TMK Reduced Pipe Shipments by 13%

Total pipe shipments decreased by 8% qoq (-13% y / y), mainly due to a decrease in total shipments in the American Division and shipments of welded pipes in the Russian Division.

Seamless pipe shipments decreased by 5% compared to Q3 2019 (-16% YoY), mainly due to a decrease in shipments of OCTG pipes and linear pipes in the American Division amid continued slowdown in activity on the North American market.

The volume of shipments of welded pipes decreased by 14% compared to the third quarter of 2019 (-6% y / y), mainly due to a decrease in the volume of shipment of large diameter pipes in the Russian division, due to a change in the structure of production in the fourth quarter of 2019. ., and also due to a reduction in shipments of OCTG pipes and linear pipes in the American Division.

OCTG pipe shipments decreased by 10% compared to Q3 2019 (-30% YoY), mainly due to lower shipments in the American Division.

Results for 2019

The total volume of pipe shipment decreased by 5% compared to 2018 due to a decrease in shipment of both seamless and welded pipes (by 5% and 5% compared to 2018, respectively), which is mainly due to the weak results of the American division.

The impact of the American Division results was partially offset by a 5% increase in pipe shipments in the Russian Division compared to 2018, due to an increase in the shipment of seamless OCTG pipes (by 4% compared to 2018) and large diameter pipes (by 56% by compared to 2018).

The total volume of shipment of OCTG pipes decreased by 11% compared to 2018, while the volume of shipment of OCTG pipes in the Russian division increased by 3% compared to a year earlier (by 4% compared to 2018, excluding shipments of welded OCTG pipes from TMK GIPI, which was excluded from the consolidation perimeter in the fourth quarter of 2018), due to the increased complexity of hydrocarbon production projects in Russia and an increase in the share of horizontal drilling.

The total volume of shipments of premium threaded joints decreased by 10% compared to 2018, while shipments of premium threaded joints in the Russian division increased by 15% compared to a year earlier.

Forecast until the end of 2020

TMK expects that in 2020 the consumption of pipes by the companies of the fuel and energy complex in Russia will remain at a stable level. It is expected that an increase in the complexity of hydrocarbon production projects in Russia will lead to an increase in demand for high-tech products.

TMK expects shipments of seamless industrial pipes in the European Division to remain stable compared to 2019, mainly due to demand for high-margin pipe products.

Commentary by TMK CEO Igor Korytko:

“In 2019, TMK showed a steady increase in the total volume of shipments in the Russian division at the level of 5%. The volume of shipment of seamless OCTG pipes, our key product, increased by 4% compared to 2018 due to stable demand from Russian oil and gas companies, while the volume of shipment of premium threaded joints in the Russian division increased by 15% in 2019 compared with a year earlier. This was made possible largely due to the fact that TMK continued to pay special attention to the development and production of high-tech products in order to meet the growing demand from major consumers implementing increasingly complex exploration and production projects. In order to further develop the scientific and technical potential in the IV quarter of 2019, TMK commissioned a new research center in Skolkovo.

 

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Reviewer overview

TMK Reduced Pipe Shipments by 13% - /10

Summary

Total pipe shipments decreased by 8% qoq (-13% y / y), mainly due to a decrease in total shipments in the American Division and shipments of welded pipes in the Russian Division.

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