Tenaris Announces 2011 Third Quarter Results

The financial 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) -- 11/03/11 -- 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, 2011 with comparison to its results for the quarter and nine months ended September 30, 2010.

Summary of 2011 Third Quarter Results

(Comparison with second quarter of 2011 and third quarter of 2010)




                                    Q3 2011      Q2 2011         Q3 2010

Net sales (US$ million)             2,494.8   2,403.1    4%   2,027.2   23%

Operating income (US$ million)       485.3     412.4    18%    405.1    20%

Net income (US$ million)             365.5     304.7    20%    302.7    21%

Shareholders' net income (US$        325.0     287.2    13%    304.8     7%

 million)

Earnings per ADS (US$)                0.55      0.49    13%     0.52     7%

Earnings per share (US$)              0.28      0.24    13%     0.26     7%

EBITDA (US$ million)                 620.3     548.4    13%    531.1    17%

EBITDA margin (% of net sales)        25%       23%             26%



*EBITDA is defined as operating income plus depreciation, amortization and impairment charges/(reversals)

Operating income rose 18% on higher sales and a recovery of margins in our Tubes operating segment which more than offset a lower contribution from our Projects operating segment. Sales of premium OCTG products, particularly in the Middle East and Mexico, grew strongly contributing to a higher value product mix and our costs benefitted from a more favorable plant mix and currency movements.

Cash flow from operations increased and our net cash position (cash and other current investments less total borrowings) rose by US$162.7 million to US$227.6 million at the end of the quarter.

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 24, 2011 (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 25, 2011, which is the first business day following the stated payment date), and the ex-dividend date will be November 21, 2011.

Market Background and Outlook

Drilling activity has been increasing steadily in most regions, with the exception of North Africa, and is supported by current oil and gas prices. The European financial crisis and concerns about a Chinese slowdown are resulting in increased economic uncertainty and commodity price volatility but have not been reflected in energy prices.

Sales of our products and services to the oil and gas sector are increasing driven by a continued high level of activity in North America, higher activity in the Middle East and the ramp up of operations at our new plant in Veracruz; in particular, demand for our premium OCTG products is rising in most regions reflecting the increasing complexity of drilling operations worldwide. Downstream projects are moving forward and our sales to this sector remain stable subject to the normal fluctuations associated with project activity.

Sales and operating income are expected to continue improving in the coming quarters unless the global financial and economic situation deteriorates substantially.

Analysis of 2011 Third Quarter Results




Sales volume (metric tons)          Q3 2011      Q2 2011         Q3 2010

Tubes - Seamless                    650,000   633,000    3%   581,000   12%

Tubes - Welded                      216,000   198,000    9%   205,000    5%

Tubes - Total                       866,000   831,000    4%   786,000   10%

Projects - Welded                    53,000    68,000  (22%)   39,000   36%

Total                               919,000   899,000    2%   825,000   11%





               Tubes                Q3 2011      Q2 2011         Q3 2010

(Net sales - $ million)

North America                       1,034.8    946.0     9%    848.7    22%

South America                        338.4     327.9     3%    320.7     6%

Europe                               275.3     279.0    (1%)   161.5    70%

Middle East & Africa                 358.8     303.7    18%    338.6     6%

Far East & Oceania                   143.0     141.2     1%    116.0    23%

Total net sales ($ million)         2,150.3   1,997.8    8%   1,785.5   20%

Cost of sales (% of sales)            61%       63%             61%

Operating income ($ million)         429.2     322.0    33%    367.6    17%

Operating income (% of sales)         20%       16%             21%



Net sales of tubular products and services increased 8% sequentially and 20% year on year. Sequentially, the 8% increase in sales reflects a 4% increase in volumes and a 3% increase in average selling prices. In North America, sales increased due to higher sales in Mexico and Canada. In South America, an increase in sales of OCTG products in Argentina was partially offset by lower sales in Ecuador. In Europe, sales decreased slightly, as seasonally lower sales of non-OCTG products to European distributors were largely offset by higher sales of OCTG products. In the Middle East & Africa, higher sales of high value OCTG products in Saudi Arabia were partially offset by lower sales of other products in the Middle East. In the Far East & Oceania, higher shipments of structural pipe for jack-up rigs offset lower sales of OCTG in China.

Operating income from tubular products and services increased 33% sequentially as sales rose 8% and operating margin recovered to close to that of a year ago reflecting improvements in product mix and costs benefitted from a more favorable plant mix.




                Projects                 Q3 2011     Q2 2011       Q3 2010

Net sales ($ million)                     150.8    212.4  (29%)  95.3   58%

Cost of sales (% of sales)                 67%      65%          66%

Operating income ($ million)               27.3    51.5   (47%)  12.6  117%

Operating income (% of sales)              18%      24%          13%



Projects net sales amounted to US$150.8 million in the third quarter of 2011, a decrease of 29% sequentially and an increase of 58% year on year. Sequentially, the decrease in sales and operating income reflects a decrease in volumes of 22%, due to the timing in projects deliveries, and a decrease in operating margins, which in the previous quarter were positively affected by a high proportion of shipments to offshore projects.




                Others                  Q3 2011     Q2 2011       Q3 2010

Net sales ($ million)                    193.7    192.9   0%    146.4   32%

Cost of sales (% of sales)                73%      68%           72%

Operating income ($ million)              28.7    38.9   (26%)  24.8    16%

Operating income (% of sales)             15%      20%           17%



Net sales of other products and services were flat sequentially and increased 32% year on year. Sequentially, sales of industrial equipment in Brazil and of steel pipes for electric conduits in the United States increased, but they were mostly offset by lower sales of other products. Operating income decreased sequentially, mainly due to a decrease in margins to a level similar to that of a year ago.

Selling, general and administrative expenses, or SG&A, amounted to 18.5% of net sales in the third quarter of 2011, similar to the third quarter of 2010 and lower than the 19.5% of the previous quarter. Sequentially, SG&A decreased as a percentage of net sales due to a positive effect of higher revenues and a slight decrease in SG&A from US$468.3 million in the second quarter 2011 to US$462.4 million in the third quarter of 2011.

Net interest expenses amounted to US$8.5 million in the third quarter of 2011, compared to net interest expenses of US$5.7 million in the previous quarter and net interest income of US$4.0 million in the third quarter of 2010.

Other financial results generated a gain of US$28.0 million during the third quarter of 2011, compared to a loss of US$12.4 million in the previous quarter and a loss of US$16.2 million during the third quarter of 2010. 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. During the third quarter of 2011, these gains were mainly attributable to the revaluation of the U.S. dollar against the Brazilian real (+18.6%), as our Brazilian subsidiaries held a positive net financial position in the U.S. dollar in the quarter.

Equity in earnings of associated companies generated a gain of US$1.5 million in the third quarter of 2011, compared to a gain of US$22.7 million in the previous quarter and a gain of US$15.6 million in the third quarter of 2010. These gains were derived mainly from our equity investment in Ternium and reflected lower results at Ternium.

Income tax charges totalled US$140.8 million in the third quarter of 2011, equivalent to 28% of income before equity in earnings of associated companies and income tax, compared to 28% in the previous quarter and 27% in the third quarter of 2010.

Income attributable to non-controlling interests amounted to US$40.5 million in the third quarter of 2011, compared to US$17.5 million in the previous quarter and to losses attributable to non-controlling interests of US$2.1 million in the third quarter of 2010. Sequentially, the increase is due to the better financial results of our Brazilian operations due to the revaluation of the U.S. dollar against the Brazilian real.

Cash Flow and Liquidity of 2011 Third Quarter

Net cash provided by operations during the third quarter of 2011 was US$336.3 million, compared to US$325.1 million in the previous quarter and US$122.1 million in the third quarter of 2010. Working capital remained flat during the third quarter of 2011, compared to an increase of US$95.1 million in the previous quarter and US$427.9 million in the third quarter of 2010, when it increased due to an uneven distribution of shipments during the quarter and to an increase in raw material inventories.

Capital expenditures amounted to US$212.1 million in the third quarter of 2011, compared to US$251.2 million in the previous quarter and US$212.8 million in the third quarter of 2010.

Our net cash position (cash and other current investments less total borrowings) increased to US$227.6 million, at the end of the third quarter, from US$64.9 million at the end of the previous quarter, following a dividend payment of US$247.9 million in June 2011.

Analysis of 2011 First Nine Months Results




                                    9M 2011   9M 2010   Increase/(Decrease)

Net sales (US$ million)             7,221.9   5,647.7           28%

Operating income (US$ million)      1,339.1   1,119.7           20%

Net income (US$ million)             994.4     819.9            21%

Shareholders' net income (US$        931.6     806.5            16%

 million)

Earnings per ADS (US$)                1.58      1.37            16%

Earnings per share (US$)              0.79      0.68            16%

EBITDA* (US$ million)               1,739.5   1,497.6           16%

EBITDA margin (% of net sales)        24%       27%





 Sales volume (metric tons)     9M 2011      9M 2010    Increase/(Decrease)

Tubes - Seamless               1,904,000    1,651,000           15%

Tubes - Welded                  647,000      523,000            24%

Tubes - Total                  2,551,000    2,174,000           17%

Projects - Welded               196,000      105,000            87%

Total                          2,747,000    2,279,000           21%





               Tubes                9M 2011   9M 2010   Increase/(Decrease)

(Net sales - $ million)

North America                        2,959.3   2,261.6                   31%

South America                          984.5     839.0                   17%

Europe                                 798.1     540.3                   48%

Middle East & Africa                   960.3     963.9                  (0%)

Far East & Oceania                     413.2     312.6                   32%

Total net sales ($ million)          6,115.4   4,917.4                   24%

Cost of sales (% of sales)               61%       59%

Operating income ($ million)         1,123.3   1,002.3                   12%

Operating income (% of sales)            18%       20%



Net sales of tubular products and services increased 24% to US$6,115.4 million in the first nine months of 2011, compared to US$4,917.4 million in the first nine months of 2010, reflecting a 17% increase in volumes and a 6% increase in average selling prices.

Operating income from tubular products and services increased 12% to US$1,123.3 million in the first nine months of 2011, from US$1,002.3 million in the first nine months of 2010, as a 24% increase in sales was partially offset by a reduction in the operating margin. Operating income expressed as a percentage of net sales decreased to 18% in the first nine months of 2011, compared to 20% in the first nine months of 2010. The lower operating margin in the first nine months of 2011 reflects an increase in raw materials and other costs, which was just partially offset by an increase in average selling prices.




             Projects               9M 2011   9M 2010   Increase/(Decrease)

Net sales ($ million)                538.1       282.6          90%

Cost of sales (% of sales)            67%          65%

Operating income ($ million)         110.6        40.1          175%

Operating income (% of sales)         20%          14%



Net sales of pipes for pipeline projects increased 90% to US$538.1 million in the first nine months of 2011, compared to US$282.6 million in the first nine months of 2010, reflecting an 87% increase in volumes and a 2% increase in average selling prices.

Operating income from pipes for pipeline projects increased 175% to US$110.6 million in the first nine months of 2011, from US$40.1 million in the first nine months of 2010, reflecting an increase in sales and higher operating margins.




              Others                9M 2011   9M 2010   Increase/(Decrease)

Net sales ($ million)                568.4       447.8          27%

Cost of sales (% of sales)            70%          72%

Operating income ($ million)         105.2        77.3          36%

Operating income (% of sales)         19%          17%



Net sales of other products and services increased 27% to US$568.4 million in the first nine months of 2011, compared to US$447.8 million in the first nine months of 2010, as all the main business activities included in the segment increased their revenues.

Operating income from other products and services increased 36% to US$105.2 million in the first nine months of 2011, compared to US$77.3 million during the first nine months of 2010, reflecting higher sales and operating margins, mainly due to the improved results of, our electric conduits operations in the United States, our industrial equipment business in Brazil and from higher sales of sucker rods.

SG&A amounted to 19.1% of net sales during the first nine months of 2011, compared to 19.6% in the same period of 2010.

Net interest expenses amounted to US$19.6 million in the first nine months of 2011 compared to US$26.5 million in the same period of 2010.

Other financial results amounted to a gain of US$16.7 million during the first nine months of 2011, compared to a loss of US$15.9 million during the first nine months of 2010. 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$48.5 million in the first nine months of 2011, compared to a gain of US$58.4 million in the first nine months of 2010. These gains were derived mainly from our equity investment in Ternium.

Income tax charges totalled US$390.3 million in the first nine months of 2011, equivalent to 29% of income before equity in earnings of associated companies and income tax, compared to 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.

Income attributable to non-controlling interests amounted to US$62.8 million in the first nine months of 2011, compared to US$13.4 million in the first nine months of 2010, mainly due to a better performance at our Brazilian operations.

Cash Flow and Liquidity of 2011 First Nine Months

During the first nine months of 2011, net cash provided by operations was US$827.1 million, compared to US$617.0 million in the same period of 2010. Working capital increased by US$489.7 million in the first nine months of 2011, similar to the increase in the first nine months of 2010.

Capital expenditures amounted to US$673.9 million in the first nine months of 2011, compared with US$561.2 million in the same period of 2010.

Our net cash position (cash and other current investments less total borrowings) at September 30, 2011, amounted to US$227.6 million, a decrease of US$48.0 million since the beginning of the year.

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   Three-month period       Nine-month period

 U.S. dollars)                 ended September 30,     ended September 30,

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

                                2011        2010        2011        2010

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

Continuing operations              (Unaudited)             (Unaudited)

Net sales                     2.494.840   2.027.242   7.221.927   5.647.725

Cost of sales                (1.548.822) (1.252.583) (4.506.632) (3.423.055)

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

Gross profit                    946.018     774.659   2.715.295   2.224.670

Selling, general and

 administrative expenses       (462.415)   (370.267) (1.380.530) (1.108.798)

Other operating income

 (expense), net                   1.654         694       4.303       3.857

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

Operating income                485.257     405.086   1.339.068   1.119.729

Interest income                   5.547      13.968      19.747      25.468

Interest expense                (14.073)    (10.003)    (39.362)    (51.961)

Other financial results          28.019     (16.223)     16.669     (15.900)

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

Income before equity in

 earnings of associated

 companies and income tax       504.750     392.828   1.336.122   1.077.336

Equity in earnings of

 associated companies             1.514      15.575      48.519      58.389

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

Income before income tax        506.264     408.403   1.384.641   1.135.725

Income tax                     (140.776)   (105.696)   (390.253)   (315.838)

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

Income for the period           365.488     302.707     994.388     819.887



Attributable to:

Equity holders of the

 Company                        324.991     304.812     931.583     806.459

Non-controlling interests        40.497      (2.105)     62.805      13.428

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

                                365.488     302.707     994.388     819.887

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



Consolidated Condensed Interim Statement of Financial Position




(all amounts in thousands of

 U.S. dollars)                At September 30, 2011    At December 31, 2010

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

                                   (Unaudited)

ASSETS

Non-current assets

  Property, plant and

   equipment, net              4.029.640               3.780.580

  Intangible assets, net       3.434.038               3.581.816

  Investments in associated

   companies                     669.958                 671.855

  Other investments               48.238                  43.592

  Deferred tax assets            217.219                 210.523

  Receivables                    138.509   8.537.602     120.429   8.408.795

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



Current assets

  Inventories                  2.772.199               2.460.384

  Receivables and

   prepayments                   241.974                 282.536

  Current tax assets             170.405                 249.317

  Trade receivables            1.798.844               1.421.642

  Available for sale assets       21.572                  21.572

  Other investments              634.238                 676.224

  Cash and cash equivalents      764.787   6.404.019     843.861   5.955.536

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

Total assets                              14.941.621              14.364.331

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



EQUITY

Capital and reserves

 attributable to the

 Company's equity holders                 10.344.372               9.902.359

Non-controlling interests                    644.721                 648.221

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

Total equity                              10.989.093              10.550.580

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



LIABILITIES

Non-current liabilities

  Borrowings                     177.120                 220.570

  Deferred tax liabilities       852.279                 934.226

  Other liabilities              225.878                 193.209

  Provisions                      79.057                  83.922

  Trade payables                   2.378   1.336.712       3.278   1.435.205

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



Current liabilities

  Borrowings                     994.331               1.023.926

  Current tax liabilities        270.732                 207.652

  Other liabilities              356.959                 233.590

  Provisions                      40.285                  25.101

  Customer advances               78.364                  70.051

  Trade payables                 875.145   2.615.816     818.226   2.378.546

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

Total liabilities                          3.952.528               3.813.751

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

Total equity and liabilities              14.941.621              14.364.331

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

Consolidated Condensed Interim Statement of Cash Flow




                               Three-month period       Nine-month period

                                      ended                   ended

                                  September 30,           September 30,

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

(all amounts in thousands of

 U.S. dollars)                  2011        2010        2011        2010

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

Cash flows from operating

 activities                        (Unaudited)             (Unaudited)



Income for the period           365.488     302.707     994.388     819.887

Adjustments for:

Depreciation and

 amortization                   135.064     125.974     400.465     377.890

Income tax accruals less

 payments                        70.379      48.406     107.008     (67.542)

Equity in earnings of

 associated companies            (1.514)    (15.575)    (48.519)    (58.885)

Interest accruals less

 payments, net                     (635)        817     (28.455)     20.313

Changes in provisions            (9.597)      3.596      10.319       5.280

Changes in working capital       (1.735)   (427.899)   (489.686)   (491.392)

Other, including currency

 translation adjustment        (221.176)     84.062    (118.460)     11.430

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

Net cash provided by

 operating activities           336.274     122.088     827.060     616.981

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



Cash flows from investing

 activities

Capital expenditures           (212.139)   (212.825)   (673.930)   (561.218)

Proceeds from disposal of

 property, plant and

 equipment and intangible

 assets                           1.372       1.215       3.339       6.961

Dividends and distributions

 received from associated

 companies                            -         774      17.229      13.732

Investments in short terms

 securities                     236.668    (137.375)     41.986     (62.323)

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

Net cash provided by (used

 in) investing activities        25.901    (348.211)   (611.376)   (602.848)

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



Cash flows from financing

 activities

Dividends paid                        -           -    (247.913)   (247.913)

Dividends paid to non-

 controlling interests in

 subsidiaries                    (5.964)     (4.442)    (11.699)    (19.019)

Acquisitions of non-

 controlling interests              (90)        395     (16.579)     (2.961)

Proceeds from borrowings        223.723      19.862     713.518     369.718

Repayments of borrowings       (174.150)   (145.114)   (715.262)   (733.868)

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

Net cash provided by (used

 in) financing activities        43.519    (129.299)   (277.935)   (634.043)

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



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

Increase (decrease) in cash

 and cash equivalents           405.694    (355.422)    (62.251)   (619.910)

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



Movement in cash and cash

 equivalents

At the beginning of the

 period                         362.043   1.244.401     820.165   1.528.707

Effect of exchange rate

 changes                        (13.621)     11.790      (3.798)     (8.028)

Increase (decrease) in cash

 and cash equivalents           405.694    (355.422)    (62.251)   (619.910)

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

At September 30,                754.116     900.769     754.116     900.769

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



                                At September 30,        At September 30,

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

Cash and cash equivalents       2011        2010        2011        2010

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

Cash and bank deposits          764.787     919.027     764.787     919.027

Bank overdrafts                 (10.671)    (18.258)    (10.671)    (18.258)

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

                                754.116     900.769     754.116     900.769

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



Giovanni Sardagna

Tenaris

1-888-300-5432

www.tenaris.com



Source: Tenaris S.A.

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