TMK Announces 4Q and FY 2017 IFRS Results
PAO TMK (“TMK” or “the Group”), one of the world’s leading producers of tubular products for the oil and gas industry, today announces its audited consolidated IFRS financial results for the year ended December 31, 2017.
4Q and FY 2017 Highlights
Financial
- 4Q Revenue up 5% q-o-q at $1,203m, FY Revenue up 32% y-o-y at $4,394m
- 4Q Adjusted EBITDA down 5% q-o-q at $160m, FY Adjusted EBITDA up 14% y-o-y at $605m
- Adjusted EBITDA margin at 13% in 4Q 2017 and 14% for FY 2017
- Net debt at $2,688m as at December 31, 2017
- Net debt/EBITDA ratio improved to 4.44x as at December 31, 2017
4Q 2017 Developments
- In October 2017, TMK and OOO Gazprom Burenie signed a long-term strategic cooperation agreement until 2022 based on a pricing formula, securing TMK as the key supplier of the entire range of steel drilling pipes for Gazprom Burenie.
- In October 2017, TMK won a tender to supply LUKOIL subsidiaries with 18.4 thousand tonnes of casing pipe with TMK UP PF, ТМК UP PF ET, TMK UP FMC, TMK UP GF and TMK UP Centum premium threaded connections, including pipes made from the unique corrosion-resistant chromium-nickel alloy TMK-C and pipes with GreenWell lubricant-free coating.
- In November 2017, TMK launched production of casing pipes with TMK UP ULTRA GX threaded connection. The connection fully complies with the ISO PAS 12835 standard, which sets stringent requirements for high-viscosity oil production employing the Steam Assisted Gravity Drainage (SAGD) method, and simulates thermocyclic loads that a connection might undergo in real operation conditions. The first lot of pipes was shipped to Rosneft’s subsidiary – AO Samaraneftegaz.
- In November 2017, TMK and the Federal State Unitary Enterprise “Central Scientific Research Institute of Ferrous Metallurgy” I.P. Bardina “(TSNIichern) signed a cooperation agreement to January 1, 2025 to jointly develop and implement technologies to produce exclusive new steel brands and improved corrosion resistant pipes.
- In January 2018, TMK fully redeemed its Eurobond issue in the total nominal value of $231m. The $500m Eurobonds with a coupon rate of 7.75% and a 7-year maturity were issued by TMK Capital SA on January 27, 2011 to finance a loan to PAO TMK. Part of the issue in the amount of $269m was redeemed earlier.
- On February 8, 2018, IPSCO, the American division of PAO TMK announced that it had decided to postpone a proposed initial public offering of its shares of common stock launched on 29 January 2018, due to adverse market conditions.
Outlook
- While EBITDA margin is expected broadly in line with FY 2017, TMK anticipates higher EBITDA for FY 2018 supported by further improvements in the performance of the American division.
Alexander Shiryaev, CEO of TMK, said:
“TMK has continued to maintain a leading position in the global oil and gas pipe market, signing a number of important deals in the fourth quarter with major customers for premium and innovative new products.
We have also made some progress towards our objective of reducing the Group’s net debt-to-EBITDA ratio and we remain committed to strengthening the Group’s financial position.
Overall, we are confident in the outlook for 2018, with OCTG consumption in Russia remaining strong in 2018, with some upside potential, as well as with stable demand and an improved pricing environment in Europe. The solid fundamentals in the US have continued to drive demand for our products in that region and we believe that IPSCO will continue to perform strongly as US majors return to increasing rig count, with a focus on horizontal drilling.”
