OAO TMK a leading global producer of steel pipes for the oil and gas industry announces its unaudited IFRS financial results for the six months ended June 30th 2009.
| H1'09 | H1'08 | Change | |
| Revenue | 1,478.6 | 2,368.4 | -37.6% |
| Gross profit | 223.9 | 617.8 | -63.8% |
| Net profit (loss) | -203.8 | 158.2 | N/A |
| Adjusted EBITDA | 145.9 | 417.8 | -65.1% |
In USD million
H1 2009 Highlights
1. Revenue fell by 38% to USD 1,478.6 million.
2. Gross profit decreased by 64% to USD 223.9 million
3. Adjusted EBITDA, excluding non-cash items 1 declined by 65% to USD 145.9 million.
4. Adjusted EBITDA, including certain non cash items decreased by 72% to USD 113.0 million as a result of a decrease in revenue and gross profit.
5. Despite a net loss of USD 203.8 million the Company generated net operating cash flow of USD 286.0 million.
TMK’s 1H 2009 financial results were severely affected by a slump in demand and unfavorable pricing environment across major markets as a result of sharp a decline observed in global energy demand and oil and gas prices.
With its large exposure to the oil and gas sector, TMK struggled in the first half of the year with a falling rig count and high pipe inventories in the US, the curtailment of E&P budgets in Russia and increased competition in the Middle East and CIS markets. At the same time, demand in the industrial pipe segment collapsed in the beginning of the year as the global financial crisis continued to affect the manufacturing industry.
Despite the contraction in demand for oil and gas pipe products across all major markets, TMK held its market positions and increased its Russian seamless OCTG market share to 71% in the first six months of 2009, up from 58% in 1H 2008.
Due to falling natural gas prices and OCTG inventory build up, TMK IPSCO, the Company’s US division, saw a sharp decline in sales and its capacity utilization rate drop below 30%. However, TMK actively developed its ULTRA premium connections business in the United States. As of September 2009, ULTRA had a 30% premium connections market share in the shale plays, making them the most widely used premium connections in US shale plays. This contributed to consolidated TMK premium connection shipments increased by 47% compared to the first half of 2008 and amounted to 61 thousand tonnes.
In the first half of 2009, pipe prices in Russia declined by around 20% to 40%, while prices outside Russia were slashed by approximately 35% to 50% as compared to the peaks reached in the fourth quarter of 2008.