TS » Topics » Tubes

This excerpt taken from the TS 20-F filed Jun 30, 2009.

Tubes

The following table indicates, for our Tubes business segment, net sales by geographic region, cost of sales as a percentage of net sales, operating income and operating income as a percentage of net sales for the periods indicated below:

 

Millions of U.S. dollars    For the year ended December 31,     Increase /
(Decrease)
 
     2007     2006    

Net sales

      

- North America

   2,921.7      1,993.0      47

- South America

   1,221.7      960.3      27

- Europe

   1,661.4      1,315.1      26

- Middle East & Africa

   2,057.6      1,895.7      9

- Far East & Oceania

   690.2      662.8      4
                  

Total net sales

   8,552.6      6,826.9      25

Cost of sales (% of sales)

   52   47  

Operating income

   2,713.9      2,670.5      2

Operating income (% of sales)

   32   39  

Net sales of tubular products and services rose 25% to $8,552.6 million in 2007, compared to $6,826.9 million in 2006, due to a higher volume of welded pipe sales, resulting from the incorporation of the former Maverick operations acquired in October 2006, and a higher average selling price for our seamless pipes reflecting an enhanced product mix and increased demand for our specialized, high-end seamless pipe products used in the world’s more complex drilling operations and other demanding applications. In North America, sales increased principally due to the incorporation of sales from the former Maverick and Hydril premium connection operations but, excluding such effects, there was a substantial decline in sales in Canada reflecting the decline in drilling activity and consequent inventory adjustments. In South America, sales increased due primarily to higher sales of OCTG products in Venezuela as PDVSA began to replenish inventories, and increased sales in Colombia. In Europe, sales increased, with higher average selling prices and volumes, reflecting higher sales to European-based process and power plant contractors, a more specialized mix of products sold to industrial and automotive customers, increased sales of OCTG products in continental Europe and the appreciation of the Euro with respect to the U.S. dollar. In the Middle East and Africa, higher average selling prices more than offset lower volumes which were affected by lower sales of API OCTG products and inventory adjustments. In the Far East and Oceania, sales remained stable with higher sales in South-East Asia and South Korea offsetting lower sales in China.

Cost of sales of tubular products and services, expressed as a percentage of net sales, rose from 47% in 2006 to 52% in 2007, due primarily to higher sales of lower margin ERW products following the acquisition of Maverick in October 2006.

Operating income from tubular products and services rose 2% to $2,713.9 million in 2007, from $2,670.5 million in 2006, as the increase in sales was substantially offset by a reduction in the gross margin and higher expenses for the amortization of intangible assets.

 

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This excerpt taken from the TS 20-F filed Jun 30, 2008.

Tubes

The following table indicates, for our Tubes business segment, net sales by geographic region, cost of sales as a percentage of net sales, operating income and operating income as a percentage of net sales for the periods indicated below:

 

Millions of U.S. dollars    For the year ended December 31,     Increase /  
     2006     2005     (Decrease)  

Net sales

      

- North America

   1,993.0     1,663.4     20 %

- South America

   960.3     839.2     14 %

- Europe

   1,315.1     1,024.5     28 %

- Middle East & Africa

   1,895.7     933.4     103 %

- Far East & Oceania

   662.8     667.4     (1 )%
                  

Total net sales

   6,826.9     5,128.0     33 %

Cost of sales (% of sales)

   47 %   53 %  

Operating income

   2,670.5     1,701.7     57 %

Operating income (% of sales)

   39 %   33 %  

Net sales of tubular products and services rose 33% to $6,826.9 million in 2006, compared to $5,128.0 million in 2005, due primarily to an increase in the average selling price of our tubular products and services and the incorporation of sales from the former Maverick energy products division in the fourth quarter of 2006. Sales increased in the Middle East and Africa as there was strong demand for our specialized OCTG products and services, particularly in Saudi Arabia but more generally throughout the region, where there has been a sustained increase in investment in oil and gas drilling activity. In North America, excluding sales from the former Maverick operations, sales declined primarily due to lower demand for our OCTG products and services in Mexico, where drilling activity was impacted by oilfield cost inflation and budgetary constraints of the Mexican state-oil company Pemex, as well as lower sales of line pipe products for process and power plant construction to engineering companies in the U.S. and Canada. In South America, an increase in average selling prices offset a decline in sales of OCTG products in Venezuela as PDVSA reduced its stock of tubular inventories during the year. In Europe, there was an increase in sales of line pipe products to European-based process and power plant contractors and of OCTG products and services for the North Sea and a reduction in sales of tubes to industrial and automotive customers. In the Far East and Oceania, although the average selling price of our products increased, sales volumes of line pipe products to process and power plant customers in China and throughout the region declined, as did sales of industrial products in Japan and OCTG products throughout the region.

 

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Cost of sales of tubular products and services, expressed as a percentage of net sales, decreased from 53% in 2005 to 47% in 2006, due to higher average selling prices reflecting a more favorable product and market mix following product repositioning efforts and higher market prices.

This excerpt taken from the TS 20-F filed Jun 29, 2007.

Tubes

The following table indicates, for our Tubes business segment, net sales by geographic region, cost of sales as a percentage of net sales, operating income and operating income as a percentage of net sales for the periods indicated below:

 

Millions of U.S. dollars    For the year ended December 31,     Increase /
(Decrease)
 
     2005     2004    

Net sales

      

- North America

   1,662.2     1,094.1     52 %

- South America

   838.8     502.2     67 %

- Europe

   1,023.9     794.1     29 %

- Middle East & Africa

   933.0     480.2     94 %

- Far East & Oceania

   666.0     402.6     65 %
                  

Total net sales

   5,124.0     3,273.3     57 %

Cost of sales (% of sales)

   53 %   63 %  

Operating income

   1,701.5     751.0     127 %

Operating income (% of sales)

   33 %   23 %  

Net sales of tubular products and services increased by 57%, to $5,124.0 million in 2005, compared to $3,273.3 million in 2004, reflecting strong market demand for our products, particularly for high-end products used in demanding applications. Average selling prices for our products rose significantly in all regions. Sales almost doubled in the Middle East and Africa region reflecting increased sales of specialized OCTG products and services in the Middle East, particularly in Saudi Arabia, and higher sales of flowlines and risers for West Africa deepwater projects. In North America, sales increased due to higher prices and higher sales of OCTG products in Canada, including specialized products for SAGD projects, and in the U.S. In South America, sales increased reflecting higher levels of drilling activity in the region, particularly in Venezuela and Ecuador. In Europe, a decline in regional sales volumes was offset by an increase in average selling prices reflecting a reallocation of mill capacity from lower margin industrial products to satisfy increased demand elsewhere from the energy sector. In the Far East and Oceania, sales of OCTG products and services increased, particularly in Indonesia and China.

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