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According to Steel First calculations, based on the results published by the company on Wednesday March 12, TMK's fourth-quarter earnings before interest, taxes, depreciation and amortisation (Ebitda) were $247 million, up from $230 million in the same period of 2012.
The earnings rose despite the fall in revenue at TMK, which runs about 30 production sites in Russia, Kazakhstan, the USA, Canada, Romania, Oman and the UAE. Overall revenues fell by 4% year-on-year in the quarter to $1.57 billion.
“Cost reductions [are] always under way,” TMK’s vp for strategy and business development, Vladimir Shmatovich, told Steel First during the company’s conference call on March 12. “But the main reason [for the good financial performance] was the sales mix – with [an] increased share of products for [the] premium sector.”
In Russia, TMK’s Ebitda dropped by 4% year-on-year to $188 million in the fourth quarter, while domestic revenues fell 14% year-on-year to $1.04 billion.
The Russian division’s financial results were negatively affected by the depreciation of the rouble against the dollar, Shmatovich said.
All the above percentage changes in the story have been calculated by Steel First as TMK did not provide year-on-year comparison figures for the fourth quarter.
Full-year resuls for 2013
For 2013 as a whole, the company’s Ebitda decreased by 7% year-on-year, to $952 million, on “unfavorable market conditions” in the USA and Europe.
TMK’s overall revenues stood at $6.43 billion last year, down 4% year-on-year.
The all was mainly due to lower sales of seamless pipe in the Russian division and fluctuations in the currency, TMK said.
Through 2013, the rouble lost 8% against the US dollar, according to Oanda.com.
Out of the total, the Russian segment saw its revenues fall by 5% year-on-year, to $4.48 billion in 2013.
Meanwhile the domestic Ebitda rose slightly, by 2% year-on-year, to $776 million in 2013.
For the full year 2014, the company expects increased activity in the tube and pipe market in Russia, mainly due to higher consumption of oil and gas pipe grades.
In particular, as a results of horizontal drilling growth and further development in unconventional oil and gas reserves, TMK expects to see increasing demand for its high-quality Ultra Premium (TMK UP) connections, the company said.
Shmatovich said that with price increases for new contracts starting from April, TMK is aiming to offset some cost inflation from the depreciation of the rouble.
The company is also considering the possibility of increasing exports should the rouble continue to weaken, he said.
TMK, which sources some plate and coil for welded pipe production from Ukraine, was said not to be suffering from the unrest in its neighboring country as the company has the option of switching to supplies from Russia, Europe, Japan and South Korea.
TMK, Russia's leading tube & pipe producer, saw its earnings rise by 7% year-on-year in the fourth quarter of 2013.