Tenaris S.a. · MIL:TEN
Tenaris — Investor Presentation (April 2010)
23 slides from Tenaris's investor presentation, April 2010
Slide 1: Investor Presentation
Investor Presentation Paolo Rocca Chairman and CEO
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: Agenda
Agenda • Market dynamics • Actions underway • Operating results • Competitive position Investor Presentation Tenaris April 2010 3
Slide 4: Recovery driven by oil prices
Recovery driven by oil prices Rig count, WTI, North American natural gas and coal Rigs (US$/mmbtu) 4,000 25.0 3,500 20.0 3,000 2,500 15.0 2,000 10.0 1,500 1,000 5.0 500 0 0.0 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 International USA an
Slide 5: Demand for OCTG is also recovering
Demand for OCTG is also recovering (2006 = 100) 160 140 120 100 80 60 40 20 0 2006 2007 2008 2009 2010F Premium API Consumption •Demand and consumption of OCTG are expected to come back into balance in 2010 •2008 levels of API OCTG demand are not expected for many years •Demand for premium products
Slide 6: Global OCTG consumption and Tenaris positioning
Global OCTG consumption and Tenaris positioning Local markets in the Rest of the China and Americas world Russia API 55% API 84% API 94% Worldwide OCTG market PRM 45% PRM 16% PRM 6% 39% 27% 34% In these markets Tenaris is In the rest of the world In China and Russia a local player and unfair demand
Slide 7: Changing patterns in demand: US gas shales
Changing patterns in demand: US gas shales Gas: drilled wells and OCTG consumption evolution Tons/well Bcf/well Index 160 1.4 140 1.2 120 1 100 0.8 80 0.6 60 0.4 40 20 Shales 0.2 Shales Shales Shales Shales 0 0 2006 2007 2008 2009 2010F C onsumption of pipes (year 2006 = 100) Gas wells (year 2006 =
Slide 8: Changing patterns in demand: Shales in the USA
Changing patterns in demand: Shales in the USA Connections Onshore gas (w/o shales) PRM API Shales gas PRM API Steel grades Onshore gas (w/o shales) HT NHT Shales gas HT NHT Conforming Onshore gas (w/o shales) Acceptable ERW Shales gas Acceptable ERW SMLS 0% 20% 40% 60% 80% 100% Investor Presentatio
Slide 9: Changing patterns in demand: Middle East gas
Changing patterns in demand: Middle East gas OCTG Consumption Breakdown 3% 100% 7% 23% 25% 26% 28% 80% 30% 60% 40% 77% 75% 74% 69% 63% 20% 0% 2006 2007 2008 2009 2010F Oil Gas Iraq Premium % share • OCTG used in gas wells is 85% premium with a high component of sour and special grades • In the last
Slide 10: Changing patterns in demand: worldwide offshore drilling
Changing patterns in demand: worldwide offshore drilling Worldwide OCTG Consumption Offshore Worldwide OCTG Consumption USA 11% C HINA 10% SUB SAHARAN AFRIC A SOUTH EAST 11% ONSHORE OFFSHORE ASIA 89% 11% 27% MIDDLE EAST 10% LATIN AMERIC A NORTH SEA 11% Premium Worldwide OCTG Consumption 12% OTHERS 8
Slide 11: Agenda
Agenda • Market dynamics • Actions underway • Operating results • Competitive position Investor Presentation Tenaris April 2010 11
Slide 12: Investments to support competitive positioning
Investments to support competitive positioning • New rolling mill in Mexico by the end of 2010 expanding the range of our high-end products • Transforming North American industrial operations: new heat treatment, finishing and control facilities US$ M illion Capital expenditures 1,200 • Investing in
Slide 13: Strengthening our presence in the Eastern hemisphere
Strengthening our presence in the Eastern hemisphere • Moving our Eastern Hemisphere oil and gas operations headquarters to Dubai • New premium threading facility in Saudi Arabia by May 2010. Enhancing local content and customer service • Integration of SPIJ has strengthened our local presence and s
Slide 14: Acting to limit unfair competition in local markets
Acting to limit unfair competition in local markets • Important actions taken to defend our local markets against unfair competition from China 9 Duties introduced in USA 9 Duties introduced in Canada 9 Duties introduced in Europe 9 Antidumping investigations initiated in Mexico, Argentina and Colom
Slide 15: R&D: customer solutions and competitive differentiation
R&D: customer solutions and competitive differentiation • Process improvements to enhance quality, reduce costs and manufacturing new steel grades • Fatigue resistant steel grades and connections for shales applications • Sour service and chrome products for highly corrosive environments • HP/HT gra
Slide 16: Agenda
Agenda • Market dynamics • Actions underway • Operating results • Competitive position Investor Presentation Tenaris April 2010 16
Slide 17: Raw material costs are rising but…
Raw material costs are rising but… (Jan 2006 = 100) 450 400 350 300 250 200 . 150 100 50 0 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Scrap HRC Pig iron Iron ore - pellets Investor Presentation Tenaris April 2010 17
Slide 18: … prices are also starting to rise
… prices are also starting to rise (Jan 2006 = 100) 450 400 350 300 250 200 . 150 100 50 0 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Scrap HRC Pig iron Iron ore - pellets Pipelogix Investor Presentation Tenaris April 2010 18
Slide 19: Margins of our Tubes segment
Margins of our Tubes segment Prices and costs per metric ton and volumes of our Tubes segment US$/Ton Thousand Tons 4,000 1,500 3,000 1,000 2,000 500 1,000 0 - 1Q03 4Q03 3Q04 2Q05 1Q06 4Q06 3Q07 2Q08 1Q09 4Q09 Margin per ton Tubes volumes (Ths tons) Cost per ton Price per ton Pipe Logix basket Inves
Slide 20: Operating and financial results
Operating and financial results Millions of US$ (except ratios and per ADS amounts) 2005 2006 2007 2008 2009 Net Sales 6,051 7,559 9,874 11,988 8,149 Tubes 5,055 6,734 8,433 10,010 6,671 Projects 790 454 876 1,271 986 Others 207 372 565 707 492 Operating income 1,910 2,742 2,917 3,126 1,814 EBITDA 2
Slide 21: Agenda
Agenda • Market dynamics • Actions underway • Operating results • Competitive position Investor Presentation Tenaris April 2010 21
Slide 22: Well placed in a changing and competitive world
Well placed in a changing and competitive world Financial position US$ million 4,000 1.0 • Financial strength: positive net cash 3,000 0.8 position, good cash flow and higher 2,000 0.6 margins than competitors 1,000 0.4 0 0.2 • Expanding local presence and service in 2006 2007 2008 2009 -1,000 0.0 m
Slide 23: Investor Presentation Tenaris April 2010
Investor Presentation Tenaris April 2010 23