Tenaris closed the first quarter with nearly fivefold profitsabove the estimates (503 million dollars from 101 million last year, against the 389 million expected by the consensus) and revenue doubled compared to the same period last year (2,367 billion, +100% year on year and +15% compared to the previous three months, against estimates of 2,33 billion), in the wake of the increase in Octg (oil country tubular goods ) in North America and the increase in line pipe deliveries (transport pipes) in Europe and South America.
“The Russian invasion of Ukraine and the sanctions that have been imposed on Russian individuals, companies and Russian institutions have changed the energy outlook around the world“, with prices and costs on the rise and oil and gas production levels that “are not keeping pace with global demand and inventories are at low levels,” comments Tenaris.
In the quarter the EBITDA was 627 million, +220% year on year and +30% compared to the previous three months, given that the increase in prices more than offset the rises in energy and raw material costs. The Ebitda margin was 26,5% (from 16,6% in Q2021 23,5 and XNUMX% in QXNUMX), while theoperating profit of 484 million (from 52 million in the first quarter of 2021).
Tenaris has decided to discontinue the industrial equipment business in Brazil, which reported an EBITDA loss of $14 million, including provisions for job termination. The company recorded a $15 million charge related to the impairment of its 49% stake in the joint venture with Severstal in Russia.
“The first quarter results are above expectations thanks to better margins. Free cash flow is weak, but the outlook is very solid and higher than expected” commented the Equita analysts, underlining that "Ebitda (627 million, +220% year on year and +30% compared to the previous three months) was 10% higher than expected" and that "the results benefited from a strong improvement in prices ( +41% year on year and +12% quarter on quarter against +7% expected), with growing volumes”.
“Assuming 10% sequential revenue growth in the second quarter and a 27% EBITDA margin, second quarter EBITDA should be approximately $700 million, higher than both our estimate ($611 million) and the consensus ( 617 million)”, underlines Equita again.
In more detail, Tenaris announced that operating income from tubular products and services amounted to a gain of $471 million, compared to a gain of $245 million in the previous quarter and $38 million in the same period of 2021. Sales Net tubular products and services increased 15% quarter over quarter and 104% year over year to $2,203 billion. Volumes increased 3% sequentially and 45% year over year, while average selling prices increased 12% over the prior three months and 41% year over year. In North America Sales increased 20% sequentially on higher prices across the region, reflecting increased drilling activity and declining market inventory levels with seasonally higher volumes than Octg (oil country tubular goods) in Canada.
In South America Sales increased 2% sequentially and in Europe revenues increased 39% due to sales of offshore line pipes to the Sakarya project in Turkey and higher prices on mechanical pipe sales to distributors. In Middle East and Africa sales decreased by 13% and remain at low levels, particularly in Kuwait, where the transition to a new contract is still pending, and with minimal sales of offshore line pipes in Africa and of Octg in Qatar
In the second quarter, further sales growth is expected in the Middle East and South America
In second quarter the manufacturer and supplier of pipes and services for oil and gas exploration and production reports positive free cash flow and afurther sales growth, with higher volumes in the Middle East and South America, and stable margins with higher pricing offsetting higher costs. In the second half of the year, further sales growth is expected and margins should remain around the same level as in the first half.
A Business Square the Tenaris share was quoted in the afternoon at around 14 euros, with an increase of 0,29% after a peak at 14,75 euros.
The French TotalEnergies feels the blow of the Russian sanctions
Different path for the French company TotalEnergies which has announced a writedown of $4,1 billion on its balance sheet due to Russian sanctions which led to difficulties with its massif Arctic LNG2 project, as stated in a press release.
TotalEnergies has decided to no longer account for reserves set aside for the Arctic LNG 2 project, “given the uncertainty created by the technological and financial sanctions on the ability to carry out the Arctic LNG 2 project currently under construction and their likely exacerbation as the conflict escalates ,” the company said in a press release.
The company also took over "additional risks" emerged on April 8 with new European Union sanctions banning the export from EU countries of goods and technology to be used in the liquefaction of natural gas for the benefit of a Russian company.
“As a result, TotalEnergies has decided to record in its accounts, as of March 31, 2022, a write-down of $4,1 billion, specifically with respect to Arctic LNG 2,” TotalEnergies says. TotalEnergies' partner in Arctic LNG 2 is the Russian Novatek, with TotalEnergies accounting for a 10% share. Novatek, which exports liquid gas, is one of the few companies that can still escape the "Rubles for gas" scheme.
The final investment decision for this project was made in 2019. The project was expected to have a production capacity of 19,8 million tonnes per year and was expected to export its first LNG shipment by 2023.
TotalEnergies has refused to withdraw from Russia-affiliated projects while super giants BP, Exxon and Shell bowed to Western pressure and sanctions. However, it is now clear with the compromise that Arctic LNG 2 has a very uncertain future, affecting the French oil giant.
Earlier this week, Technip Energies, the European contractor for Arctic LNG 2, said in an earnings briefing to investors that sanctions are affecting the pace of work on the project, but that Technip "remained committed" .
Technip said it "still expects the project's equity position and contractual protections to be sufficient to meet contractual obligations" in accordance with the sanctions.
