Tenaris Announces 2010 First Quarter Results

The Financial and Operational Information Contained in This Press Release Is Based on Unaudited Consolidated Condensed Interim Financial Statements Prepared in Accordance With International Financial Reporting Standards (IFRS) and Presented in U.S. Dollars

LUXEMBOURG, May 05, 2010 (MARKETWIRE via COMTEX News Network) -- Tenaris S.A. (NYSE: TS) (BAE: TS) (MXSE: TS) (MILAN: TEN) ("Tenaris") today announced its results for the quarter ended March 31, 2010 with comparison to its results for the quarter ended March 31, 2009.

Summary of 2010 First Quarter Results
(Comparison with fourth and first quarters of 2009)
                               Q1 2010       Q4 2009           Q1 2009
Net sales (US$ million)        1,638.7  1,847.2     (11%) 2,434.3     (33%)
Operating income (US$ million)   309.3    330.6      (6%)   685.6     (55%)
Net income (US$ million)         222.2    240.8      (8%)   393.1     (43%)
Shareholders' net income (US$
 million)                        219.5    222.4      (1%)   366.0     (40%)
Earnings per ADS (US$)            0.37     0.38      (1%)    0.62     (40%)
Earnings per share (US$)          0.19     0.19      (1%)    0.31     (40%)
EBITDA (US$ million)             435.4    459.6      (5%)   807.4     (46%)
EBITDA margin (% of net sales)      27%      25%               33%

Our first quarter results were affected by a significant decline in the results of our Projects operating segment, where quarterly sales were lower than at any time in the last three years. In our principal Tubes operating segment, operating income increased sequentially as lower costs resulting from operating efficiencies offset a decline in average selling prices. Sales continued to recover strongly in North America and sales in the Middle East and Africa should recover from this quarter's low in the following quarters.

Cash flow from operations remained positive and we reduced our investment in working capital by a further US$124.2 million. Our net cash position (total financial debt less cash and other current investments) reached US$947.4 million at March 31, 2010.

Market Background and Outlook

During the first quarter of 2010, global oil prices remained stable with an upwards tendency supporting investment activity in most regions. North American gas prices, however, have continued to fluctuate at relatively low levels and declined towards the end of the quarter reflecting prolific levels of production in shale gas fields.

Drilling activity, as measured by the count of active drilling rigs published by Baker Hughes, has increased both in international markets and in North America. The international rig count in the first quarter increased 5% over that of the fourth quarter of 2009 and the US and Canadian rig counts for the first quarter were 21% and 69% higher respectively than the corresponding rig counts for the fourth quarter of 2009.

With activity levels recovering and inventories at more reasonable levels, we expect sales in our Tubes operating segment in the coming quarters to increase in most regions, particularly in North America and the Middle East and Africa. Sales in our Projects segment, however, will continue to be affected by low shipment levels in the following two quarters but should recover in the fourth quarter.

Steelmaking raw material and steel costs have risen significantly in the year to date. Iron ore prices have risen particularly strongly. Major steelmakers have accepted quarterly pricing of iron ore in accordance with spot market prices putting an end to 40 years of annual contract pricing. This is likely to lead to increased volatility in raw material prices. Pipe prices are also increasing but so far not at the same rate as raw material increases. Nevertheless, we expect that pipe prices will continue to increase and that we will be able to maintain our operating margins throughout the year.

Annual General Meeting of Shareholders

The annual general meeting of shareholders of the Company will take place at 11:00 am on June 2, 2010 in Luxembourg. The notice and agenda for the meeting, the shareholder meeting brochure and proxy statement together with the Company's 2009 annual report can be downloaded from our website at www.tenaris.com/investors and may be obtained on request by calling (352) 26-47-89-78 (within Luxembourg), 1-800-555-2470 (within the USA) or + 1-267-468-0786 (within any other jurisdiction).

Analysis of 2010 First Quarter Results
                                                               Increase/
Sales volume (metric tons)            Q1 2010      Q1 2009    (Decrease)
Tubes - Seamless                      467,000      579,000         (19%)
Tubes - Welded                        139,000      110,000          26%
Tubes - Total                         606,000      689,000         (12%)
Projects - Welded                      34,000       84,000         (60%)
Total                                 640,000      773,000         (17%)
                                                               Increase/
Tubes                                 Q1 2010      Q1 2009    (Decrease)
Net sales ($ million)
North America                           676.4      1,015.8         (33%)
South America                           203.0        249.3         (19%)
Europe                                  199.3        262.6         (24%)
Middle East & Africa                    249.3        395.3         (37%)
Far East & Oceania                       82.4        167.6         (51%)
Total net sales                       1,410.4      2,090.6         (33%)
Cost of sales (% of sales)                 59%          53%
Operating income ($ million)            279.1        641.3         (56%)
Operating income (% of sales)              20%          31%

Net sales of tubular products and services decreased 33% to US$1,410.4 million in the first quarter of 2010, compared to US$2,090.6 million in the first quarter of 2009, reflecting a 12% reduction in sales volumes and a 23% reduction in average selling prices. In North America, sales declined in spite of higher demand for OCTG products due to lower selling prices and reduced demand for line pipe and mechanical products. Sales in South America were affected by lower demand in Venezuela and lower prices throughout the region. In Europe, although demand for mechanical tubes increased, sales were affected by lower prices and lower demand from energy related sectors. Sales in the Middle East and Africa were affected by lower shipments of OCTG and line pipe products. Sales in the Far East & Oceania were affected by lower shipments and lower prices throughout the region.

                                                               Increase/
Projects                                 Q1 2010    Q1 2009   (Decrease)
Net sales ($ million)                       93.2      222.2        (58%)
Cost of sales (% of sales)                    68%        70%
Operating income ($ million)                 8.5       49.0        (83%)
Operating income (% of sales)                  9%        22%

Net sales of pipes for pipeline projects decreased 58% to US$93.2 million in the first quarter of 2010, compared to US$222.2 million in the first quarter of 2009, reflecting a lower level of shipments to gas and other pipeline projects in Brazil and Argentina. The decline in operating margin reflected the very low level of shipments during the quarter.

                                                                 Increase/
Others                                      Q1 2010    Q1 2009  (Decrease)
Net sales ($ million)                         135.1      121.5         11%
Cost of sales (% of sales)                       73%        90%
Operating income ($ million)                   21.7       (4.7)       562%
Operating income (% of sales)                    16%       (4%)

Net sales of other products and services increased 11% to US$135.1 million in the first quarter of 2010, compared to US$121.5 million in the first quarter of 2009. Operating margins recovered as sales increased and our electric conduit business in the USA returned to profit.

Selling, general and administrative expenses, or SG&A, increased as a percentage of net sales to 21.2% in the quarter ended March 31, 2010 compared to 15.9% in the corresponding quarter of 2009, mainly due to the effect of fixed expenses on lower revenues.

Net interest expenses decreased to US$12.9 million in the first quarter of 2010 compared to US$34.6 million in the same period of 2009.

Other financial results generated a gain of US$7.7 million during the first quarter of 2010, compared to a loss of US$36.4 million during the first quarter of 2009. These results largely reflect gains and losses on net foreign exchange transactions and the fair value of derivative instruments and are partially offset by changes to our net equity position. These gains and losses are mainly attributable to variations in the exchange rates between our subsidiaries' functional currencies (other than the US dollar) and the US dollar in accordance with IFRS.

Equity in earnings of associated companies generated a gain of US$23.5 million in the first quarter of 2010, compared to a loss of US$8.6 million in the first quarter of 2009. These results were derived mainly from our equity investment in Ternium (NYSE: TX).

Income tax charges totaled US$105.4 million in the first quarter of 2010, equivalent to 35% of income from continuing operations before equity in earnings of associated companies and income tax, compared to US$205.1 million, or 33% of income before equity in earnings of associated companies and income tax, in the first quarter of 2009. The income tax rate for our Mexican operations has increased during 2010 and this is likely to be reflected in a higher overall tax rate for the Company.

Income attributable to minority interest was US$2.7 million in the first quarter of 2010, compared to US$27.0 million in the corresponding quarter of 2009.

Cash Flow and Liquidity

Net cash provided by operations during the first quarter of 2010 was US$436.3 million, compared to US$763.4 million in the first quarter of 2009. Working capital decreased by US$124.2 million during the quarter.

Capital expenditures amounted to US$158.0 million for the first quarter of 2010, compared to US$119.8 million in the first quarter of 2009. Our capital expenditures are likely to continue to increase during the year reflecting the progress of our new rolling mill in Mexico, and increased investments throughout our industrial system.

During the first quarter of 2010, our net cash position (total financial debt less cash and other current investments) increased by US$271.6 million to reach US$947.4 million at March 31, 2010.

Registered Major Holders

On May 5, 2010, Aberdeen Asset Management PLC's Fund Management Operating Subsidiaries informed Tenaris, pursuant to the Luxembourg Transparency Law, that as of April 30, 2010, it is deemed to be the beneficial owner of 59,077,316 ordinary shares of Tenaris, par value U.S.$ 1.00 per share, representing 5.0% of Tenaris's issued and outstanding capital and votes.

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
(all amounts in thousands of U.S. dollars, unless     Three-month period
 otherwise stated)                                      ended March 31,
                                                       2010        2009
                                                    ----------  ----------
Continuing operations                                     (Unaudited)
Net sales                                            1,638,721   2,434,288
Cost of sales                                         (987,043) (1,363,312)
                                                    ----------  ----------
Gross profit                                           651,678   1,070,976
Selling, general and administrative expenses          (347,387)   (387,080)
Other operating income (expense), net                    5,049       1,746
                                                    ----------  ----------
Operating income                                       309,340     685,642
Interest income                                          7,148       4,574
Interest expense                                       (20,069)    (39,147)
Other financial results                                  7,691     (36,359)
                                                    ----------  ----------
Income before equity in earnings of associated
 companies and income tax                              304,110     614,710
Equity in earnings (losses) of associated companies     23,526      (8,579)
                                                    ----------  ----------
Income before income tax                               327,636     606,131
Income tax                                            (105,426)   (205,074)
                                                    ----------  ----------
Income for continuing operations                       222,210     401,057
Discontinued operations
Result for discontinued operations                           -      (7,962)
                                                    ----------  ----------
Income for the period                                  222,210     393,095
Attributable to:
Equity holders of the Company                          219,549     366,047
Minority interest                                        2,661      27,048
                                                    ----------  ----------
                                                       222,210     393,095
Consolidated Condensed Interim Statement of Financial Position
(all amounts in thousands of
 U.S. dollars)                    At March 31, 2010   At December 31, 2009
                                    (Unaudited)
ASSETS
Non-current assets
  Property, plant and equipment,
   net                           3,323,522             3,254,587
  Intangible assets, net         3,635,435             3,670,920
  Investments in associated
   companies                       631,410               602,572
  Other investments                 33,299                34,167
  Deferred tax assets              203,426               197,603
  Receivables                      102,205  7,929,297    101,618  7,861,467
                                ----------            ----------
Current assets
  Inventories                    1,820,265             1,687,059
  Receivables and prepayments      225,421               220,124
  Current tax assets               194,079               260,280
  Trade receivables              1,170,072             1,310,302
  Available for sale assets         21,572                21,572
  Other investments                645,780               579,675
  Cash and cash equivalents      1,631,919  5,709,108  1,542,829  5,621,841
                                ----------            ----------
                                           ----------            ----------
Total assets                               13,638,405            13,483,308
EQUITY
Capital and reserves
 attributable to the Company's
 equity holders                             9,322,599             9,092,164
Minority interest                             619,934               628,672
                                           ----------            ----------
Total equity                                9,942,533             9,720,836
LIABILITIES
Non-current liabilities
  Borrowings                       653,770               655,181
  Deferred tax liabilities         839,869               860,787
  Other liabilities                196,845               192,467
  Provisions                        84,669                80,755
  Trade payables                     3,228  1,778,381      2,812  1,792,002
                                ----------            ----------
Current liabilities
  Borrowings                       676,572               791,583
  Current tax liabilities          286,498               306,539
  Other liabilities                221,326               192,190
  Provisions                        30,142                28,632
  Customer advances                 66,684                95,107
  Trade payables                   636,269  1,917,491    556,419  1,970,470
                                ----------            ----------
Total liabilities                           3,695,872             3,762,472
Total equity and liabilities               13,638,405            13,483,308
Consolidated Condensed Interim Statement of Cash Flows
                                                 Three-month period ended
                                                        March 31,
(all amounts in thousands of U.S. dollars)          2010          2009
                                                ------------  ------------
                                                        (Unaudited)
Cash flows from operating activities
Income for the period                                222,210       393,095
Adjustments for:
Depreciation and amortization                        126,028       121,741
Income tax accruals less payments                    (28,258)     (150,496)
Equity in (earnings) losses of associated
 companies                                           (23,526)        8,459
Interest accruals less payments, net                   9,047        24,167
Changes in provisions                                  5,424       (11,475)
Changes in working capital                           124,247       387,945
Other, including currency translation
 adjustment                                            1,100        (9,989)
                                                ------------  ------------
Net cash provided by operating activities            436,272       763,447
                                                ------------  ------------
Cash flows from investing activities
Capital expenditures                                (157,962)     (119,829)
Acquisitions and decrease of minority interest           (27)       (5,942)
Proceeds from disposal of property, plant and
 equipment and intangible assets                       2,910         2,579
Dividends and distributions received from
 associated companies                                  1,472           940
Investments in short terms securities                (66,105)      (17,250)
                                                ------------  ------------
Net cash used in investing activities               (219,712)     (139,502)
                                                ------------  ------------
Cash flows from financing activities
Proceeds from borrowings                             198,323       194,745
Repayments of borrowings                            (307,045)     (340,683)
                                                ------------  ------------
Net cash used in financing activities               (108,722)     (145,938)
                                                ------------  ------------
Increase in cash and cash equivalents                107,838       478,007
Movement in cash and cash equivalents
At the beginning of the period                     1,528,707     1,525,022
Effect of exchange rate changes                      (11,636)      (34,322)
Increase in cash and cash equivalents                107,838       478,007
At March 31,                                       1,624,909     1,968,707
Cash and cash equivalents                                At March 31,
                                                      2010          2009
Cash and bank deposits                             1,631,919     1,980,586
Bank overdrafts                                       (7,010)      (11,879)
                                                   1,624,909     1,968,707

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


SOURCE: Tenaris S.A.

http://www.tenaris.com

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