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 May 7, 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 First 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: May 7, 2007
Tenaris, S.A.
By: /s/ Cecilia Bilesio
---------------------------
Cecilia Bilesio
Corporate Secretary
Tenaris Announces 2007 First 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--(BUSINESS WIRE)--May 4, 2007--Tenaris S.A. (NYSE:TS)
(BI:TEN) (BMV:TS) (BCBA:TS) ("Tenaris") today announced its results
for the quarter ended March 31, 2007 with comparison to its results
for the quarter ended March 31, 2006.
Summary of 2007 First Quarter Results
(Comparison with fourth quarter and first quarter of 2006)
Q1 2007 Q4 2006 Q1 2006
Net sales (US$ million) 2,425.3 2,460.9 (1%)1,621.9 50%
Operating income (US$ million) 757.6 812.6 (7%) 597.1 27%
Net income (US$ million) 509.4 612.0 (17%) 441.7 15%
Shareholders' net income (US$ million) 480.3 574.8 (16%) 419.7 14%
Earnings per ADS (US$) 0.81 0.97 (16%) 0.71 14%
Earnings per share (US$) 0.41 0.49 (16%) 0.36 14%
EBITDA (US$ million) 858.1 901.6 (5%) 651.8 32%
EBITDA margin (% of net sales) 35% 37% 40%
Our results in the first quarter continued to show strong
year-on-year growth with net sales up 50%, operating income up 27% and
earnings per share up 14%. Sequentially, however, revenues were flat,
operating income declined 7% and earnings per share, on a comparable
basis(1), declined 11%. Demand for our products and services outside
North America remains firm but, in North America, it has been affected
by the slowdown in Canada. Free cash flow (net cash provided by
operations less capital expenditures) during the period totaled
US$568.4 million, and net debt decreased to US$1,574.7 million at
March 31, 2007.
(1) Excluding the gain recorded on the sale of Dalmine Energie in
the fourth quarter of 2006.
Market Background and Outlook
Oil prices fluctuated during the first quarter, declining at the
beginning of the period before recovering towards the end. North
American gas prices, which had declined sharply in the second half of
last year falling below US$5 per million BTU in September, recovered
to a range of US$7-8 per million BTU. The international count of
active drilling rigs, as published by Baker Hughes, continued to rise
and averaged 982 during the first quarter, an increase of 3% over the
previous quarter and one of 10% compared to the same quarter of the
previous year. In North America, however, where drilling activity is
more sensitive to regional gas prices, the Canadian rig count
registered a 20% decline in the first quarter of 2007 compared to the
first quarter of 2006. The U.S. rig count remained stable showing a 1%
increase during the first quarter of 2007 compared to the fourth
quarter of 2006 and was up 14% compared to the first quarter of 2006.
In addition to the slowdown in Canadian drilling activity during
the recently-ended winter drilling season, sales of our tubular
products and services in North America during the first quarter of
2007 were also affected by the increase in imports from China. Demand
in the rest of the world, however, remains firm as oil and gas
operators continue to increase investments in exploration and
production activity. We expect that, based on current forward gas
prices, drilling activity in Canada will recover in the next winter
drilling season and that we will increase our worldwide sales of
high-end products later in the year as we bring on stream new heat
treatment and finishing facilities. Consequently, we should continue
to record year-on-year growth in sales and maintain our segment
operating margin at current levels.
Sales of our large diameter pipes for pipeline projects in South
America started to pick up at the end of the first quarter as we
commenced deliveries to the GASCAC phase of the GASENE project in
Brazil. Further increases in sales are expected during the year as we
complete deliveries to this and other projects in Brazil and a delayed
project in Argentina.
Annual Shareholders Assembly
The annual general shareholders' meeting of Tenaris will take
place at 11:00 am on June 6, 2007 in Luxembourg. The notice and agenda
for the meeting, the shareholder meeting brochure and proxy statement
and the Company's 2006 annual report may be downloaded from our
website at www.tenaris.com/investors and may be obtained on request by
calling 1-800-990-1135 (within the USA) or +1-201-680-6630 (outside
the USA).
Analysis of 2007 First Quarter Results
Sales volume (metric tons) Q1 2007 Q1 2006 Increase/(Decrease)
Tubes - Seamless 746,000 714,000 4%
Tubes - Welded 252,000 7,000
Tubes - Total 998,000 721,000 38%
Projects - Welded 75,000 58,000 29%
Total 1,073,000 779,000 38%
Tubes Q1 2007 Q1 2006 Increase/(Decrease)
(Net sales - $ million)
North America 727.8 449.6 62%
South America 260.5 218.8 19%
Europe 418.7 296.2 41%
Middle East & Africa 580.0 310.9 87%
Far East & Oceania 157.7 172.6 (9%)
Total net sales ($ million) 2,144.7 1,448.0 48%
Cost of sales (% of sales) 50% 48%
Operating income ($ million) 722.0 572.2 26%
Operating income (% of sales) 34% 40%
Net sales of tubular products and services rose 48% to US$2,144.7
million in the first quarter of 2007, compared to US$1,448.0 million
in the first quarter of 2006, due primarily to the incorporation of
sales from the former Maverick operations. On a like for like basis
both average selling prices and sales volumes increased. Sales rose
strongly in the Middle East and Africa on increased demand for our
TenarisBlue(R) premium connections and other specialized OCTG products
and services. In North America, on a like-for-like basis, sales
declined reflecting the slowdown in drilling activity and distributor
inventory adjustments in Canada and lower activity in Mexico. In
Europe, sales of line pipe products to process and power plant
customers increased as did hollows for gas cylinders and mechanical
pipe for hydraulic cylinders. In South America, sales increased in
Colombia and Argentina but sales of OCTG products and services were
lower in Venezuela as PDVSA continued to draw down inventories. In the
Far East and Oceania, sales declined primarily due to lower sales of
OCTG products and services in the region.
Projects Q1 2007 Q1 2006 Increase/(Decrease)
Net sales ($ million) 124.4 96.2 29%
Cost of sales (% of sales) 66% 65%
Operating income ($ million) 26.3 16.3 61%
Operating income (% of sales) 21% 17%
Net sales of pipes for pipeline projects increased 29% to US$124.4
million in the first quarter of 2007, compared to US$96.2 million in
the first quarter of 2006, primarily reflecting higher sales in Brazil
where deliveries for the GASCAC phase of the GASENE project began
during the period.
Others Q1 2007 Q1 2006 Increase/(Decrease)
Net sales ($ million) 156.2 77.6 101%
Cost of sales (%of sales) 82% 77%
Operating income ($ million) 9.3 8.6 8%
Operating income (% of sales) 6% 11%
Net sales of other products and services rose 101% to US$156.2
million in the first quarter of 2007, compared to US$77.6 million in
the first quarter of 2006, reflecting the inclusion of sales of
conduit pipes and higher sales of metallic structures by our Brazilian
subsidiary.
Selling, general and administrative expenses, or SG&A, increased
as a percentage of net sales to 15.4% in the quarter ended March 31,
2007 compared to 13.4% in the corresponding quarter of 2006 due
primarily to an increase in amortization expenses following the
incorporation of Maverick. Amortization of customer relationships and
other intangibles acquired with Maverick amounted to US$37 million in
the quarter.
Net interest expenses rose to US$35.5 million in the first quarter
of 2007 compared to a net interest income of US$0.8 million in the
same period of 2006 reflecting an increased net debt position
following the Maverick acquisition.
Other financial results recorded a loss of US$13.0 million during
the first quarter of 2007, compared to a gain of US$9.7 million during
the first 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$25.9 million in the first quarter of 2007, compared to a gain of
US$21.5 million in the first quarter of 2006. These gains were derived
mainly from our equity investment in Ternium.
Income tax charges totalled US$225.5 million in the first quarter
of 2007, equivalent to 32% of income before equity in earnings of
associated companies and income tax, compared to US$190.0 million in
the first 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$29.1 million
in the first quarter of 2007, compared to US$22.0 million in the
corresponding quarter of 2006 reflecting higher operating and
financial results at our Confab and NKKTubes subsidiaries.
Cash Flow and Liquidity
Net cash provided by operations during the first quarter of 2007
was US$688.3 million, compared to US$544.1 million in the first
quarter of 2006. Working capital increased by US$90.5 million,
reflecting principally a decline in trade payables of US$71.4 million
and an increase in inventories of US$65.5 million.
Capital expenditures amounted to US$119.9 million in the first
quarter of 2007, compared to US$69.5 million in the first quarter of
2006. The increase reflects the progress of implementation of our
two-year investment program to increase capacity for specialized
products and investments in the former Maverick operations.
During the first quarter of 2007, total financial debt decreased
by US$253.0 million to US$3,398.2 million at March 31, 2007 from
US$3,651.2 million at December 31, 2006. Net financial debt during the
first quarter of 2007 decreased by US$520.6 million to US$1,574.7
million at March 31, 2007.
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
Three-month period
(Thousands of U.S. dollars) ended March 31,
----------------------
2007 2006
----------- ----------
Continuing operations (Unaudited)
Net sales 2,425,299 1,621,891
Cost of sales (1,291,498) (816,327)
----------- ----------
Gross profit 1,133,801 805,564
Selling, general and administrative expenses (374,267) (216,640)
Other operating income (expenses), net (1,937) 8,185
----------- ----------
Operating income 757,597 597,109
Interest income 22,191 12,395
Interest expense (57,727) (11,639)
Other financial results (13,043) 9,697
----------- ----------
Income before equity in earnings of associated
companies and income tax 709,018 607,562
Equity in earnings of associated companies 25,907 21,521
----------- ----------
Income before income tax 734,925 629,083
Income tax (225,531) (190,026)
----------- ----------
Income for continuing operations 509,394 439,057
Discontinued operations
Income (loss) for discontinued operations - 2,633
----------- ----------
Income for the period 509,394 441,690
Attributable to:
Equity holders of the Company 480,304 419,688
Minority interest 29,090 22,002
----------- ----------
509,394 441,690
----------- ----------
Consolidated Condensed Interim Balance Sheet
(Thousands of U.S.
dollars) At March 31, 2007 At December 31, 2006
--------------------- ---------------------
(Unaudited)
ASSETS
Non-current assets
Property, plant and
equipment, net 2,978,406 2,939,241
Intangible assets, net 2,826,641 2,844,498
Investments in
associated companies 453,483 422,958
Other investments 26,807 26,834
Deferred tax assets 293,353 291,641
Receivables 39,330 6,618,020 41,238 6,566,410
---------- ----------
Current assets
Inventories 2,437,796 2,372,308
Receivables and
prepayments 268,845 272,632
Current tax assets 160,676 202,718
Trade receivables 1,642,841 1,625,241
Other investments 188,688 183,604
Cash and cash
equivalents 1,634,812 6,333,658 1,372,329 6,028,832
--------------------- ---------------------
Total assets 12,951,678 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 29,023 3,954
Other reserves 28,143 28,757
Retained earnings 3,877,888 5,843,378 3,397,584 5,338,619
---------- ----------
Minority interest 387,552 363,011
----------- -----------
Total equity 6,230,930 5,701,630
----------- -----------
LIABILITIES
Non-current liabilities
Borrowings 2,765,327 2,857,046
Deferred tax liabilities 978,204 991,945
Other liabilities 193,339 186,724
Provisions 84,405 92,027
Trade payables 354 4,021,629 366 4,128,108
---------- ----------
Current liabilities
Borrowings 632,858 794,197
Current tax liabilities 693,545 565,985
Other liabilities 217,241 187,701
Provisions 22,729 26,645
Customer advances 365,861 352,717
Trade payables 766,885 2,699,119 838,259 2,765,504
-------- ----------- -------- -----------
Total liabilities 6,720,748 6,893,612
Total equity and liabilities 12,951,678 12,595,242
Consolidated Condensed Interim Cash Flow Statement
Three-month period
ended March 31,
--------------------
(Thousands of U.S. dollars) 2007 2006
---------- ---------
Cash flows from operating activities (Unaudited)
Income for the period 509,394 441,690
Adjustments for:
Depreciation and amortization 100,487 54,675
Income tax accruals less payments 125,377 83,458
Equity in earnings of associated companies (25,907) (21,521)
Interest accruals less payments, net 45,429 5,292
Income from disposal of investment - (6,933)
Changes in provisions (7,230) 731
Changes in working capital (90,519) (24,257)
Other, including currency translation adjustment 31,243 10,947
---------- ---------
Net cash provided by operating activities 688,274 544,082
---------- ---------
Cash flows from investing activities
Capital expenditures (119,912) (69,529)
Acquisitions of subsidiaries and minority
interest (1,750) (29,809)
Decrease in subsidiaries (1,195) -
Proceeds from disposal of property, plant and
equipment and intangible assets 2,693 1,820
Changes in restricted bank deposits - 648
Investments in short terms securities (5,084) (177,650)
---------- ---------
Net cash used in investing activities (125,248) (274,520)
---------- ---------
Cash flows from financing activities
Dividends paid to minority interest in
subsidiaries (3,359) (7,581)
Proceeds from borrowings 48,174 101,085
Repayments of borrowings (360,899) (154,601)
---------- ---------
Net cash used in financing activities (316,084) (61,097)
---------- ---------
Increase in cash and cash equivalents 246,942 208,465
Movement in cash and cash equivalents
At the beginning of the period 1,365,008 680,591
Effect of exchange rate changes 2,736 (1,834)
Increase in cash and cash equivalents 246,942 208,465
At March 31, 1,614,686 887,222
---------- ---------
Cash and cash equivalents At March 31,
--------------------
2007 2006
Cash and bank deposits 1,634,812 910,991
Bank overdrafts (20,105) (22,369)
Restricted bank deposits (21) (1,400)
1,614,686 887,222
CONTACT: Tenaris
Nigel Worsnop, 1-888-300-5432
www.tenaris.com