Tenaris S.a. · MIL:TEN
Tenaris — Investor Presentation (August 2005)
23 slides from Tenaris's investor presentation, August 2005
Slide 1: Investor Presentation August 2005
Investor Presentation August 2005
Slide 2: Disclaimer
Disclaimer This presentation contains “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 th
Slide 3: A key player in the global energy industry
A key player in the global energy industry • Leading global supplier of seamless pipes Revenues by segment (2004) to the oil and gas industry with manufacturing Other Energy operations worldwide 10% 2% Welded 8% • Leading supplier of welded pipes for South America’s oil and gas infrastructure • Inno
Slide 4: Leader in OCTG sector
Leader in OCTG sector World seamless OCTG production • Leading consolidator in the seamless pipes 2004 market share industry Japan 9% Tenaris 18% Eastern Europe & • Focusing on sales of high-end products direct CIS 20% to end-user customer base China Others 22% 4% • Comprehensive range of high quali
Slide 5: Core seamless pipe business is global
Core seamless pipe business is global Distribution of production capacity Distribution of sales volume (2004) (3.3 million tons) (2.7 million tons) South America 14% South America North America 27% North America 28% 31% Far East & Oceania 16% Far East & Oceania 8% Middle East & Africa Europe 16% 26%
Slide 6: Growing oil demand not matched by additional supply capacity
Growing oil demand not matched by additional supply capacity Mln b/d 90 14 85 12 80 10 75 8 70 6 65 4 60 2 55 50 - 1974 1979 1984 1989 1994 1999 2004 World oil demand Spare capacity (RHS) Source: EIA, BP Statistical review of World Energy and Spears estimates Investor Presentation Tenaris August 200
Slide 7: Constraints to supply growth
Constraints to supply growth Point to multi-year period of higher investment in all parts of the industry • Since 1985 production has exceeded the discovery of new reserves every year • Decline rates for older reservoirs are accelerating • Long lead-time required to develop new reservoirs • New expl
Slide 8: Production will increasingly be in difficult operating environments
Production will increasingly be in difficult operating environments Production trend towards non-conventional sources 2003 Oil & Gas production 2010 Oil & Gas production Tight Gas Acid Sour 3% 0% LNG Acid Sour Arctic 6% Tight Gas 3% 4% 0% Deepwater LNG 3% 10% Heavy oil 7% Arctic 6% Deepwater 14% Hea
Slide 9: Responding to the needs of the industry
Responding to the needs of the industry And enhancing competitive differentiation • Investing in global industrial structure to increase capacity in high value products, reduce costs and secure raw material supply • Increasing investment in R&D to develop new products • Investing in finishing facili
Slide 10: Adding value to our sales and winning customer loyalty
Adding value to our sales and winning customer loyalty High-end tubes (% of total sold) Tubes with value added service (% of total sold) % % 40 30 38 36 25 34 20 32 30 15 28 26 10 24 5 22 20 0 2001 2002 2003 2004 2005E 2001 2002 2003 2004 2005E Investor Presentation Tenaris August 2005 10
Slide 11: Setting new industry standards in premium connections
Setting new industry standards in premium connections • Statoil’s Snøhvit project in the Barents Sea is the first field worldwide where all casing and tubing will be dope-free • TenarisBlue® Dopeless™ is increasingly seen as the thread and coupled connection of choice for its environmental and opera
Slide 12: At the forefront of industry developments
At the forefront of industry developments • Caspian (Karachaganak, Kashagan, Tengizchevroil) • Gas production for LNG and regional grids (Qatar, Egypt, Nigeria, Australia) • Saudi Aramco expanding production • West African deepwater • Norwegian offshore • Mexico – rig count has doubled in last three
Slide 13: Investing to reduce costs and expand industrial structure
Investing to reduce costs and expand industrial structure • USD60m in Matesi reduces exposure to high scrap prices and gives access to competitive Venezuelan iron ore and natural gas • USD140m in Dalmine power plant will reduce energy cost and secure supply • USD42m (+USD32m debt) in Silcotub adds c
Slide 14: Seamless pipe margins are growing
Seamless pipe margins are growing US$ 2,000 900 Rig USD/b s bl 1,800 800 1,600 700 1,400 1,200 600 1,000 500 800 600 400 400 300 200 0 200 2000FY 2001FY 2002FY 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 Margin per ton (RHS) Price per ton Cost per ton Investor Presentation Tenaris August 2005
Slide 15: Operating results growing
Operating results growing Millions of US$ 2001 2002 2003 2004 1H 2005 Net Sales 3,174 3,219 3,180 4,136 3,197 Seamless 2,496 2,244 2,376 3,273 2,413 Welded 433 580 351 348 416 Energy 113 210 333 418 256 Others 132 185 120 97 112 EBITDA 1 644 667 602 899 1,000 EBITDA margin 20% 21% 19% 22% 31% Net in
Slide 16: Reinvesting cash flow in growth and dividends
Reinvesting cash flow in growth and dividends Million US$ 600 500 400 300 200 100 0 2002 2003 2004 Acquisitions Capex Dividends Investor Presentation Tenaris August 2005 16
Slide 17: Liquidity of shares increasing
Liquidity of shares increasing Average daily trading Shares by market Italy Millions of US$ M exico 8% 2% ADRs 61% 30 25 20 Argentina 29% 15 June 2005 10 It aly M exico 5% ADRs 2% 52% 5 0 2003 2004 1 H 2005 New York Milan Buenos Aires Mexico Argentina 41% December 2004 Investor Presentation Tenaris
Slide 18: Summary
Summary • Global leader in a consolidated industry segment with substantial barriers to entry • Well positioned to benefit from extended energy cycle and industry developments • Consolidating competitive position by investing in R&D and industrial structure • Operating results and prospects transfor
Slide 19: Investor Presentation Tenaris August 2005
Investor Presentation Tenaris August 2005 19
Slide 20: Balance sheet is strong
Balance sheet is strong Indebtedness (Million US$) Firm value US$ 9,954 As of June 30, 2005 Net debt 714 649 Cash & Cash Equivalents 451 Financial Debt 1,165 Net Debt 714 Net Debt / Equity 24.1% Balance Sheet (Million US$) Market Cap (1) 9,240 As of June 30, 2005 Current Assets 3,368 Current Liabili
Slide 21: Solid financial indicators
Solid financial indicators FY 2003 FY 2004 1H 2005 Million US$ % Million US$ % Million US$ % EBITDA (1) 602 19% 899 22% 1.000 31% Shareholders Equity 1.841 2.496 2.963 Market Capitalization (2) 3.891 5.795 9.240 Firm Value (FV) (3) 4.339 6.841 9.954 FV/EBITDA 7,2 7,4 Interest Coverage (EBITDA/Intere
Slide 22: Corporate organization
Corporate organization Tenaris Manufacturing Services & Investment & R&D & Procurement Centres Trading Financial Technology AlgomaTubes Tenaris Global Tenaris Tenaris Exiros (Canada) Services Investments Connections (Uruguay) Dalmine (Uruguay) (Ireland) (Netherlands) (Italy) Procurement Commercial N
Slide 23: Positioned to serve the needs of demanding markets worldwide
Positioned to serve the needs of demanding markets worldwide Investor Presentation Tenaris August 2005 23