TMK announces 1H 2011 IFRS results

TMK, JSC - one of the world’s leading producers of tubular products for the oil and gas industry, today announces its interim consolidated IFRS financial results for the six months ending June 30, 2011.
 

1H 2011 Highlights

Financials:

Revenue increased by 38% year-on-year to U.S. $ 3,547 million driven mainly by further improvement in pricing and product mix. Sales of seamless pipes, core business of the Company, generated 57% of total revenue.

Gross profit increased to U.S. $ 814 million, a year-on-year increase of 39%, resulting from an increase in sales volume, a favorable change in product mix and stronger pricing. Gross profit from seamless pipe sales represented 70% of total gross profit. Gross profit margin remained unchanged at 23% compared to the first six months of 2010. In the first six months of 2011 gross profit margin from seamless pipe sales was 29%, one of the highest respective measures in the industry.

Net income amounted to U.S. $ 258 million as compared to a net income of U.S. $ 67 million in the first six months of 2010, as a result of higher gross profit and lower net finance costs. Net income adjusted for the gain on changes in the fair value of the derivative financial instrument equaled U.S. $ 243 million as compared to U.S. $ 35 million in the first six months of 2010. Adjusted net income margin increased to 7% as compared to 1% in the first six months of 2010.

Net debt marginally decreased compared to March 31, 2011, amounting to U.S. $ 3,843 million.

Sales Volumes:

Total pipe sales increased by 16% to 2,179 thousand tons, mainly due to increases in both large-diameter (LD) and seamless oil country tubular goods (OCTG) pipe in the Russian division and welded line pipe in the American division.

Key Developments:

In April 2011, TMK completed shipments of casing pipe with ULTRA SF connection to Gazprom Neft for the Urmanskoye field in Western Siberia. This project marked the first sale of ULTRA premium threads to the Russian market.
In May 2011, TMK finalized the sale of its 100% ownership interest in its noncore asset TMK Hydroenergy Power S.R.L. which is the owner of four hydropower generating units located in Romania and previously owned by TMKResita.
In June 2011, TMK successfully completed qualification tests of TMK PF and
ULTRA-QX connections in accordance with ISO 13679 CAL IV standard which certifies that the products can be used in certain demanding and unconventional applications including offshore drilling.
In June 2011, TMK started production of a new TMK CWB premium connection for drilling with casing. This technology allows obtaining higher gas-tightness specifications and provides better compatibility when used with other types of threads.