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 6, 2004
TENARIS, S.A.
(Translation of Registrant's name into English)
TENARIS, S.A.
13, rue Beaumont
L-1219 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
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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
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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 results for the first quarter of 2004.
Tenaris Announces Results for the First Quarter of 2004
LUXEMBOURG--(BUSINESS WIRE)--May 5, 2004--Tenaris S.A. (NYSE:TS)
(Buenos Aires:TS) (BMV:TS) (MTA Italy:TEN)
-- 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.
Tenaris S.A. (NYSE:TS) (Buenos Aires:TS) (BMV:TS) (MTA Italy:TEN)
("Tenaris") today announced its results for the quarter ended March
31, 2004 with comparison to its results for the quarter ended March
31, 2003.
2004 First Quarter Summary
-- Net sales of US$859.3 million, up 8.8% from US$789.6 million
-- Operating income of US$102.6 million, up 4.1% from US$98.6
million
-- Net income of US$48.4 million, up 6.3% from US$45.5 million
-- Net earnings per share of US$0.041 (US$0.41 per ADS), up 5.1%
from US$0.039
Net sales, operating income and net income all rose over the
levels recorded during the corresponding period of 2003. Operating
income plus depreciation and amortization increased 6.8% to US$156.4
million, or 18.2% of net sales, from US$146.4 million, or 18.5% of net
sales. These positive results were driven by a 19% increase in our net
sales of seamless pipes and were achieved in spite of continuing
increases in steelmaking raw material costs and weak demand for our
welded pipes. Sales volumes benefited from increased demand in Mexico
and a partial recovery of demand in Venezuela, and average selling
prices, compared to the first quarter of 2003, were higher in all
regions. Sales volumes also showed significant increases in Europe and
the Far East & Oceania over the levels recorded in the third and
fourth quarters of 2003.
Market Background and Outlook
In the first quarter of 2004, oil prices remained strong, rising
to their current level above US$35 per barrel. Global oil demand has
been increasing along with global economic growth led by the U.S. and
Chinese economies and the OPEC nationals have been maintaining
production discipline with a further cut in production targets
announced in February. Oil and gas drilling activity, as measured by
the number of active rigs, showed no aggregate growth outside North
and South America: in particular, activity in Iraq and Nigeria
continues to remain affected by political and security issues. On the
other hand, demand for seamless pipes in each of our local markets of
Mexico, Argentina, Canada and Venezuela has been higher than the
average level for 2003. In addition, industrial production activity in
North America and Japan has been growing, but in Europe the recovery
in the sector remains fragile. With these trends in place, we expect
that demand for our seamless pipes in 2004 will continue to be
favorable throughout the year.
Steelmaking raw material and freight costs, which had already
risen substantially during 2003, surged in the first quarter of 2004
but are currently decreasing from their highs. Prices are increasing
for our seamless pipe products but the full effect of these price
increases will not be reflected in our results until the third quarter
and, similarly, the full effect of the latest steelmaking raw material
cost increases have not been reflected in our results for the first
quarter.
Demand for our welded pipes continues to be affected by the
continuing suspension of deliveries to an ongoing project and the
postponement of new projects in the local Brazilian market as well as
a lack of projects in other South American markets. The energy crisis
in Argentina should eventually result in investment in pipeline
construction or expansion activity but there can be no assurance of
when this might occur.
Analysis of 2004 First Quarter Results
(metric tons)
Sales volume Q1 2004 Q1 2003 Increase/(Decrease)
------------------------------- -------- -------- -------------------
South America 96,000 67,000 42%
North America 157,000 139,000 13%
Europe 169,000 156,000 8%
Middle East & Africa 82,000 86,000 (4%)
Far East & Oceania 114,000 121,000 (6%)
Total seamless pipes 618,000 570,000 8%
Welded pipes 69,000 108,000 (36%)
Total steel pipes 687,000 678,000 1%
Sales volumes of seamless pipes increased by 8% to 618,000 tons in
the first quarter of 2004 from 570,000 tons in the same period of
2003. This increase primarily reflects increased sales in our local
markets of Mexico, where Pemex' spending on exploration and production
has increased significantly, and Venezuela, where there has been a
partial recovery of exploration and production activity following the
general strike which took place in the first quarter of 2003. Quarter
on quarter, sales volumes of seamless pipes increased by 13%, with
increases recorded in all regions except North America.
Sales volumes of welded pipes decreased by 36% to 69,000 tons in
the first quarter of 2004 from 108,000 in the same period of 2003,
with demand being affected by continuing problems affecting contracted
deliveries and pipeline project activity in the Brazilian market and a
lack of pipeline project activity elsewhere in South America.
(US$ million)
Net sales Q1 2004 Q1 2003 Increase/(Decrease)
--------------------------------- ------- ------- -------------------
Seamless pipes 673.8 565.6 19%
Welded pipes 66.4 98.5 (33%)
Energy 103.9 72.1 44%
Others 15.2 53.4 (72%)
Total 859.3 789.6 9%
Net sales in the quarter ended March 31, 2004 increased 9% to
US$859.3 million, compared to US$789.6 million in the corresponding
quarter of 2003 due to higher net sales of seamless pipes which
represented 78% of total net sales during the quarter. Net sales of
seamless pipes increased 19% due to higher volumes and average selling
prices. Net sales of welded pipes decreased 33% due to lower sales
volumes and a slight decline in average selling prices. Included
within net sales of welded pipes are sales of metal structures made by
our Brazilian welded pipe subsidiary which amounted to US$15 million
in the first quarter of 2004 and US$15 million in the first quarter of
2003. Net sales of electricity and natural gas by Dalmine Energie
increased by 44% reflecting the appreciation of the Euro against the
U.S. dollar and the continued expansion of the business. Net sales of
other goods and services decreased 72% following the discontinuation
of sales of non-pipe steel products produced by third parties, which
amounted to US$36.6 million in the first quarter of 2003.
Cost of sales, expressed as a percentage of net sales, increased
1.5 percentage points to 72.2% in the first quarter of 2004, compared
to 70.7% in the same period of 2003. Cost of sales for seamless pipe
products, expressed as a percentage of net sales, increased 1.3
percentage points to 67.6% in the first quarter of 2004 compared to
66.3% in the same period of 2003. This increase resulted principally
from significant rises in steelmaking raw material costs, which were
not fully offset by increased average selling prices. Cost of sales
for welded pipe products, expressed as a percentage of net sales,
increased 13.6 percentage points to 80.8% in the first quarter of
2004, compared to 67.2% in the same period of 2003, due to higher
steel costs, which were not offset by higher prices on export sales,
and a higher proportion of low-margin sales of metal structures in
this segment. Cost of sales for energy products, expressed as a
percentage of net sales, decreased 2.1 percentage points to 96.8% in
the first quarter of 2004, compared to 98.9% in the same period of
2003. Cost of sales for other products, expressed as a percentage of
net sales, decreased 16.4 percentage points to 69.5% in the first
quarter of 2004, compared to 85.9% in the same period of 2003,
reflecting the discontinuation of sales of low-margin non-pipe steel
products produced by third parties.
Selling, general and administrative expenses, or SG&A, remained
stable at US$139.8 million, or 16.3% of net sales, in the quarter
ended March 31, 2004, compared to US$133.0 million, or 16.8% of net
sales, during the corresponding quarter of 2003. Higher freight costs,
additional selling expenses associated with higher exports of welded
pipes and higher costs in Italy due to the appreciation of the Euro
were offset by proportionately lower general and administration
expenses following increased net sales.
Net financial income and expenses resulted in a loss of US$15.4
million in the first quarter of 2004, compared to a loss of US$22.7
million in the same period of 2003. Net interest expenses amounted to
US$5.6 million in the first quarter of 2004 compared to US$5.3 million
in the same period of 2003. A net loss of US$15.3 million was recorded
on foreign exchange translations during the first quarter of 2004, due
principally to the effects of (i) the appreciation of the British
pound against the Euro on Dalmine's outstanding liability resulting
from the settlement of litigation with a consortium led by BHP
Billiton Petroleum Ltd., (ii) the devaluation of the Venezuelan
Bolivar on the net monetary position of our Venezuelan seamless pipe
manufacturing subsidiary which holds debt in U.S. dollars, and (iii)
the appreciation of the Argentine peso on the net monetary position of
our Argentine subsidiaries, a significant proportion of whose payables
are in Argentine pesos. In addition, a gain of US$5.4 million was
recorded relating mainly to the purchase of US dollars by our
Venezuelan manufacturing subsidiary used to reduce financial debt.
Results of associated companies generated a loss of US$0.5 million
in the first quarter of 2004, compared to a loss of US$9.0 million in
the first quarter of 2003. These results principally reflect the
returns on our indirect investments in Sidor. Although Sidor's
operating result for the first quarter of 2004 was strongly positive,
its net result was affected by the recording of a substantial deferred
tax provision reflecting the impact of the devaluation of the
Venezuelan Bolivar on the tax base of its assets.
Cash Flow and Liquidity
Cash and cash equivalents, excluding investments of US$138.6
million in trust funds to support our Argentine and Brazilian
operations, decreased by US$26.5 million to US$221.0 million during
the quarter ended March 31, 2004. Total financial debt increased by
US$85.2 million to US$918.9 million.
Net cash used in operations during the quarter ended March 31,
2004 was US$89.5 million, which included an increase in working
capital of US$175.0 million reflecting a net increase in trade
receivables less trade payables of US$83.0 million, an increase in
inventories of US$53.7 million and the payment of the first instalment
of the liability towards the consortium led by BHP Billiton Petroleum
Ltd. (US$55.3). Net cash used in investment activities was US$33.2
million. Capital expenditure payments of US$39.9 million included
US$6.8 million of the US$9.6 million paid to Algoma Steel for the
purchase of the land and buildings leased by our seamless pipe
manufacturing subsidiary in Canada.
Some of the statements contained in this press release are
"forward-looking statements." Forward-looking statements are based on
management's current views and assumptions and involve known and
unknown risks that could cause actual results, performance or events
to differ materially from those expressed or implied by those
statements. These risks include but are not limited to risks arising
from uncertainties as to future oil prices and their impact on
investment programs by oil companies.
With manufacturing facilities in Argentina, Brazil, Canada, Italy,
Japan, Mexico and Venezuela and a network of customer service centers
present in over 20 countries worldwide, Tenaris is a leading global
manufacturer of seamless steel pipes and provider of pipe handling,
stocking and distribution services to the oil and gas, energy and
mechanical industries as well as a leading regional supplier of welded
steel pipes for gas pipelines in South America.
Consolidated Condensed Interim Income Statement
Three-month period
ended March 31,
(All amounts in US$ thousands) 2004 2003
--------- ---------
Net sales 859,346 789,579
Cost of sales (620,457) (558,534)
--------- ---------
Gross profit 238,889 231,045
Selling, general and administrative expenses (139,818) (132,998)
Other operating income and expenses, net 3,500 521
--------- ---------
Operating income 102,571 98,568
Financial income (expenses), net (15,438) (22,691)
--------- ---------
Income before income tax, equity in earnings
(losses) of associated companies and minority
interest 87,133 75,877
Equity in earnings (losses)
of associated companies (461) (9,034)
--------- ---------
Income before income tax and minority interest 86,672 66,843
Income tax (39,069) (17,927)
--------- ---------
Net income before minority interest 47,603 48,916
Minority interest 765 (3,404)
--------- ---------
Net income 48,368 45,512
Consolidated Condensed Interim Balance Sheet
March 31, 2004 December 31, 2003
--------------------- ---------------------
(All amounts in US$
thousands)
Assets
Non-current assets
Property, plant and
equipment, net 1,924,947 1,960,314
Intangible assets, net 54,317 54,037
Investments in associated
companies 45,361 45,814
Other investments 23,175 23,155
Deferred tax assets 124,561 130,812
Receivables 59,440 2,231,801 59,521 2,273,653
Current assets
Inventories 885,622 831,879
Receivables and
prepayments 175,623 165,134
Trade receivables 760,801 652,782
Other investments 138,637 138,266
Cash and cash equivalents 220,968 2,181,651 247,834 2,035,895
Total assets 4,413,452 4,309,548
Equity and Liabilities
Shareholders' equity 1,888,437 1,841,280
Minority interest 118,387 119,984
Non-current liabilities
Borrowings 333,787 374,779
Deferred tax liabilities 395,172 418,333
Other liabilities 197,299 191,540
Provisions 30,345 23,333
Trade payables 11,548 968,151 11,622 1,019,607
Current liabilities
Borrowings 585,099 458,872
Current tax liabilities 102,083 108,071
Other liabilities 167,214 207,594
Provisions 31,544 39,624
Customers advances 67,715 54,721
Trade payables 484,822 1,438,477 459,795 1,328,677
Total liabilities 2,406,628 2,348,284
Total equity and
liabilities 4,413,452 4,309,548
Consolidated Condensed Interim Cash Flow Statement
Three-month period
ended March 31,
(All amounts in US$ thousands) 2004 2003
--------- --------
Net income for the period 48,368 45,512
Depreciation and amortization 53,824 47,867
Tax accruals less payments (10,320) 4,338
Equity in earnings (losses)
of associated companies 461 9,034
Interest accruals less payments (1,551) 2,426
Net provisions (1,068) 3,203
Minority interest (765) 3,404
Change in working capital (174,981) 52,415
Currency translation adjustment and others (3,477) (10,135)
--------- --------
Net cash (used in) provided by operations (89,509) 158,064
--------- --------
Capital expenditure (39,912) (43,611)
Acquisitions of subsidiaries and associates 191 (20,013)
Proceeds from disposition of property, plant
and equipment 6,519 658
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Net cash used in investment activities (33,202) (62,966)
--------- --------
Proceeds from borrowings 147,694 84,493
Repayments of borrowings (51,471) (94,374)
--------- --------
Net cash provided by (used in)
financing activities 96,223 (9,881)
--------- --------
(Decrease)/increase in cash and cash equivalents (26,488) 85,217
--------- --------
Cash and cash equivalents at January 1, 247,834 304,536
Effect of exchange rate changes on cash and cash
equivalents (378) 298
(Decrease)/increase (26,488) 85,217
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Cash and cash equivalents at March 31, 220,968 390,051
CONTACT: Tenaris S.A.
Nigel Worsnop, 888-300-5432
www.tenaris.com
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 6, 2004
Tenaris, S.A.
By: /s/ Cecilia Bilesio
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Cecilia Bilesio
Corporate Secretary