TMK’s pipe sales down 14.2 percent in 2009

Russia's largest oil and gas pipe producer TMK has released its consolidated results for 2009 under International Financial Reporting Standards (IFRS).
 
Accordingly, in 2009 TMK's revenue fell by 39.2 percent year on year to $3.46 billion as a result of a severe demand contraction across all key markets and unfavorable pricing in the seamless and welded pipe segments. In addition, TMK saw a 61.3 percent decrease year on year in its gross profit to $556.4 million, as a result of lower capacity utilization rates, lower volumes and prices for pipe products decreasing more than costs, and a 68.7 percent fall in its EBITDA to $328.1 million.
 
Meanwhile, TMK's net loss amounted to $323.8 million, compared to a net profit of 198.5 million in 2008.
 
In 2009, TMK's total pipe sales volume decreased by 14.2 percent year on year to 2.769 million mt, due to the contraction in demand brought on by the economic crisis.
 
The company's seamless pipe sales volumes decreased by 16.7 percent compared to the previous year and totaled 1.65 million mt. This decline in sales volumes was primarily driven by the contraction in demand in North America and the Middle East and the weak demand for industrial grades.
 
TMK's welded pipe sales volumes in 2009 decreased by 10.2 percent to 1.12 million mt due to weak demand for oil and gas and industrial welded products. However, large-diameter pipe sales grew by 19.8 percent, exceeding budget projections and mitigating the decline in welded products.
 
In 2009, the company's seamless and welded OCTG sales volumes decreased by 15.6 percent to 1.04 million mt with demand from the Russian oil and gas sector lessening the effects of the declines observed in other markets.
 
On the back of the current positive economic trends observed across TMK's key markets and trends in energy prices, the company expects pipe demand to continue to recover in 2010. The first quarter shipments, which grew by 60 percent year on year, highlight the improvements seen in both the Russian and the US markets. Given the current trends observed in the industry, TMK maintains its expectations of a 20 percent year-on-year increase in shipment volumes in 2010 and expects to sustain capacity utilization in the production of oil and gas pipes above 70 percent throughout the year.