PROPRIETARY & CONFIDENTIAL TMK Investor Presentation August 2013
Presentation Outline Company Overview and Investment Highlights 4 Industry Overview 15 Financial Overview 23 Appendix Summary Financial Accounts 35 Appendix Capital Structure and Corporate Governance 39 Appendix TMK Products…
Company Overview and Investment Highlights 4
Investment Highlights One of the largest tubular capacity Global High exposure to the oil & gas industry: approximately 75% of 2012 shipments went to the oil & gas sector Market Leader Leading producer of value-added steel pipes for…
TMK Global Supplier of Full Range of Pipes for Oil and Gas Industry Steel Tubular Industry Leader TMKs strategic positioning made it the steel tubular industry leader, with over 4 million tonnes sold in 2012. Truboplast Pipe…
Leading Global Supplier of Pipes for Oil and Gas Industry Key Considerations since 2010 World Leading Tubular Producer for the Last 3 Years A world leading tube producer by sales volumes in 2012. Sales Volumes (thousand tonnes) 4,185…
Strong Pipe Industry Fundamentals Key Considerations Oil Prices Remain High Strong industry fundamentals driven by robust demand for Historical and forward Brent Oil price (US/barrel) oil and gas. 150 Significant expected capital…
Utilisation of TMK Pipe Products in Oil and Gas Industry OCTG Oil Country Tubular Goods (drilling, casing, tubing) used for oil & gas exploration, well fixing and oil & gas production (41% of total sales volumes in 2012); Line pipe…
Diversified Business Model Key Considerations Diversified Product Portfolio and Customer Base High degree of diversification enabling earnings resilience. Sales Volumes by Product (2012) Geographical diversification seeking to mitigate…
Focus on High Value Added Products Key Considerations Increasing Focus on Higher Margin Seamless Products 62% of revenues came from higher margin seamless pipes in 2012. 30% 26% 28% 26% 70% Share of seamless product in 25% 26%…
Low Cost Vertically Integrated Producer Raw Materials Costs can Generally be Passed Through to Key Considerations Customers Structural cost advantages over major international competitors: Cost of Sales Structure (2012) Russia is one…
Proven Track Record of Sustainable Growth Key Considerations Sales Volumes Evolution Resilient pipe sales throughout the crisis. Sales Volumes (thousand tonnes) 4,185 4,238 More than US2.5bn capex spent since 2004. 3,962 3,227…
Strategy Focused on Profitable Growth TMK is committed to maintaining its global leadership position in the main product segments and core markets, improving production efficiencies and seeking to enhance its margins in line with…
Industry Overview 15
Increasing Complexity of Russian Drilling Increasing Greenfield Oil Production in Eastern Regions Falling Oil Wells Productivity in Russia 11,300 Russian Oil Production Prirazlomnoye 1,000 Yamal fields**** Thousand barrels per…
Russian Market Overview Key Considerations Growing Drilling Market in Russia Demand driven by production shift to unconventional regions 25,000 7,000 (Eastern Siberia, Sakhalin and Arctic offshore) and development of 6,000 greenfield…
Strong Russian LDP Demand Key Considerations Russian Pipeline Projects Russian LDP demand is expected to be driven by new CIS pipeline projects Shtokman TMK is currently a supplier for major pipeline projects Bovanenkovo Murmansk…
US Market Overview Growing Oil Drilling Activity Supported by High Crude Oil Key Considerations Prices In 2Q 2013, US total rig count amounted on average to 1,761 rigs, flat US Oil and Gas Rig Count compared to 1Q 2013. 2,100 Gas rig…
Shift to Unconventional Drilling Drives Demand for Seamless and Premium Products Conventional (Vertical) Drilling Unconventional (Horizontal) Drilling (Hydraulic Fracturing) Drilling with casing TMK CWB Seamless / Premium…
Shale Gas Revolution Led to an Increase in Natural Gas Consumption Key Considerations With Gas Prices Falling Gas-Fueled Power Capacity Extended The shale gas revolution led to a 48% surge in natural gas output in US Electricity…
Canadian Oil Sands Three Major Oil Sands Deposits Canadian Oil Sands Fast Facts Around 170 billion of Oil Sands reserves Potential for over 100 years of production Peace River Deposit Athabasca Deposit Mining less than 200 feet deep:…
2Q 2013 Sales by Division and Group of Product 2Q 2013 Sales by Division +4% 840 Russian division sales increased QoQ mainly due to higher 720 demand for LDP and welded industrial pipe in 2Q2013. Thousand tonnes 600 American…
1H 2013 Sales by Division and Group of Product 1H 2013 Sales by Division 1,800 +5% Russian division sales increased YoY mainly due to higher demand for LDP and welded line pipe. 1,500 Thousand tonnes 1,200 American division…
2Q 2013 Revenue by Division 2Q 2013 Revenue 2Q 2013 Revenue per Tonne* -4% 1,400 -9% 1,800 -13% No change 1,200 1,500 U.S. / tonne 1,000 U.S. mln 1,200 800 900 1,800 1,721 1,277 1,624 1,617 1,618 600 1,164 +12% 1,420…
1H 2013 Revenue by Division 1H 2013 Revenue 1H 2013 Revenue per Tonne* +3% -11% 2,500 2,000 -13% -1% 2,000 1,600 U.S. / tonne U.S. mln 1,500 1,200 2,370 2,440 1,976 -12% 1,857 1,761 1,000 800 1,542 1,519 1,618 -17%…
Seamless Core to Profitability U.S. mln QoQ, YoY, 2Q 2013 1H 2013 (unless stated otherwise) % % Volumes- Pipes, kt 645 +3% 1,271 no Sales of seamless pipe generated change 62% of total Revenue in 2Q 2013 Net Sales 1,025 -5% 2,110…
No Major Changes in Working Capital Position in 1H 2013 Inventories (Days) Accounts Payable (Days) 140 132 120 107 120 100 97 100 91 90 86 75 73 80 64 62 80 60 60 40 40 20 20 0 0 2009 2010 2011 2012 6m2013 2009 2010 2011…
Debt Maturity Profile as of June 30, 2013 As of June 30, 2013, total financial debt 890 amounted to U.S.3,769 mln 900 86% of total financial debt is long-term 750 413 Weighted average nominal interest rate totalled 6.67% 600…
Debt Profile as of June 30, 2013 More than U.S.1 bn of Undrawn Committed Credit Lines to Debt Breakdown by Source of Borrowings Cover Short-term Debt Investment Loans 1,200 2% Utilized Credit Facilities 1,000 Unutilized Credit…
Appendix Summary Financial Accounts 35
Income Statement US mln 2012 2011 2010 2009 2008 Revenue 6,688 6,754 5,579 3,461 5,690 Cost of Sales (5,204) (5,307) (4,285) (2,905) (4,252) Gross Profit 1,483 1,446 1,293 556 1,438 Selling and Distribution Expenses (433) (411) (403)…
Cash Flow US mln 2012 2011 2010 2009 2008 Profit / (Loss) before Income Tax 405 544 185 (427) 308 Adjustments for: Depreciation and Amortisation 326 336 301 313 248 Net Interest Expense 275 271 412 406 263 Others 34 (101) 44 36 228…
Appendix Capital Structure and Corporate Governance 39
Capital Structure and Dividend Policy Key Considerations Dividend Policy TMKs securities are listed on the London Stock Exchange, the OTCQX International Premier trading platform in the U.S. and on At least 25% of annual IFRS net…
Corporate Governance DMITRY PUMPYANSKIY, Chairman of the Board of Directors, non-executive director. Key Considerations Born in 1964. Graduated from the Sergey Kirov Urals Polytechnic Institute in 1986. PhD in Technical Sciences, Doctor…
Appendix TMK Products 42
TMK Product Portfolio Seamless Welded Threading Threaded pipes for the oil Threaded pipes for the oil Premium connections are and gas industry including and gas industry including gas tight, proprietary value- drill pipe, casing and…
Appendix TMK Synergies 44
Russian and North American Synergies Both Russia and North America have benefitted during the past three years since the acquisition of IPSCO Benefits for Russia Benefits for North America Best business practices Russia is implementing…
Thank You TMK Investor Relations 40/2a, Pokrovka Street, Moscow, 105062, Russia +7 (495) 775-7600 IRtmk-group.com 46
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