Investor Presentaiton
Key 2011 events
Management's Discussion and Analysis
Nine months ended September 30, 2011
In January 2011, we supplied seamless pipes to Gazprom for construction of
the Portovaya compressor station. Unique in its technical and operating
characteristics, this compressor station will be a starting point for gas
supplies via the Nord Stream gas pipeline.
In January 2011, we completed the offering of U.S.$500 million of 7.75%
loan participation notes which fall due in January 2018. The notes have
been admitted for trading on the London Stock Exchange. The proceeds
were used to refinance existing indebtedness.
In March 2011, we won an open auction for the acquisition of a 25.5% stake
in OAO Volgograd River Port for RUB113 million (approximately U.S.$4
million). The auction was held by the Russian Federal Property
Management Agency. The acquisition was finalised on August 4, 2011.
This acquisition will allow us to optimise logistics for our Volzhsky plant,
located close to the Volgograd River Port, and will create additional
opportunities to ship OCTG and line pipe to the oil and gas fields in the
Caspian region.
In March 2011, the second thread line for ULTRA connections with a
capacity of 240 thousand joints was commissioned at TMK IPSCO'S
facility in Brookfield, USA. The new line will also enhance our product
range and help us to meet growing demand from oil and gas companies.
In April 2011, we completed shipments of casing pipe with ULTRA SF
Premium Connections to Gazprom Neft for the Urmanskoye field in the
Tomsk region in Western Siberia. The pipes were produced by TMK
IPSCO. This was the first of our deliveries to Russia of premium tubular
products made in the United States.
In May 2011, we began construction of a research center in Houston, Texas
(U.S.A.). The state-of-the-art facility will be used for product design and
development, experimental and validation testing and advanced
metallurgical research. The center will collaborate with numerous
organizations, including the Massachusetts Institute of Technology, our
subsidiary RosNITI and several other research laboratories and universities.
In May 2011, we finalized the sale of TMK Hydroenergy Power S.R.L., our
non-core asset previously owned by TMK-RESITA, which is comprised of
four hydropower generating units located in Romania.
In June and July 2011, as a part of the Programme on Development and
Testing of TMK Premium Connections, we successfully completed
qualification tests of TMK PF and ULTRA-QX connections in accordance
with ISO 13679 CAL IV standard. Certification of the connections will
allow us to provide more tailored solutions to the clients and further
strengthen our positions in the segment of premium pipe products.
In June 2011, we started production of pipes with a new TMK CWB
premium connection for drilling with casing. The implementation of new
technology will allow us for an increase in the connection's gas-tightness
and operational efficiency. One of the TMK CWB connection's outstanding
features is its ability to be coupled with other types of threads without
adapters.
In June 2011, the annual shareholders' meeting approved a final dividend in
respect of 2010 year in the amount of 796,948 thousand Russian roubles
(U.S.$28 million at the exchange rate at the date of approval) or
0.85 Russian roubles per share (0.03 U.S. dollars per share), of which
60,839 thousand Russian roubles (U.S.$2 million at the exchange rate at the
date of approval) related to the treasury shares in possession of the Group.
In September 2011, Standard & Poor's Rating Services raised its long-term
corporate credit rating on TMK to "B+/ru A”. The upgrade reflects the
improvement in TMK's liquidity and its operating and financial
performance in the first half of 2011.
In October 2011, we commissioned a thread line for casing with premium
connections at Orsky Machine Building Plant, which is part of TMK's
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