Tenaris Announces 2010 Third Quarter Results

The Financial and Operational Information Contained in This Press Release Is Based on Unaudited Consolidated Condensed Interim Financial Statements Presented in U.S. Dollars (US$) and Prepared in Accordance With International Financial Reporting Standards as Issued by the International Accounting Standard Board and Adopted by the European Union, or IFRS

LUXEMBOURG -- (MARKET WIRE) -- 11/04/10 -- Tenaris S.A. (NYSE: TS) (BAE: TS) (MXSE: TS) (MILAN: TEN) ("Tenaris") today announced its results for the quarter and nine months ended September 30, 2010.


Summary of 2010 Third Quarter Results



(Comparison with second quarter of 2010 and third quarter of 2009)





                                   Q3 2010      Q2 2010           Q3 2009

Net sales (US$ million)            2,027.2  1,981.8    2%   1,771.5     14%

Operating income (US$ million)       405.1    405.3   (0%)    360.6     12%

Net income (US$ million)             302.7    295.0    3%     237.3     28%

Shareholders' net income (US$

 million)                            304.8    282.1    8%     229.9     33%

Earnings per ADS (US$)                0.52     0.48    8%      0.39     33%

Earnings per share (US$)              0.26     0.24    8%      0.19     33%

EBITDA (US$ million)                 531.1    531.2   (0%)    488.3      9%

EBITDA margin (% of net sales)          26%      27%             28%


Our results in the third quarter reflect a continuing improvement in our U.S. and Canadian operations and the gradual recovery in overall market conditions that we are witnessing in the rest of the world. Notwithstanding the prolonged shutdown of our Italian plant and a major reduction of oil and gas activity in Mexico exacerbated by severe weather conditions, our earnings per share rose 33% year on year and 8% sequentially. As anticipated, the average selling price in our Tubes operating segment for the quarter showed a moderate increase reflecting higher seamless and welded pipe prices thus reverting the previous downward trend.

Cash flow from operations during the third quarter of 2010 amounted to US$122.1 million after an increase of US$427.9 million in working capital due in large part to an uneven distribution of shipments during the quarter. Our net cash position (total financial debt less cash and other current investments) decreased by US$97.6 million to US$471.1 million following an increase in capital expenditure. This amounted to US$212.8 million during the quarter as we approach the start-up of our new rolling mill in Mexico and completed significant investments in our Dalmine mill in Italy.

Interim Dividend Payment

Our board of directors approved the payment of an interim dividend of US$0.13 per share (US$0.26 per ADS), or approximately US$153 million. The payment date will be November 25, 2010 (however, because such date is not a business day in the U.S., shareholders in all jurisdictions may receive their interim dividend on or after November 26, 2010, which is the first business day following the stated payment date), and the ex-dividend date will be November 22, 2010.

Market Background and Outlook

In the year to date, global drilling activity has continued to recover led by substantially higher oil drilling activity in the U.S. and Canada. North American gas drilling activity has also increased primarily in shale and liquid rich plays. Activity has increased steadily in most other markets reflecting the stability of oil prices at attractive levels and increased investment in regional gas developments. The international rig count, as published by Baker Hughes, has surpassed pre-crisis levels and recorded a new quarterly high during the third quarter.

We expect the recovery in drilling activity will continue in most markets in the fourth quarter and into 2011. Although we expect a reduction in drilling for dry gas in North America, this is likely to be largely offset by further increases in oil and liquid rich gas drilling. Recovery in other sectors is expected to take hold particularly as we move into 2011.

Under these market conditions, we expect revenues and operating income to increase gradually in the fourth quarter and more strongly in the first half of 2011.



Analysis of 2010 Third Quarter Results





Sales volume (metric tons)      Q3 2010       Q2 2010           Q3 2009

Tubes - Seamless                581,000   603,000   (4%)    407,000   43%

Tubes - Welded                  205,000   179,000   15%      67,000  206%

Tubes - Total                   786,000   782,000    1%     474,000   66%

Projects - Welded                39,000    32,000   22%      97,000  (60%)

Total                           825,000   814,000    1%     571,000   44%



     Tubes                     Q3 2010       Q2 2010           Q3 2009

(Net sales - $ million)

North America                    848.7     736.4    15%      515.6    65%

South America                    320.7     315.3     2%      225.9    42%

Europe                           161.5     179.4   (10%)     176.9    (9%)

Middle East & Africa             338.6     376.0   (10%)     360.4    (6%)

Far East & Oceania               116.0     114.2     2%       82.3    41%

Total net sales ($ million)    1,785.5   1,721.4     4%    1,361.0    31%

Cost of sales (% of sales)          61%       58%               58%

Operating income ($ million)     367.6     355.6     3%      285.8    29%

Operating income (% of sales)       21%       21%               21%

Net sales of tubular products and services increased 4% sequentially and 31% year on year and operating margins were stable in spite of a higher proportion of welded products in the sales mix. Sales in North America were up 15% on a sequential basis driven by a seasonally stronger quarter in Canada and a further increase in sales in the United States but sales in Mexico declined due to a reduction in activity in Chicontepec and Burgos and the impact of hurricane activity. In South America, sales in the Andean region and Southern Cone remained in line with the previous quarter consolidating the year on year recovery. In Europe, sales declined 10% sequentially reflecting seasonally weaker activity in industrial and distributor markets. In the Middle East and Africa, sales declined 10% following the strong level of shipments to the Middle East recorded in the second quarter. In the Far East and Oceania sales remained in line with the second quarter.




      Projects                     Q3 2010       Q2 2010        Q3 2009

Net sales ($ million)                 95.3    94.0      1%    288.7   (67%)

Cost of sales (% of sales)              66%     63%              71%

Operating income ($ million)          12.6    19.0    (34%)    59.5   (79%)

Operating income (% of sales)           13%     20%              21%

Net sales of pipes for pipeline projects amounted to US$95.3 million in the third quarter of 2010 in line with the second quarter but 67% lower compared to the third quarter of 2009. Shipments and operating income from this segment should recover in the coming quarters following three quarters of low activity.


      Others                       Q3 2010      Q2 2010         Q3 2009

Net sales ($ million)                146.4    166.3   (12%)   121.7    20%

Cost of sales (% of sales)              72%      72%             74%

Operating income ($ million)          24.8     30.7   (19%)    15.2    64%

Operating income (% of sales)           17%      18%             12%

Net sales of other products and services amounted to US$146.4 million in the third quarter of 2010, 12% lower sequentially but 20% higher compared to the third quarter of 2009. The sequential reduction in sales in the third quarter was due principally to lower sales at our Brazilian industrial equipment business and the non-recurrence of sales of steelmaking raw materials in the second quarter.

Selling, general and administrative expenses, or SG&A, as a percentage of net sales accounted to 18.3% in the quarter ended September 30, 2010, 1.4 percentage points lower than the previous quarter and similar to the level of the third quarter of 2009.

Net interest income of US$4.0 million in the third quarter of 2010 compared to net interest expenses of US$17.5 million in the previous quarter and US$20.6 million in the same period of 2009. Interest expenses in the second quarter of 2010 were negatively affected by higher interest rates, which were partially offset by foreign exchange gains recorded under other financial results, while results in the third quarter of 2009, included US$11.1 million of losses on interest rate swaps.

Other financial results generated a loss of US$16.2 million during the third quarter of 2010, compared to losses of US$7.4 million in the previous quarter and of US$15.4 million in the same period of 2009. These results largely reflect gains and losses on net foreign exchange transactions and the changes in 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 U.S. dollar) and the U.S. dollar, in accordance with IFRS.

Equity in earnings of associated companies generated a gain of US$15.6 million in the third quarter of 2010, compared to a gain of US$19.3 million in the previous quarter and of US$10.3 million in the same period of 2009. These gains mainly derived from our equity investment in Ternium.

Income tax charges totalled US$105.7 million in the third quarter of 2010, equivalent to 27% of income before equity in earnings of associated companies and income tax, compared to 28% in the previous quarter and 30% in the same periof of 2009.

Losses attributable to non-controlling interests amounted to US$2.1 million in the third quarter of 2010, compared to gains attributable to non-controlling interests of US$12.9 million in the previous quarter and of US$7.4 million in the third quarter of 2009. Compared to the previous quarter we recorded lower results at our Confab subsidiary while our NKKTubes subsidiary was still loss making.

Cash Flow and Liquidity

Net cash provided by operations during the third quarter of 2010 was US$122.1 million (US$617.0 million in the first nine months), compared to US$772.4 million in the third quarter of 2009 (US$2,647.0 million in the first nine months). Working capital increased by US$427.9 million during the third quarter, due in large part to an uneven distribution of shipments during the quarter and to an increase in our raw material inventories.

Capital expenditures amounted to US$212.8 million in the third quarter of 2010 (US$561.2 million in the first nine months), compared to US$101.5 million in the third quarter of 2009 (US$327.8 million in the first nine months).

During the first nine months of 2010, our net cash position decreased by US$204.6 million, from US$675.7 million at December 31, 2009, to US$471.1 million at September 30, 2010. Total financial debt during the first nine months of 2010 decreased by US$356.9 million to US$1.1 billion at September 30, 2010.

Analysis of 2010 First Nine Months Results

Net income attributable to equity holders in the company during the first nine months of 2010 was US$806.5 million, or US$0.68 per share (US$1.37 per ADS), which compares with net income attributable to equity holders in the company during the first nine months of 2009 of US$939.2 million, or US$0.80 per share (US$1.59 per ADS). Operating income was US$1,119.7 million, or 20% of net sales, compared to US$1,483.0 million, or 24% of net sales. Operating income plus depreciation and amortization was US$1,497.6 million, or 27% of net sales, compared to US$1,858.8 million, or 29% of net sales.


                                                                 Increase/

Sales volume (metric tons)           9M 2010        9M 2009     (Decrease)

Tubes - Seamless                    1,651,000      1,483,000          11%

Tubes - Welded                        523,000        242,000         116%

Tubes - Total                       2,174,000      1,725,000          26%

Projects - Welded                     105,000        271,000         (61%)

Total                               2,279,000      1,996,000          14%





                                                                Increase/

Tubes                                9M 2010        9M 2009    (Decrease)

(Net sales - $ million)

North America                        2,261.6        2,192.4            3%

South America                          839.0          720.2           16%

Europe                                 540.3          661.8          (18%)

Middle East & Africa                   963.9        1,208.4          (20%)

Far East & Oceania                     312.6          387.7          (19%)

Total net sales ($ million)          4,917.4        5,170.4           (5%)

Cost of sales (% of sales)                59%            55%

Operating income ($ million)         1,002.3        1,312.1          (24%)

Operating income (% of sales)             20%            25%

Net sales of tubular products and services decreased 5% to US$4,917.4 million in the first nine months of 2010, compared to US$5,170.4 million in the first nine months of 2009, as a 26% increase in volumes was offset by a 25% reduction in average selling prices.


                                                                Increase/

Projects                             9M 2010        9M 2009    (Decrease)

Net sales ($ million)                  282.6          765.4         (63%)

Cost of sales (% of sales)                65%            72%

Operating income ($ million)            40.1          154.0         (74%)

Operating income (% of sales)             14%            20%

Net sales of pipes for pipeline projects decreased 63% to US$282.6 million in the first nine months of 2010, compared to US$765.4 million in the first nine months of 2009, reflecting lower deliveries in Brazil and Argentina to gas and other pipeline projects.


                                                               Increase/

Others                               9M 2010        9M 2009    (Decrease)

Net sales ($ million)                  447.8          366.4           22%

Cost of sales (% of sales)                72%            81%

Operating income ($ million)            77.3           16.8          360%

Operating income (% of sales)             17%             5%

Net sales of other products and services increased 22% to US$447.8 million in the first nine months of 2010, compared to US$366.4 million in the first nine months of 2009, mainly due to an increase in sales of sucker rods and in most of the other business activities included in the segment.

Selling, general and administrative expenses, or SG&A, increased as a percentage of net sales to 19.6% in the nine months ended September 30, 2010 compared to 17.6% in the corresponding nine months of 2009, mainly due to the effect of fixed and semi-fixed expenses over lower revenues.

Net interest expenses decreased to US$26.5 million in the first nine months of 2010 compared to US$71.4 million in the same period of 2009 reflecting the change in our net debt position to a net cash position and lower interest rates.

Other financial results generated a loss of US$15.9 million during the first nine months of 2010, compared to a loss of US$67.6 million during the first nine months of 2009. These results largely reflect gains and losses on net foreign exchange transactions and the changes in 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 U.S. dollar) and the U.S. dollar, in accordance with IFRS.

Equity in earnings of associated companies generated a gain of US$58.4 million in the first nine months of 2010, compared to a gain of US$68.2 million in the first nine months of 2009. These gains were derived mainly from our equity investment in Ternium.

Income tax charges totalled US$315.8 million in the first nine months of 2010, equivalent to 29% of income before equity in earnings of associated companies and income tax, compared to US$417.2 million in the first nine months of 2009, equivalent to 31% of income before equity in earnings of associated companies and income tax.

Income attributable to minority interest decreased to US$13.4 million in the first nine months of 2010, compared to US$27.7 million in the corresponding nine months of 2009, mainly reflecting lower results at our Confab and NKKTubes subsidiaries.

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.

Press releases and financial statements can be downloaded from Tenaris's website at www.tenaris.com/investors.



Consolidated Condensed Interim Income Statement





(all amounts in

 thousands of U.S.

 dollars, unless        Three-month period ended  Nine-month period ended

 otherwise stated)            September 30,             September 30,

                        ------------------------  ------------------------

                            2010         2009         2010         2009

                        -----------  -----------  -----------  -----------

Continuing operations         (Unaudited)               (Unaudited)

Net sales                 2,027,242    1,771,475    5,647,725    6,302,107

Cost of sales            (1,252,583)  (1,080,161)  (3,423,055)  (3,708,372)

                        -----------  -----------  -----------  -----------

Gross profit                774,659      691,314    2,224,670    2,593,735

Selling, general and

 administrative

 expenses                  (370,267)    (327,234)  (1,108,798)  (1,110,240)

Other operating income

 (expense), net                 694       (3,528)       3,857         (504)

                        -----------  -----------  -----------  -----------

Operating income            405,086      360,552    1,119,729    1,482,991

Interest income              13,968       10,435       25,468       23,172

Interest expense            (10,003)     (31,007)     (51,961)     (94,589)

Other financial results     (16,223)     (15,377)     (15,900)     (67,643)

                        -----------  -----------  -----------  -----------

Income before equity in

 earnings of associated

 companies and income

 tax                        392,828      324,603    1,077,336    1,343,931

Equity in earnings of

 associated companies        15,575       10,294       58,389       68,229

                        -----------  -----------  -----------  -----------

Income before income

 tax                        408,403      334,897    1,135,725    1,412,160

Income tax                 (105,696)     (97,583)    (315,838)    (417,175)

                        -----------  -----------  -----------  -----------

Income for continuing

 operations                 302,707      237,314      819,887      994,985



Discontinued operations

Result for discontinued

 operations                       -            -            -      (28,138)

                        -----------  -----------  -----------  -----------

Income for the period       302,707      237,314      819,887      966,847



Attributable to:

Equity holders of the

 Company                    304,812      229,873      806,459      939,188

Non-controlling

 interests                   (2,105)       7,441       13,428       27,659

                        ===========  ===========  ===========  ===========

                            302,707      237,314      819,887      966,847

                        ===========  ===========  ===========  ===========









Consolidated Condensed Interim Statement of Financial Position



 (all amounts in thousands of

 U.S. dollars)                  At September 30, 2010 At December 31, 2009

                                --------------------- ---------------------

                                    (Unaudited)

ASSETS

Non-current assets

  Property, plant and

   equipment, net                3,576,154             3,254,587

  Intangible assets, net         3,543,508             3,670,920

  Investments in associated

   companies                       657,911               602,572

  Other investments                 43,091                34,167

  Deferred tax assets              220,528               197,603

  Receivables                      121,721  8,162,913    101,618  7,861,467

                                ----------            ----------

Current assets

  Inventories                    2,270,276             1,687,059

  Receivables and prepayments      274,457               220,124

  Current tax assets               230,605               260,280

  Trade receivables              1,531,564             1,310,302

  Available for sale assets         21,572                21,572

  Other investments                641,998               579,675

  Cash and cash equivalents        919,027  5,889,499  1,542,829  5,621,841

                                ========== ========== ========== ==========



Total assets                               14,052,412            13,483,308

                                           ==========            ==========

EQUITY

Capital and reserves

 attributable to the Company's

 equity holders                             9,699,612             9,092,164

Non-controlling interests                     649,233               628,672

                                           ==========            ==========

Total equity                               10,348,845             9,720,836

                                           ==========            ==========

LIABILITIES

Non-current liabilities

  Borrowings                       376,204               655,181

  Deferred tax liabilities         885,230               860,787

  Other liabilities                189,815               192,467

  Provisions                        88,608                80,755

  Trade payables                     3,387  1,543,244      2,812  1,792,002

                                ==========            ==========

Current liabilities

  Borrowings                       713,703               791,583

  Current tax liabilities          221,095               306,539

  Other liabilities                289,894               192,190

  Provisions                        26,059                28,632

  Customer advances                 86,710                95,107

  Trade payables                   822,862  2,160,323    556,419  1,970,470

                                ========== ========== ========== ==========

Total liabilities                           3,703,567             3,762,472

                                           ==========            ==========

Total equity and liabilities               14,052,412            13,483,308

                                           ==========            ==========











Consolidated Condensed Interim Statement of Cash Flows



                              Three-month period      Nine-month period

                              ended September 30,     ended September 30,

                            ----------------------  ----------------------

(all amounts in thousands

 of U.S. dollars)              2010        2009        2010        2009

                            ----------  ----------  ----------  ----------

Cash flows from operating

 activities                 (Unaudited) (Unaudited) (Unaudited) (Unaudited)

Income for the period          302,707     237,314     819,887     966,847

Adjustments for:

Depreciation and

 amortization                  125,974     127,789     377,890     375,850

Income tax accruals less

 payments                       48,406     (15,741)    (67,542)   (345,431)

Equity in earnings of

 associated companies          (15,575)    (10,294)    (58,885)    (67,367)

Interest accruals less

 payments, net                     817       5,741      20,313     (17,957)

Changes in provisions            3,596     (10,174)      5,280       4,026

Changes in working capital    (427,899)    359,488    (491,392)  1,534,948

Other, including currency

 translation adjustment         84,062      78,278      11,430     196,070

                            ----------  ----------  ----------  ----------

Net cash provided by

 operating activities          122,088     772,401     616,981   2,646,986

                            ==========  ==========  ==========  ==========



Cash flows from investing

 activities

Capital expenditures          (212,825)   (101,460)   (561,218)   (327,795)

Acquisition of subsidiaries          -           -           -     (64,029)

Proceeds from disposal of

 property, plant and

 equipment and intangible

 assets                          1,215       1,676       6,961      12,004

Dividends received from

 associated companies              774       3,680      13,732       8,903

Investments in short terms

 securities                   (137,375)   (255,411)    (62,323)   (482,998)

                            ==========  ==========  ==========  ==========

Net cash used in investing

 activities                   (348,211)   (351,515)   (602,848)   (853,915)

                            ==========  ==========  ==========  ==========

Cash flows from financing

 activities

Changes in non-controlling

 interests                         395         (29)     (2,961)     (9,535)

Dividends paid                       -           -    (247,913)   (354,161)

Dividends paid to

 non-controlling interests

 in subsidiaries                (4,442)     (5,522)    (19,019)    (32,698)

Proceeds from borrowings        19,862     245,961     369,718     509,802

Repayments of borrowings      (145,114)   (554,689)   (733,868) (1,704,173)

                            ----------  ----------  ----------  ----------

Net cash used in financing

 activities                   (129,299)   (314,279)   (634,043) (1,590,765)

                            ----------  ----------  ----------  ----------



(Decrease) Increase in cash

 and cash equivalents         (355,422)    106,607    (619,910)    202,306



Movement in cash and cash

 equivalents

At the beginning of the

 period                      1,244,401   1,608,695   1,528,707   1,525,022

Effect of exchange rate

 changes                        11,790      18,118      (8,028)     15,788

Decrease due to

 deconsolidation                     -           -           -      (9,696)

(Decrease) Increase in cash

 and cash equivalents         (355,422)    106,607    (619,910)    202,306

                            ----------  ----------  ----------  ----------

At September 30,               900,769   1,733,420     900,769   1,733,420

                            ----------  ----------  ----------  ----------



                                At September 30,       At September 30,

                            ----------------------  ----------------------

Cash and cash equivalents      2010        2009        2010       2009

                            ----------  ----------  ----------  ----------

Cash and bank deposits         919,027   1,741,352     919,027   1,741,352

Bank overdrafts                (18,258)     (7,932)    (18,258)     (7,932)

                            ----------  ----------  ----------  ----------

                               900,769   1,733,420     900,769   1,733,420

                            ----------  ----------  ----------  ----------



Giovanni Sardagna

Tenaris

 1-888-300-5432

www.tenaris.com



Source: Tenaris S.A.

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