Tenaris Announces 2013 First Quarter Results

LUXEMBOURG--(Marketwired - May 1, 2013) - Tenaris S.A. (NYSE: TS) (BAE: TS) (BMV: TS) (MILAN: TEN) ("Tenaris") today announced its results for the quarter ended March 31, 2013 in comparison with its results for the quarter ended March 31, 2012.

Summary of 2013 First Quarter Results

(Comparison with fourth and first quarters of 2012)

		Q1 2013			Q4 2012						Q1 2012
Net sales ($ million)		2,678			2,758			(3	%)		2,617			2	%
Operating income ($ million)		554			586			(5	%)		566			(2	%)
Net income ($ million)		423			350			21	%		448			(6	%)
Shareholders' net income ($ million)		425			358			19	%		439			(3	%)
Earnings per ADS ($)		0.72			0.61			19	%		0.74			(3	%)
Earnings per share ($)		0.36			0.30			19	%		0.37			(3	%)
EBITDA* ($ million)		699			733			(5	%)		704			(1	%)
EBITDA margin (% of net sales)		26.1	%		26.6	%					26.9	%

^*EBITDA is defined as operating income plus depreciation, amortization and impairment charges/(reversals)

Our first quarter sales decreased 3% sequentially as higher sales of premium OCTG products in Saudi Arabia and Sub-Saharan Africa did not fully compensate for lower sales in South America and the impact of lower market prices for less differentiated products in North America. Our EBITDA and operating margins maintained a good level in a competitive market.

Cash provided by operating activities reached $563 million during the quarter and at the end of the quarter we had a net cash position (cash and other current investments less total borrowings) of $121 million.

Market Background and Outlook

Over the past three quarters, drilling activity in North America has slowed down and should start to pick up by the end of the year, while in the rest of the world it should continue to increase slowly, supported by current oil and gas prices.

In the second quarter, the Canadian break up will affect our sales in North America. Sales in the Middle East are expected to increase further from the level of the first quarter. In the second half, sales of line pipe in Brazil will be affected by delays in project execution. Industrial customers in Europe will continue to be affected by weak economic activity.

In this environment, sales and margins for the rest of the year are expected to remain close to current levels with product mix improvements helping to offset the impact of lower prices in less differentiated segments.

Analysis of 2013 First Quarter Results

Tubes Sales volume (thousand metric tons)		Q1 2013		Q4 2012					Q1 2012
Seamless		657		669		(2	%)		664		(1	%)
Welded		289		306		(6	%)		289		-
Total		946		975		(3	%)		953		(1	%)

Tubes		Q1 2013			Q4 2012						Q1 2012
(Net sales - $ million)
North America		1,143			1,155			(1	%)		1,269			(10	%)
South America		595			693			(14	%)		463			29	%
Europe		268			243			10	%		262			2	%
Middle East & Africa		400			378			6	%		281			42	%
Far East & Oceania		82			110			(25	%)		126			(35	%)
Total net sales ($ million)		2,488			2,578			(3	%)		2,400			4	%
Operating income ($ million)		526			572			(8	%)		529			(1	%)
Operating income (% of sales)		21.1	%		22.2	%					22.1	%

Net sales of tubular products and services decreased 3% sequentially but increased 4% year on year. Sales decreased sequentially as higher sales of premium in Saudi Arabia and Sub-Saharan Africa did not fully compensate for lower sales in South America and lower market prices in North America. In North America, higher sales in Canada largely offset the effect of lower market prices and less favorable product mix in the United States. In South America, sales decreased due to lower sales of line pipe in Argentina and of OCTG in Colombia. In Europe, sales increased due to higher sales of line pipe for offshore projects in Norway. In the Middle East and Africa, sales increased due to higher sales of premium products in Saudi Arabia and Sub-Saharan Africa. In the Far East and Oceania, sales decreased due to lower sales of line pipe and industrial products in the region.

Operating income from tubular products and services decreased 8% sequentially and 1% year on year, reflecting a decline in sales and in operating margin.

Others	Q1 2013		Q4 2012				Q1 2012
Net sales ($ million)	190		180		6	%	217		(12	%)
Operating income ($ million)	28		14		100	%	37		(24	%)
Operating income (% of sales)	14.5	%	7.6	%			17.0	%

Net sales of other products and services increased 6% sequentially but declined 12% year on year. The sequential increase in sales and operating income was mainly due to higher sales and operating income of our industrial equipment business in Brazil.

Selling, general and administrative expenses, or SG&A, amounted to $476 million, or 17.8% of net sales, in the first quarter of 2013, compared to $494 million, 17.9% in the previous quarter and $444 million, 17.0% in the first quarter of 2012.

Net interest expenses amounted to $8 million in the first quarter of 2013, compared to $6 million in the previous quarter and $0.3 million in the first quarter of 2012.

Other financial results generated a loss of $1 million during the first quarter of 2013, compared to a loss of $10 million in the previous quarter and a gain of $13 million during the first quarter of 2012. These results largely reflect gains and losses on net foreign exchange transactions and the fair value of derivative instruments.

Equity in earnings of associated companies generated a gain of $12 million in the first quarter of 2013, compared to a loss of $108 million in the previous quarter and a gain of $14 million in the first quarter of 2012. These results are mainly derived from our equity investment in Ternium (NYSE: TX) and Usiminas. In the previous quarter, these results were negatively affected by the impairment recorded on our investment in Usiminas.

Income tax charges totaled $134 million in the first quarter of 2013, equivalent to 24.6% of income before equity in earnings of associated companies and income tax, compared to $112 million, or19.6% in the previous quarter and $145 million or 25.0% in the first quarter of 2012.

Results attributable to non-controlling interests amounted to losses of $2 million in the first quarter of 2013, compared to losses of $7 million in the previous quarter and gains of $10 million in the first quarter of 2012.

Cash Flow and Liquidity

Net cash provided by operations during the first quarter of 2013 was $563 million, compared to $347 million in the previous quarter and $608 million in the first quarter of 2012.

Capital expenditures amounted to $184 million for the first quarter of 2013, compared to $202 million in the previous quarter and $196 million in the first quarter of 2012.

At the end of the quarter, our net cash position (cash and other current investments less total borrowings) amounted to $121 million.

Conference call

Tenaris will hold a conference call to discuss the above reported results, on May 2, 2013, at 09:00 a.m. (Eastern Time). Following a brief summary, the conference call will be opened to questions. To access the conference call dial in +1 866 318.8618 within North America or +1 617 399.5137 Internationally. The access number is "70135173." Please dial in 10 minutes before the scheduled start time. The conference call will be also available by webcast at www.tenaris.com/investors

A replay of the conference call will be available on our webpage http://ir.tenaris.com/ or by phone from 12:00 pm on May 2 through 12:00 am on May 9. To access the replay by phone, please dial +1 888 286.8010 or +1 617 801.6888 and enter passcode "88385058" when prompted.

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 Condensed Interim Income Statement
(all amounts in thousands of U.S. dollars)		Three-month period ended March 31,
		2013			2012
Continuing operations		Unaudited
Net sales		2,678,305			2,617,349
Cost of sales		(1,645,432	)		(1,611,097	)
Gross profit		1,032,873			1,006,252
Selling, general and administrative expenses		(475,565	)		(444,143	)
Other operating income (expense) net		(3,723	)		4,092
Operating income		553,585			566,201
Interest income		6,081			9,583
Interest expense		(13,909	)		(9,925	)
Other financial results		(1,381	)		13,081
Income before equity in earnings of associated companies and income tax		544,376			578,940
Equity in earnings of associated companies		12,197			13,963
Income before income tax		556,573			592,903
Income tax		(133,856	)		(144,674	)
Income for the period		422,717			448,229
Attributable to:
Owners of the parent		424,777			438,641
Non-controlling interests		(2,060	)		9,588
		422,717			448,229

Consolidated Condensed Interim Statement of Financial Position
(all amounts in thousands of U.S. dollars)			At March 31, 2013				At December 31, 2012
			Unaudited
ASSETS
Non-current assets
	Property, plant and equipment, net		4,490,305				4,434,970
	Intangible assets, net		3,161,011				3,199,916
	Investments in associated companies		985,230				977,011
	Other investments		2,532				2,603
	Deferred tax assets		201,599				215,867
	Receivables		128,921		8,969,598		142,060		8,972,427
Current assets
	Inventories		2,894,456				2,985,805
	Receivables and prepayments		256,572				260,532
	Current tax assets		141,359				175,562
	Trade receivables		2,076,099				2,070,778
	Available for sale assets		21,572				21,572
	Other investments		802,991				644,409
	Cash and cash equivalents		948,777		7,141,826		828,458		6,987,116
Total assets					16,111,424				15,959,543
EQUITY
Capital and reserves attributable to owners of the parent					11,735,821				11,328,031
Non-controlling interests					156,648				171,561
Total equity					11,892,469				11,499,592
LIABILITIES
Non-current liabilities
	Borrowings		491,049				532,407
	Deferred tax liabilities		696,401				728,541
	Other liabilities		308,084				302,444
	Provisions		72,555		1,568,089		67,185		1,630,577
Current liabilities
	Borrowings		1,139,799				1,211,785
	Current tax liabilities		242,836				254,603
	Other liabilities		333,917				318,828
	Provisions		24,889				26,958
	Customer advances		92,409				134,010
	Trade payables		817,016		2,650,866		883,190		2,829,374
Total liabilities					4,218,955				4,459,951
Total equity and liabilities					16,111,424				15,959,543

Consolidated Condensed Interim Statement of Cash Flows
		Three-month period ended March 31,
(all amounts in thousands of U.S. dollars)		2013			2012
		Unaudited
Cash flows from operating activities
Income for the period		422,717			448,229
Adjustments for:
Depreciation and amortization		145,370			138,159
Income tax accruals less payments		15,213			49,495
Equity in earnings of associated companies		(12,197	)		(13,963	)
Interest accruals less payments, net		(30,725	)		(18,293	)
Changes in provisions		3,134			(8,131	)
Changes in working capital		16,321			(1,796	)
Other, including currency translation adjustment		3,578			14,237
Net cash provided by operating activities		563,411			607,937
Cash flows from investing activities
Capital expenditures		(183,885	)		(196,395	)
Acquisition of associated companies		-			(504,597	)
Proceeds from disposal of property, plant and equipment and intangible assets		4,386			1,532
Dividends received from associated companies		1,196			-
Changes in investments in short terms securities		(158,582	)		10,583
Net cash used in investing activities		(336,885	)		(688,877	)
Cash flows from financing activities
Dividends paid to non-controlling interest in subsidiaries		(16,671	)		(905	)
Acquisitions of non-controlling interests		(538	)		(12	)
Proceeds from borrowings		625,732			545,779
Repayments of borrowings		(677,045	)		(237,103	)
Net cash used in financing activities		(68,522	)		307,759
Increase in cash and cash equivalents		158,004			226,819
Movement in cash and cash equivalents
At the beginning of the period		772,656			815,032
Effect of exchange rate changes		(5,106	)		18,708
Increase in cash and cash equivalents		158,004			226,819
At March 31,		925,554			1,060,559
		At March 31,
Cash and cash equivalents		2013			2012
Cash and bank deposits		948,777			1,076,803
Bank overdrafts		(23,223	)		(16,244	)
		925,554			1,060,559