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March 2016 Investor Presentation – Tmk Group

Tmk Group · Mar 28, 2016 · 36 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. March 2016 Investor Presentation – Tmk Group – slide 1
    TMK IR PRESENTATION March 2016
  2. March 2016 Investor Presentation – Tmk Group – slide 2
    TMK Global Supplier of Full Range of Pipes for Oil and Gas Industry MANAGEMENT TMK Headquarters (Moscow, Russia) TMK IPSCO Headquarters (Houston, USA) 3 2 4 3 4 1 2 3 5 18 6 11 2 3 5 9 12 1 13 19 PRODUCTION 8 11…
  3. March 2016 Investor Presentation – Tmk Group – slide 3
    Russian Upstream Oil Sector Remains Profitable Marginal Oil Well Returns is Close to 2012-13 Levels Russian Upstream EBITDA Resilience 160 30% 120 Brent = US99/bbl 140 25% Margin = 8% 100 2.1 120 20% 80 US/bbl 100 Brent…
  4. March 2016 Investor Presentation – Tmk Group – slide 4
    Resilient Russian Market with Historic Record High Oil Production and Drilling Activity Russian total oil output is reaching record highs, mmbpd 2015 10.73 +1.4% 2014 10.58 +0.6% 2013 10.51 Source: Interfax, Info…
  5. March 2016 Investor Presentation – Tmk Group – slide 5
    Russian Oil Production Supported by Strong Drilling Activity Russian total oil output, mmbpd 11.0 10.90 10.89 Russia and OPEC agreed to limit 10.9 oil output to January 2016 levels 10.83 10.78 10.78 10.8 10.74 +2.5% 10.65 10.70 10.7…
  6. March 2016 Investor Presentation – Tmk Group – slide 6
    Russian Oil Companies Upstream CAPEX Grew YoY in RUB Terms Cumulative upstream CAPEX budget growth decomposition, RUB trn 1.50 +41% (3%) 1.45 +20% +4% +64% 1.40 +11% +34% 1.35 +17% +27% 1.30 1.4 1.25 1.20 1.2 1.15…
  7. March 2016 Investor Presentation – Tmk Group – slide 7
    Strengthening Position on the Domestic Market TMK share of seamless OCTG is growing Seamless OCTG market shares, % 100% 23% 27% 75% 17% 9% 50% 61% 65% 25% 0% 2014 2015 TMK Import Other local producers Source: TMK…
  8. March 2016 Investor Presentation – Tmk Group – slide 8
    Russian Market Share Positions for FY2015 OCTG 65% Line pipe 60% Industrial pipe 41% SEAMLESS +4% YoY +0.4% YoY +8% YoY Seamless OCTG for Seamless line pipe for High-margin products for oil and gas oil and gas industrial…
  9. March 2016 Investor Presentation – Tmk Group – slide 9
    Shift to Horizontal Drilling Horizontal drilling is increasing in Russia 100% 80% Share of horizontal drilling is constantly growing for the last five years and it drives 71% 67% 60% 87% 79% demand for higher value added tubular…
  10. March 2016 Investor Presentation – Tmk Group – slide 10
    Premium Solutions: TMK UP Series Why do they choose premium in Russia Gas wells When casing is rotated and pushed into place Oil wells with high gas-oil ratio Steam-Assisted Gravity Drained (SAGD) Higher pressure Offshore Lite Series…
  11. March 2016 Investor Presentation – Tmk Group – slide 11
    Gazproms Eastern Program Creates Additional Demand LDP demand in Russia, 2012-2018E 3,500 15% 3,000 19% Thousand tonnes 2,500 20% 16% 20% 14% 15% 2,000 17% 19% 26% 1,500 31% 30% 14% 66% 1,000 26% 67% 67% 66% 54%…
  12. March 2016 Investor Presentation – Tmk Group – slide 12
    2015 Industry Performance Review: A Challenging Year Drop in rig count followed drop in oil prices Oil Gas Crude Oil WTI Spot 2,400 120 2,000 100 Crude Oil Price (/Bbl) US Rig Count 1,600 80 Average number of rigs in…
  13. March 2016 Investor Presentation – Tmk Group – slide 13
    Impact on US OCTG Demand FY2015 forecast remains unchanged, with OCTG Lower consumption pushed inventory levels to 7.8 consumption expected to drop sharply months in December 2015 7,000 3.6 Monthly absolute inventory 18 OCTG…
  14. March 2016 Investor Presentation – Tmk Group – slide 14
    Price Decline Being Aided by Drop in Raw Material Costs US distributor welded OCTG vs HRC prices US distributor seamless OCTG vs. scrap prices (Monthly Average) (Monthly Average) 2,000 950 2,400 750 Seamless OCTG / tonne 1,800…
  15. March 2016 Investor Presentation – Tmk Group – slide 15
    Producers Response Cost-cutting is the order of Reduced drill time Water conservation and the day recycling Cost of drilling came down by 20- Reduced the time it takes to drill a Cut overall water use by 12%. 25%. rig down to a low of…
  16. March 2016 Investor Presentation – Tmk Group – slide 16
    FY 2015 vs FY 2014 Summary Financial Highlights Sales decreased YoY, due to lower pipe volumes in Revenue fell YoY, mainly due to a sharp decline of the American division, caused by unfavorable market sales in the American division and…
  17. March 2016 Investor Presentation – Tmk Group – slide 17
    FY 2015 vs FY 2014 Sales by Division and Group of Product Sales by division 2% 3,500 Russian division sales grew by 2% YoY, driven mainly by high 3,000 LDP demand. Thousand tonnes 2,500 American division sales dropped by 57%…
  18. March 2016 Investor Presentation – Tmk Group – slide 18
    FY 2015 vs FY 2014 Revenue by Division Revenue Revenue per tonne* -20% -3% 4,000 1,800 3,200 1,500 -17% -21% 1,200 2,400 US/tonne US mln -58% 3,973 900 1,733 1,686 1,600 3,189 600 1,242 1,286 980 1,073 -27% 800…
  19. March 2016 Investor Presentation – Tmk Group – slide 19
    FY 2015 vs FY 2014 Adjusted EBITDA by Division Adjusted EBITDA Adjusted EBITDA margin 690 3% 20% 20% 600 17% 15% 15% 510 14% 12% 420 11% 9% US mln % 330 8% 614 629 5% 240 2% 150 -7% 159 -1% Russia America Europe 60…
  20. March 2016 Investor Presentation – Tmk Group – slide 20
    Revised Capex Program Total US400 mln capex program for 2016- USmln US400 mln 2017, including approximately US85 mln maintenance capex annually. Major strategic investment program completed in Autumn 2014. 208 200 200 Majority of…
  21. March 2016 Investor Presentation – Tmk Group – slide 21
    Ongoing Cost Cutting Program 2015 cost cutting program breakdown Total effect of around US110 mln 2015 cost cutting program realized by around Production 130%. yields; 17% Others; 23% 2014 cost cutting program was realized by more…
  22. March 2016 Investor Presentation – Tmk Group – slide 22
    Optimization of Working Capital Position Changes in working capital 160 For FY 2015, release of working capital in the amount of US105 mln: 120 80 150 Improved payment discipline of the major clients; US mln 40 82 58 0 -30…
  23. March 2016 Investor Presentation – Tmk Group – slide 23
    Commitment to Deleverage Continuous decrease of debt level 3,600 3,000 2,400 For FY 2015, net repayment of debt US mln amounted to US193 mln. 3,546 3,508 1,800 3,223 * 2,969 2,801 2,496 1,200 Target to…
  24. March 2016 Investor Presentation – Tmk Group – slide 24
    Debt Maturity Profile as of December 31, 2015 Debt maturity profile as of December 31, 2015 As of December 31, 2015, total loan portfolio amounted to US2,740 mln based on management accounts compared 600 to US3,148 mln as of December…
  25. March 2016 Investor Presentation – Tmk Group – slide 25
    Key Targets and Achievements Strategic investment program completed. CAPEX Capex program cut t0 around US600 mln for 2015-2017, which translates to more than 30% decrease compared to initial capex budget. For FY 2015 net repayment…
  26. March 2016 Investor Presentation – Tmk Group – slide 26
    Key Consolidated Financial Highlights (USmln)(a) 2015 2014 2013 Revenue 4,127 6,009 6,432 Adjusted EBITDA(b) 636 804 952 Adjusted EBITDA Margin (%) 15% 13% 15% Profit (Loss) (368) (217) 215 Net Profit Margin (%) n/a n/a 3% Pipe…
  27. March 2016 Investor Presentation – Tmk Group – slide 27
    Income Statement US mln 2015 2014 2013 2012 2011 Revenue 4,127 6,009 6,432 6,688 6,754 Cost of Sales (3,282) (4,839) (5,074) (5,209) (5,307) Gross Profit 845 1,169 1,358 1,479 1,446 Selling and Distribution Expenses (260) (350)…
  28. March 2016 Investor Presentation – Tmk Group – slide 28
    Statement of Financial Position US mln 2015 2014 2013 2012 2011 ASSETS Cash and Bank Deposits 305 253 93 225 231 Accounts Receivable 512 728 995 914 772 Inventories 785 1,047 1,324 1,346 1,418 Prepayments 113 113 148 180 200 Other…
  29. March 2016 Investor Presentation – Tmk Group – slide 29
    Cash Flow US mln 2015 2014 2013 2012 2011 Profit / (Loss) before Income Tax (443) (201) 312 400 544 Adjustments for: Depreciation and Amortisation 251 304 326 326 336 Net Interest Expense 269 226 245 275 271 Others 552 479 61 39…
  30. March 2016 Investor Presentation – Tmk Group – slide 30
    Seamless Core to Profitability U.S. mln QoQ, YoY, FY 2015 gross profit breakdown 4Q 2015 FY 2015 (unles s s tated otherwis e) % % Other Volumes- Pipes, kt 604 6% 2,410 -6% operations 2% Revenue 606 3% 2,598 -31% Welded 20%…
  31. March 2016 Investor Presentation – Tmk Group – slide 31
    Capital Structure Capital structure as of December 31, 2015 Key considerations TMKs securities are listed on the London Stock Free float** Exchange, the OTCQX International Premier trading 32,24% platform in the U.S. and on…
  32. March 2016 Investor Presentation – Tmk Group – slide 32
    Premium Solutions: TMK UP ULTRA SF ULTRA SFII ULTRA FJ ULTRA FX ULTRA CX ULTRA QX SXC ULTRA DQX ULTRA DQXHT TMK BPN TMK-2S ULTRA GX ULTRA QX 2003 2013 2003 2003 2008 2009 2009 2011 2013 2013 2013 2016 TORQ 2016 Cal IV Cal IV Cal…
  33. March 2016 Investor Presentation – Tmk Group – slide 33
    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 (38% of total sales in 2015); Line pipe used…
  34. March 2016 Investor Presentation – Tmk Group – slide 34
    Leading Global Supplier of Pipe for Oil and Gas Industry A world leading tube producer by sales in 2015 and for the last 6 years Sales (thousand tonnes) 4,238 4,288 4,402 4,185 3,962 3,871 1,743 1,866 1,842 1,844 1,461 1,843…
  35. March 2016 Investor Presentation – Tmk Group – slide 35
    Diversified Business Model Diversified product portfolio and customer base Key Considerations Sales by product (FY 2015) High degree of diversification enabling earnings Welded LD resilience. 16% Welded Line Geographical…
  36. March 2016 Investor Presentation – Tmk Group – slide 36
    Low Cost Vertically Integrated Producer Raw materials costs can generally be Key considerations passed through to customers Structural cost advantages over major international competitors: Russia is one of the lowest Cost of sales…

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