Tmk · RUS:TRMK
Tmk — Q3 2014 Earnings Presentation
19 slides from Tmk's earnings presentation, November 2014
Slide 1: TMK Financial Presentation 3Q and 9M 2014 IFRS Results
PROPRIETARY & CONFIDENTIAL TMK Financial Presentation 3Q and 9M 2014 IFRS Results
Slide 2: Disclaimer
Disclaimer No representation or warranty (express or implied) is made as to, and no reliance should be placed on, the fairness, accuracy or completeness of the information contained herein and, accordingly, none of the Company, or any of its shareholders or subsidiaries or any of such person's offic
Slide 3: 3Q 2014 vs 2Q 2014 Summary Financial Highlights
3Q 2014 vs 2Q 2014 Summary Financial Highlights Sales remained almost flat QoQ as higher LDP and Revenue increased QoQ mainly as a result of higher seamless industrial pipe volumes were offset by weaker LDP volumes in the Russian division and stronger OCTG pipe sales seamless pipe sales in the Ameri
Slide 4: 9M 2014 vs 9M 2013 Summary Financial Highlights
9M 2014 vs 9M 2013 Summary Financial Highlights Sales decreased YoY as stronger seamless OCTG pipe sales were offset by lower welded pipe volumes, Revenue declined YoY mainly due to a negative effect of particularly LDP currency translation -1% YoY -7% YoY 3,200 4,900 4,200 Thousand tonnes U.S.$ mln
Slide 5: Recent Developments
Recent Developments Board of Directors Decisions On October 31, 2014, TMK’s Board of Directors recommended that shareholders approve interim dividends for the first six months of 2014 for a total of RUB 393,786,159.48 (approximately USD 9.07 mln). Board of Directors decided to convene an Extraordi
Slide 6: Russian Market Overview
Russian Market Overview Growing oil drilling market in Russia Key considerations 25,000 7,000 In 3Q 2014, the Russian pipe market increased by 9% QoQ mainly due to the growth of LD pipe market. For 9M 6,000 20,000 2014, Russian pipe market increased by 5% YoY as Thousand meters 5,000 growth in LD
Slide 7: US Market Overview
US Market Overview Growing oil drilling activity Key considerations US Oil and Gas Rig Count 2,100 According to Baker Hughes, in 3Q 2014, the total average rig 1,800 Gas count was up by 51 rigs to 1,903 rigs from the prior quarter. Oil Gas - 18% Total average rig count also increased by 82 rigs in
Slide 8: 3Q 2014 vs 2Q 2014 Sales by Division and Group of Product
3Q 2014 vs 2Q 2014 Sales by Division and Group of Product Sales by division -2% 840 Russian division sales decreased QoQ mainly due to lower 720 seamless OCTG and line pipe volumes. 600 Thousand tonnes American division sales grew QoQ due to higher seamless 480 OCTG volumes. 787 772 3% 360 Eur
Slide 9: 3Q 2014 vs 2Q 2014 Revenue by Division
3Q 2014 vs 2Q 2014 Revenue by Division Revenue Revenue per tonne* 4% 1,200 1,800 -2% 1,600 1,000 7% 1,400 0% 800 1,200 U.S.$ / tonne U.S.$ mln 1,000 600 6% 1,713 1,775 1,030 1,014 800 400 600 1,308 1,312 1,257 1,346 0% 400 200 415 441 71 200 72 0 0 Russia America Europe Russia America Europe 2Q2014
Slide 10: 3Q 2014 vs 2Q 2014 Adjusted EBITDA by Division
3Q 2014 vs 2Q 2014 Adjusted EBITDA by Division Adjusted EBITDA Adjusted EBITDA margin 180 18% 3% 15% 150 14% 12% 13% U.S.$ mln 120 12% 9% 90 8% % 147 151 60 23% 6% 30 42 4% 34 9 9 0 0% Russia America Europe Russia America Europe 2Q2014 3Q2014 2Q2014 3Q2014 Russian division Adjusted EBITDA went up
Slide 11: 9M 2014 vs 9M 2013 Sales by Division and Group of Product
9M 2014 vs 9M 2013 Sales by Division and Group of Product Sales by division -2% 2,500 Russian division sales declined YoY mostly due to lower LDP sales as well as weaker seamless industrial pipe volumes. 2,000 Thousand tonnes American division sales slightly decreased YoY due to lower 1,500 weld
Slide 12: 9M 2014 vs 9M 2013 Revenue by Division
9M 2014 vs 9M 2013 Revenue by Division Revenue Revenue per tonne* -12% 6% 3,600 1,800 -11% 3,000 1,500 18% 2,400 1,200 U.S.$ / tonne U.S.$ mln 1,800 900 1,717 3,439 5% 3,025 1,619 1,479 1,323 1,299 1,200 600 1,103 1,274 -2% 600 1,208 300 210 214 0 0 Russia America Europe Russia America Europe 9M2013
Slide 13: 9M 2014 vs 9M 2013 Adjusted EBITDA by Division
9M 2014 vs 9M 2013 Adjusted EBITDA by Division Adjusted EBITDA Adjusted EBITDA margin 700 20% -23% 17% 600 16% 15% 500 12% U.S.$ mln 400 12% 10% % 300 588 8% 8% 8% 451 200 5% 21% 4% 100 95 100 21 26 0 0% Russia America Europe Russia America Europe 9M2013 9M2014 9M2013 9M2014 Russian division Adjus
Slide 14: Seamless – Core to Profitability
Seamless – Core to Profitability U.S.$ mln QoQ, YoY, 3Q 2014 gross profit breakdown 3Q 2014 9M 2014 (unless stated otherwise) % % Other Volumes- Pipes, kt 585 -8% 1,858 3% operations 2% Welded Revenue 918 -5% 2,866 -4% 19% SEAMLESS Gross Profit 231 -2% 704 -15% Margin, % 25% 25% Avg Revenue / Tonne
Slide 15: Working Capital Position as of September 30, 2014
Working Capital Position as of September 30, 2014 Inventories (days) Accounts payable (days) 120 80 75 97 96 98 73 73 100 91 90 68 80 64 60 60 40 20 0 40 2010 2011 2012 2013 9m2014 2010 2011 2012 2013 9m2014 Accounts receivable (days) Cash conversion cycle (days) 80 120 66 96 63 100 56 56 86 60 76 8
Slide 16: Debt Maturity Profile as of September 30, 2014
Debt Maturity Profile as of September 30, 2014 As of September 30, 2014, total 1,000 financial debt amounted to U.S.$3,546 mln 855 800 80% of total financial debt is long- term 600 537 U.S.$ mln 510 515 500 Weighted average nominal interest rate totalled 7.1% 855 400 343 328 As of September
Slide 17: Debt Profile as of September 30, 2014
Debt Profile as of September 30, 2014 Around U.S.$900 mln of undrawn committed credit lines to Debt breakdown by source of borrowings cover short-term debt 800 700 Utilized Credit Facilities 600 Unutilized Credit Facilities Bonds 500 U.S.$ mln 38% 400 300 Bank Loans 62% 200 100 0 2015 2016 2017 Unli
Slide 18: Outlook
Outlook For the fourth quarter of 2014, the Company observes an increase of the pipe market in Russia mainly due to higher consumption of LD pipe for Gazprom’s projects and seasonally stronger demand for OCTG pipe. In the U.S. TMK expects fourth quarter drilling activity to remain stable notwithstan
Slide 19: Thank You
Thank You TMK Investor Relations 40/2a, Pokrovka Street, Moscow, 105062, Russia +7 (495) 775-7600 IR@tmk-group.com 19