,748)              -
Proceeds from disposal of property, plant and
 equipment and intangible assets                        4,027          4,386
Dividends received from associated companies                -          1,196
Changes in investments in short terms
 securities                                         (304,446)      (158,582)
                                               -------------- --------------
Net cash used in investing activities               (538,243)      (329,139)
                                               ============== ==============

Cash flows from financing activities
Dividends paid to non-controlling interest in
 subsidiaries                                        (47,889)       (16,671)
Acquisitions of non-controlling interests                (90)          (538)
Proceeds from borrowings                              494,407        625,732
Repayments of borrowings                            (468,670)      (677,045)
                                               -------------- --------------
Net cash used in financing activities                (22,242)       (68,522)
                                               ============== ==============

                                               ============== ==============
Increase in cash and cash equivalents                  51,359        158,004
                                               ============== ==============

Movement in cash and cash equivalents
At the beginning of the period                        598,145        772,656
Effect of exchange rate changes                           185        (5,106)
Increase in cash and cash equivalents                  51,359        158,004
                                               -------------- --------------
At March 31,                                          649,689        925,554
                                               ============== ==============

                                                        At March 31,
                                                    2014           2013
                                               -------------- --------------
Cash and cash equivalents
Cash and bank deposits                                659,765        948,777
Bank overdrafts                                      (10,076)       (23,223)
                                               -------------- --------------
                                                      649,689        925,554
                                               ============== ==============

Giovanni Sardagna

More Stories By Marketwired .

Copyright © 2009 Marketwired. All rights reserved. All the news releases provided by Marketwired are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.

Latest Stories
Enterprises have taken advantage of IoT to achieve important revenue and cost advantages. What is less apparent is how incumbent enterprises operating at scale have, following success with IoT, built analytic, operations management and software development capabilities - ranging from autonomous vehicles to manageable robotics installations. They have embraced these capabilities as if they were Silicon Valley startups.
Disruption, Innovation, Artificial Intelligence and Machine Learning, Leadership and Management hear these words all day every day... lofty goals but how do we make it real? Add to that, that simply put, people don't like change. But what if we could implement and utilize these enterprise tools in a fast and "Non-Disruptive" way, enabling us to glean insights about our business, identify and reduce exposure, risk and liability, and secure business continuity?
The Internet of Things is clearly many things: data collection and analytics, wearables, Smart Grids and Smart Cities, the Industrial Internet, and more. Cool platforms like Arduino, Raspberry Pi, Intel's Galileo and Edison, and a diverse world of sensors are making the IoT a great toy box for developers in all these areas. In this Power Panel at @ThingsExpo, moderated by Conference Chair Roger Strukhoff, panelists discussed what things are the most important, which will have the most profound e...
By 2021, 500 million sensors are set to be deployed worldwide, nearly 40x as many as exist today. In order to scale fast and keep pace with industry growth, the team at Unacast turned to the public cloud to build the world's largest location data platform with optimal scalability, minimal DevOps, and maximum flexibility. Drawing from his experience with the Google Cloud Platform, VP of Engineering Andreas Heim will speak to the architecture of Unacast's platform and developer-focused processes.
While some developers care passionately about how data centers and clouds are architected, for most, it is only the end result that matters. To the majority of companies, technology exists to solve a business problem, and only delivers value when it is solving that problem. 2017 brings the mainstream adoption of containers for production workloads. In his session at 21st Cloud Expo, Ben McCormack, VP of Operations at Evernote, discussed how data centers of the future will be managed, how the p...
Chris Matthieu is the President & CEO of Computes, inc. He brings 30 years of experience in development and launches of disruptive technologies to create new market opportunities as well as enhance enterprise product portfolios with emerging technologies. His most recent venture was Octoblu, a cross-protocol Internet of Things (IoT) mesh network platform, acquired by Citrix. Prior to co-founding Octoblu, Chris was founder of Nodester, an open-source Node.JS PaaS which was acquired by AppFog and ...
Wooed by the promise of faster innovation, lower TCO, and greater agility, businesses of every shape and size have embraced the cloud at every layer of the IT stack – from apps to file sharing to infrastructure. The typical organization currently uses more than a dozen sanctioned cloud apps and will shift more than half of all workloads to the cloud by 2018. Such cloud investments have delivered measurable benefits. But they’ve also resulted in some unintended side-effects: complexity and risk. ...
In today's enterprise, digital transformation represents organizational change even more so than technology change, as customer preferences and behavior drive end-to-end transformation across lines of business as well as IT. To capitalize on the ubiquitous disruption driving this transformation, companies must be able to innovate at an increasingly rapid pace.
Predicting the future has never been more challenging - not because of the lack of data but because of the flood of ungoverned and risk laden information. Microsoft states that 2.5 exabytes of data are created every day. Expectations and reliance on data are being pushed to the limits, as demands around hybrid options continue to grow.
"MobiDev is a Ukraine-based software development company. We do mobile development, and we're specialists in that. But we do full stack software development for entrepreneurs, for emerging companies, and for enterprise ventures," explained Alan Winters, U.S. Head of Business Development at MobiDev, in this SYS-CON.tv interview at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.
Your job is mostly boring. Many of the IT operations tasks you perform on a day-to-day basis are repetitive and dull. Utilizing automation can improve your work life, automating away the drudgery and embracing the passion for technology that got you started in the first place. In this presentation, I'll talk about what automation is, and how to approach implementing it in the context of IT Operations. Ned will discuss keys to success in the long term and include practical real-world examples. Ge...
The explosion of new web/cloud/IoT-based applications and the data they generate are transforming our world right before our eyes. In this rush to adopt these new technologies, organizations are often ignoring fundamental questions concerning who owns the data and failing to ask for permission to conduct invasive surveillance of their customers. Organizations that are not transparent about how their systems gather data telemetry without offering shared data ownership risk product rejection, regu...
Bill Schmarzo, author of "Big Data: Understanding How Data Powers Big Business" and "Big Data MBA: Driving Business Strategies with Data Science," is responsible for setting the strategy and defining the Big Data service offerings and capabilities for EMC Global Services Big Data Practice. As the CTO for the Big Data Practice, he is responsible for working with organizations to help them identify where and how to start their big data journeys. He's written several white papers, is an avid blogge...
The best way to leverage your Cloud Expo presence as a sponsor and exhibitor is to plan your news announcements around our events. The press covering Cloud Expo and @ThingsExpo will have access to these releases and will amplify your news announcements. More than two dozen Cloud companies either set deals at our shows or have announced their mergers and acquisitions at Cloud Expo. Product announcements during our show provide your company with the most reach through our targeted audiences.
DevOpsSummit New York 2018, colocated with CloudEXPO | DXWorldEXPO New York 2018 will be held November 11-13, 2018, in New York City. Digital Transformation (DX) is a major focus with the introduction of DXWorldEXPO within the program. Successful transformation requires a laser focus on being data-driven and on using all the tools available that enable transformation if they plan to survive over the long term.