FORM 6 - K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a - 16 or 15d - 16 of
the Securities Exchange Act of 1934
As of November 08, 2007
TENARIS, S.A.
(Translation of Registrant's name into English)
TENARIS, S.A.
46a, Avenue John F. Kennedy
L-1855 Luxembourg
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover Form 20-F or 40-F.
Form 20-F X Form 40-F
----- -----
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12G3-2(b) under the Securities Exchange Act of 1934.
Yes No X
----- -----
If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b): 82- .
The attached material is being furnished to the Securities and Exchange
Commission pursuant to Rule 13a-16 and Form 6-K under the Securities Exchange
Act of 1934, as amended.
This report contains Tenaris's press release announcing its 2007 Third Quarter
Results.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: November 08, 2007
Tenaris, S.A.
By: /s/ Cecilia Bilesio
-----------------------
Cecilia Bilesio
Corporate Secretary
Nigel Worsnop
Tenaris
1-888-300-5432
www.tenaris.com
Tenaris Announces 2007 Third Quarter Results
The financial and operational information contained in this press release is
based on unaudited consolidated condensed interim financial statements prepared
in accordance with International Financial Reporting Standards (IFRS) and
presented in U.S. dollars.
LUXEMBOURG, Nov. 7, 2007 - Tenaris S.A. (NYSE, Buenos Aires and Mexico: TS and
MTA Italy: TEN) ("Tenaris") today announced its results for the quarter and nine
months ended September 30, 2007 with comparison to its results for the quarter
and nine months ended September 30, 2006.
Summary of 2007 Third Quarter Results
(Comparison with second quarter of 2007 and third quarter of 2006)
Q3 2007 Q2 2007 Q3 2006
Net sales (US$ million) 2,523.6 2,604.2 (3%) 1,803.6 40%
Operating income (US$ million) 687.3 780.4 (12%) 692.8 (1%)
Net income (US$ million) 436.4 534.5 (18%) 510.0 (14%)
Shareholders' net income (US$ million) 401.0 496.0 (19%) 479.1 (16%)
Earnings per ADS (US$) 0.68 0.84 (19%) 0.81 (16%)
Earnings per share (US$) 0.34 0.42 (19%) 0.41 (16%)
EBITDA (US$ million) 828.2 910.7 (9%) 749.0 11%
EBITDA margin (% of net sales) 33% 35% 42%
Our results in the third quarter were affected by a lower level of sales of
seamless pipe products and higher production costs. On a comparable basis, sales
of API-grade products were lower year on year in the Middle East, following the
inventory build-up that took place last year, as well as in Canada. Although net
sales were up 40% year on year, operating income was flat and earnings per share
were down. Sales are expected to recover only partially in the fourth quarter
before growing again in the first half of 2008. Free cash flow (net cash
provided by operations less capital expenditures) rose to US$784.3 million, and
net financial debt (total financial debt less cash and other current
investments) declined by US$718.2 million to US$3,043.5 million at September 30,
2007.
Payment of Interim Dividend
Tenaris's board of directors approved the payment of an interim dividend of
US$0.13 per share (US$0.26 per ADS), or approximately US$153 million, on
November 22, 2007, with an ex-dividend date of November 19.
Market Background and Outlook
After fluctuating in the first quarter of 2007, oil prices have resumed the
upwards trend shown in the previous three years as global demand projections
have been revised upwards and geopolitical tensions have risen in the Middle
East. On the other hand, North American gas prices, which fell sharply from the
highs reached in the first half of 2006, have fluctuated at lower levels for
most of the year to date as the amount of gas in storage has remained at the
higher end of its seasonal range. The international count of active drilling
rigs, as published by Baker Hughes, continues to rise and averaged 1020 during
the third quarter, an increase of 2% over the previous quarter and one of 8%
compared to the same quarter of the previous year. In Canada, however, where
drilling activity is sensitive to North American gas prices and drilling costs
have been rising in U.S. dollar terms, the rig count registered a 30% decline in
the third quarter of 2007 compared to the same quarter of 2006, and is now down
29% for the first nine months of 2007 compared to the same period of 2006. The
U.S. rig count remained stable showing a 2% increase during the third quarter of
2007 compared to the second quarter of 2007 and was up 4% compared to the third
quarter of 2006.
Although a recovery in Canadian drilling activity remains uncertain, drilling
activity in the rest of the world is firm as oil and gas prices encourage
operators to continue increasing investments in exploration and production
activity. However, in North America demand for OCTG products in 2007 has been
affected by distributor inventory destocking which could continue until the end
of the year. In the Middle East, apparent consumption of OCTG products is, and
is likely to remain, lower in the second half of this year.
Steelmaking raw material and energy costs have risen in 2007 and look set to
rise further in 2008. Labor costs have also been rising primarily due to
currency-related factors. In the first half of 2007, cost increases and price
declines for some of our products were offset by improvements in product mix.
However, in the third quarter, our operating margins declined as production
costs continued to rise and we had a less favorable product mix. Our operating
margins are likely to remain under pressure for the rest of the year before
recovering in the first half of 2008 when we expect increased sales of our
specialized, high-end products.
Sales of our pipes for pipeline projects in South America picked up at the end
of the first quarter of 2007 as we commenced deliveries to the GASCAC phase of
the GASENE project in Brazil. Sales in this segment are expected to remain
strong during the remainder of 2007 and into 2008 as we make deliveries to this
and other projects in the region.
Analysis of 2007 Third Quarter Results
Sales volume (metric tons) Q3 2007 Q3 2006 Increase/(Decrease)
Tubes - Seamless 659,000 709,000 (7%)
Tubes - Welded 240,000 13,000
Tubes - Total 899,000 722,000 25%
Projects - Welded 127,000 56,000 127%
Total 1,026,000 778,000 32%
Tubes Q3 2007 Q3 2006 Increase/(Decrease)
(Net sales - $ million)
North America 744.1 368.2 102%
South America 310.6 258.2 20%
Europe 360.3 316.1 14%
Middle East & Africa 471.7 477.4 (1%)
Far East & Oceania 175.9 175.1 0%
Total net sales ($ million) 2,062.6 1,595.0 29%
Cost of sales (% of sales) 54% 45%
Operating income ($ million) 615.5 660.7 (7%)
Operating income (% of sales) 30% 41%
Net sales of tubular products and services rose 29% to US$2,062.6 million in the
third quarter of 2007, compared to US$1,595.0 million in the third quarter of
2006, due primarily to the incorporation of sales from the former Maverick and
Hydril operations. On a like for like basis, average selling prices rose largely
due to product mix improvements but sales volumes declined reflecting lower
demand principally in the Middle East and Canada. In North America, sales were
affected by the decline in drilling activity in Canada, but sales of OCTG
products increased in Mexico. In South America, sales benefited from a recovery
in demand for OCTG products in Venezuela. In the Middle East and Africa, higher
sales on specialized, high-end products were offset by lower sales of API
products.
Projects Q3 2007 Q3 2006 Increase/(Decrease)
Net sales ($ million) 235.6 80.1 194%
Cost of sales (% of sales) 72% 78%
Operating income ($ million) 42.0 1.7
Operating income (% of sales) 18% 2%
Net sales of pipes for pipeline projects increased 194% to US$235.6 million in
the third quarter of 2007, compared to US$80.1 million in the third quarter of
2006, reflecting higher sales in Brazil where we continued deliveries for the
GASCAC phase of the GASENE project and in Argentina where we made some
deliveries for the delayed Loops project.
Pressure Control Q3 2007
Net sales ($ million) 89.8
Cost of sales (% of sales) 68%
Operating income ($ million) 15.6
Operating income (% of sales) 17%
Net sales of pressure control products amounted to US$89.8 million in this first
complete quarter since we acquired the business. This compares to US$49.2
million in the two months reported in the second quarter of 2007.
Others Q3 2007 Q3 2006 Increase/(Decrease)
Net sales ($ million) 135.6 128.6 5%
Cost of sales (% of sales) 73% 63%
Operating income ($ million) 14.2 30.4 (53%)
Operating income (% of sales) 10% 24%
Net sales of other products and services rose 5% to US$135.6 million in the
third quarter of 2007, compared to US$128.6 million in the third quarter of
2006.
Selling, general and administrative expenses, or SG&A, increased as a percentage
of net sales to 15.9% in the quarter ended September 30, 2007 compared to 13.5%
in the corresponding quarter of 2006 due primarily to an increase in
amortization expenses following the incorporation of Maverick and Hydril.
Amortization of customer relationships and other intangibles acquired with
Maverick and Hydril amounted to US$64 million in the quarter, or 2.5% of net
sales.
Net interest expenses rose to US$57.1 million in the third quarter of 2007
compared to net interest income of US$2.2 million in the same period of 2006
reflecting an increased net debt position following the Maverick and Hydril
acquisitions.
Other financial results recorded a loss of US$12.9 million during the third
quarter of 2007, compared to a loss of US$6.5 million during the third quarter
of 2006. These results largely reflect gains and losses on net foreign exchange
transactions and the fair value of derivative instruments and are to a large
extent offset by changes to our net equity position. They arise due to the fact
that most of our subsidiaries prepare their financial statements in currencies
other than the US dollar in accordance with IFRS.
Equity in earnings of associated companies generated a gain of US$18.3 million
in the third quarter of 2007, compared to a gain of US$29.7 million in the third
quarter of 2006. These gains were derived mainly from our equity investment in
Ternium.
Income tax charges totalled US$199.2 million in the third quarter of 2007,
equivalent to 32% of income before equity in earnings of associated companies
and income tax, compared to US$210.5 million in the third quarter of 2006,
equivalent to 31% of income before equity in earnings of associated companies
and income tax.
Income attributable to minority interest rose to US$35.4 million in the third
quarter of 2007, compared to US$30.9 million in the corresponding quarter of
2006 primarily reflecting higher operating and financial results at our Confab
subsidiary.
Cash Flow and Liquidity
Net cash provided by operations during the third quarter of 2007 was US$889.8
million (US$1,789.1 million in the first nine months), compared to US$598.1
million in the third quarter of 2006 (US$1,312.2 million in the first nine
months). Working capital decreased by US$220.0 million during the third quarter
reflecting a decrease in trade receivables and an increase in customer advances.
Capital expenditures amounted to US$105.4 million in the third quarter of 2007
(US$334.6 million in the first nine months), compared to US$133.0 million in the
third quarter of 2006 (US$302.1 million in the first nine months).
During the first nine months of 2007, total financial debt increased by
US$1,258.5 million to US$4,909.7 million at September 30, 2007 from US$3,651.2
million at December 31, 2006. Net financial debt during the first nine months of
2007 increased by US$948.2 million to US$3,043.5 million at September 30, 2007
following the acquisition of Hydril for a total consideration of $2.0 billion.
Analysis of 2007 First Nine Months Results
Net income attributable to equity holders in the company during the first nine
months of 2007 was US$1,377.2 million, or US$1.17 per share (US$2.33 per ADS),
which compares with net income attributable to equity holders in the company
during the first nine months of 2006 of US$1,370.6 million, or US$1.16 per share
(US$2.32 per ADS). Operating income was US$2,225.3 million, or 29% of net sales,
compared to US$1,979.9 million, or 38% of net sales. Operating income plus
depreciation and amortization was US$2,597.0 million, or 34% of net sales,
compared to US$2,146.0 million, or 41% of net sales.
Sales volume (metric tons) 9M 2007 9M 2006 Increase/(Decrease)
Tubes - Seamless 2,156,000 2,188,000 (1%)
Tubes - Welded 706,000 33,000
Tubes - Total 2,862,000 2,221,000 29%
Projects - Welded 317,000 184,000 72%
Total 3,179,000 2,405,000 32%
Tubes 9M 2007 9M 2006 Increase/(Decrease)
(Net sales - $ million)
North America 2,165.7 1,222.1 77%
South America 897.7 715.4 25%
Europe 1,200.6 951.3 26%
Middle East & Africa 1,598.9 1,282.3 25%
Far East & Oceania 536.8 523.3 3%
Total net sales ($ million) 6,399.7 4,694.4 36%
Cost of sales (% of sales) 51% 46%
Operating income ($ million) 2,057.0 1,909.7 8%
Operating income (% of sales) 32% 41%
Net sales of tubular products and services rose 36% to US$6,399.7 million in the
first nine months of 2007, compared to US$4,694.4 million in the first nine
months of 2006, due primarily to the incorporation of sales from the former
Maverick and Hydril operations. On a like for like basis, average selling prices
increased due largely to product mix improvements and volumes registered a
marginal decrease.
Projects 9M 2007 9M 2006 Increase/(Decrease)
Net sales ($ million) 560.9 281.1 100%
Cost of sales (% of sales) 71% 72%
Operating income ($ million) 106.7 29.0 268%
Operating income (% of sales) 19% 10%
Net sales of pipes for pipeline projects increased 100% to US$560.9 million in
the first nine months of 2007, compared to US$281.1 million in the first nine
months of 2006, reflecting higher sales in Brazil.
Pressure Control 9M 2007
Net sales ($ million) 139.0
Cost of sales (% of sales) 65%
Operating income ($ million) 24.8
Operating income (% of sales) 18%
Net sales of pressure control products amounted to US$139.0 million in the five
months since we acquired the business.
Others 9M 2007 9M 2006 Increase/(Decrease)
Net sales ($ million) 453.5 291.4 56%
Cost of sales (% of sales) 78% 70%
Operating income ($ million) 36.8 41.2 (11%)
Operating income (% of sales) 8% 14%
Net sales of other products and services rose 56% to US$453.5 million in the
first nine months of 2007, compared to US$291.4 million in the first nine months
of 2006, primarily reflecting the inclusion of sales of conduit pipes.
Selling, general and administrative expenses, or SG&A, increased as a percentage
of net sales to 15.7% in the nine months ended September 30, 2007 compared to
13.4% in the corresponding period of 2006 due primarily to an increase in
amortization expenses following the incorporation of Maverick and Hydril.
Amortization of customer relationships and other intangibles acquired with
Maverick and Hydril amounted to US$159 million in the nine months.
Net interest expenses rose to US$140.4 million in the first nine months of 2007
compared to net interest income of US$1.7 million in the same period of 2006
reflecting an increased net debt position following the Maverick and Hydril
acquisitions.
Other financial results recorded a loss of US$10.8 million during the first nine
months of 2007, compared to a gain of US$8.6 million during the first nine
months of 2006. These results largely reflect gains and losses on net foreign
exchange transactions and the fair value of derivative instruments and are to a
large extent offset by changes to our net equity position. They arise due to the
fact that most of our subsidiaries prepare their financial statements in
currencies other than the US dollar in accordance with IFRS.
Equity in earnings of associated companies generated a gain of US$73.6 million
in the first nine months of 2007, compared to a gain of US$76.7 million in the
first nine months of 2006. These gains were derived mainly from our equity
investment in Ternium.
Income tax charges totalled US$667.4 million in the first nine months of 2007,
equivalent to 32% of income before equity in earnings of associated companies
and income tax, compared to US$626.3 million in the first nine months of 2006,
equivalent to 31% of income before equity in earnings of associated companies
and income tax.
Income attributable to minority interest rose to US$103.0 million in the first
nine months of 2007, compared to US$76.8 million in the corresponding nine
months of 2006 reflecting higher operating and financial results at our Confab
and NKKTubes subsidiaries.
Some of the statements contained in this press release are "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 those statements. These risks include but are not limited to risks
arising from uncertainties as to future oil and gas prices and their impact on
investment programs by oil and gas companies.
Consolidated Interim Income Statement
(all amounts in
thousands of U.S.
dollars, unless Three-month period Nine-month period
otherwise stated) ended September 30, ended September 30,
2007 2006 2007 2006
---------------------------------------------
Continuing operations (unaudited)
Net sales 2,523,553 1,803,598 7,553,058 5,266,835
Cost of sales (1,436,511) (866,310) (4,132,567) (2,585,898)
---------------------------------------------
Gross profit 1,087,042 937,288 3,420,491 2,680,937
Selling, general and
administrative expenses (400,886) (244,153) (1,183,664) (706,935)
Other operating income
(expense), net 1,152 (359) (11,508) 5,946
---------------------------------------------
Operating income 687,308 692,776 2,225,319 1,979,948
Interest income 22,666 17,687 65,065 43,303
Interest expense (79,770) (15,482) (205,493) (41,558)
Other financial results (12,900) (6,483) (10,822) 8,601
---------------------------------------------
Income before equity in
earnings of associated
companies and income
tax 617,304 688,498 2,074,069 1,990,294
Equity in earnings of
associated companies 18,280 29,653 73,585 76,725
---------------------------------------------
Income before income tax 635,584 718,151 2,147,654 2,067,019
Income tax (199,220) (210,533) (667,410) (626,298)
---------------------------------------------
Income for continuing
operations 436,364 507,618 1,480,244 1,440,721
Discontinued operations
Income for discontinued
operations 0 2,338 0 6,689
---------------------------------------------
Income for the period 436,364 509,956 1,480,244 1,447,410
---------------------------------------------
Attributable to:
Equity holders of the
Company 400,952 479,105 1,377,206 1,370,564
Minority interest 35,412 30,851 103,038 76,846
---------------------------------------------
436,364 509,956 1,480,244 1,447,410
---------------------------------------------
Earnings per share
attributable to the
equity holders of the
Company during the
period
Weighted average number
of ordinary shares in
issue (thousands) 1,180,537 1,180,537 1,180,537 1,180,537
Earnings per share (U,S,
dollars per share) 0.34 0.41 1.17 1.16
Earnings per ADS (U,S,
dollars per ADS) 0.68 0.81 2.33 2.32
Consolidated Interim Balance Sheet
At September 30, 2007 At December 31, 2006
(Unaudited)
ASSETS
Non-current assets
Property, plant and
equipment, net 3,286,163 2,939,241
Intangible assets, net 4,900,650 2,844,498
Investments in associated
companies 487,662 422,958
Other investments 43,912 26,834
Deferred tax assets 337,807 291,641
Receivables 56,067 9,112,261 41,238 6,566,410
---------- ---------
Current assets
Inventories 2,642,851 2,372,308
Receivables and
prepayments 234,040 272,632
Current tax assets 221,713 202,718
Trade receivables 1,717,578 1,625,241
Non current assets held
for sale 10,128 0
Other investments 214,446 183,604
Cash and cash equivalents 1,651,780 6,692,536 1,372,329 6,028,832
--------------------- --------------------
Total assets 15,804,797 12,595,242
EQUITY
Capital and reserves
attributable to the
Company's equity holders
Share capital 1,180,537 1,180,537
Legal reserves 118,054 118,054
Share premium 609,733 609,733
Currency translation
adjustments 230,441 3,954
Other reserves 20,528 28,757
Retained earnings 4,420,629 6,579,922 3,397,584 5,338,619
--------------------- --------------------
Minority interest 477,759 363,011
---------- ----------
Total equity 7,057,681 5,701,630
---------- ----------
LIABILITIES
Non-current liabilities
Borrowings 3,769,956 2,857,046
Deferred tax liabilities 1,360,203 991,945
Other liabilities 204,151 186,724
Provisions 91,199 92,027
Trade payables 31 5,425,540 366 4,128,108
----------- ----------
Current liabilities
Borrowings 1,139,789 794,197
Current tax liabilities 441,200 565,985
Other liabilities 302,347 187,701
Provisions 25,354 26,645
Customer advances 601,788 352,717
Trade payables 811,098 3,321,576 838,259 2,765,504
---------- ----------
Total liabilities 8,747,116 6,893,612
Total equity and
liabilities 15,804,797 12,595,242
Consolidated Interim Cash Flow Statement
Three-month period Nine-month period
ended September 30, ended September 30,
(all amounts in thousands
of U.S. dollars) 2007 2006 2007 2006
-------------------- ---------------------
(Unaudited) (Unaudited)
Cash flows from operating
activities
Income for the period 436,364 509,956 1,480,244 1,447,410
Adjustments for:
Depreciation and
amortization 140,876 56,218 371,647 166,008
Income tax accruals less
payments 29,211 92,107 (220,582) 1,947
Equity in earnings of
associated companies (18,280) (29,653) (73,585) (76,725)
Interest accruals less
payments, net 58,654 2,920 63,519 1,456
Income from disposal of
investments - - - (6,933)
Changes in provisions (799) 2,676 (4,279) 8,207
Changes in working capital 220,034 (31,113) 94,669 (250,654)
Other, including currency
translation adjustment 23,695 (5,025) 77,498 21,447
-------------------- ---------------------
Net cash provided by
operating activities 889,755 598,086 1,789,131 1,312,163
-------------------- ---------------------
Cash flows from investing
activities
Capital expenditures (105,419) (132,976) (334,568) (302,077)
Acquisitions of
subsidiaries and minority
interest (45) (718) (1,927,227) (39,828)
Other disbursements relating
to the acquisition of
Hydril - - (71,580) -
Decrease in subsidiaries - - (1,195) -
Proceeds from disposal of
property, plant and
equipment and intangible
assets 2,327 13,180 6,923 16,568
Dividends received - - 11,496 -
Changes in restricted bank
deposits - 1,400 - 2,027
Investments in short terms
securities (45,035) 161,786 (30,842) (14,744)
-------------------- ---------------------
Net cash (used in) provided
by investing activities (148,172) 42,672 (2,346,993) (338,054)
-------------------- ---------------------
Cash flows from financing
activities
Dividends paid - - (354,161) (204,233)
Dividends paid to minority
interest in subsidiaries (5,393) (3,620) (45,315) (19,621)
Proceeds from borrowings 243,937 59,282 2,451,963 293,845
Repayments of borrowings (228,611) (173,169) (1,247,324) (443,328)
-------------------- ---------------------
Net cash provided by (used
in) financing activities 9,933 (117,507) 805,163 (373,337)
-------------------- ---------------------
Increase in cash and cash
equivalents 751,516 523,251 247,301 600,772
Movement in cash and cash
equivalents
At beginning of the period 883,042 752,259 1,365,008 680,591
Effect of exchange rate
changes 13,996 902 36,245 (4,951)
Increase in cash and cash
equivalents 751,516 523,251 247,301 600,772
At September 30, 1,648,554 1,276,412 1,648,554 1,276,412
At September 30, At September 30,
---------------------------------------
Cash and cash equivalents 2007 2006 2007 2006
Cash and bank deposits 1,651,780 1,295,184 1,651,780 1,295,184
Bank overdrafts (3,205) (18,751) (3,205) (18,751)
Restricted bank deposits (21) (21) (21) (21)
1,648,554 1,276,412 1,648,554 1,276,412
Non-cash financing activity
Conversion of debt to equity
in subsidiaries - - 35,140 -