TUBOS REUNIDOS GROUP. Special Products & Integral Services Worldwide. Tubos Reunidos. November 2014

Transcription

1 Special Products & Integral Services Worldwide Tubos Reunidos 1

2 Content Tubos Reunidos Group 1. Market and Trends 2. Company Overview Strategic Plan 4. Financials 2

3 Tubos Reunidos Group Seamless Steel tubes Company Global International Footprint : 84% of Sales (2013) Oriented to the Energy Sector: 81% of Sales (2013) Focus on Special Products: 64% of Sales (2013) Transformational Investment Plan Under Execution: 150 Mill Eur Strategy: Specialization + Service + Competitiveness. Current Strategic Plan : Towards a new Tubos Reunidos 3

4 1. Market and Trends 4

5 Tubos Reunidos Market Global demand for seamless steel pipes, million MT Standard tubes & pipes Special tubes & pipes: 12 million MT Special Seamless Steel Tubes, 12 million MT Other 3% 4% 21% 8% OCTG: Premium and Special Grades Line Pipes: Special Grades Boilers, Heaters and Pressure Pipes: Special Grades Stainless Steel Tubes Large-diameter Pipes: Special Grades Tubos Reunidos is strategically focused on the specialty tubing segments (64%)* targeted at the energy sector (81%)* 42% Uses Oil & Gas Power generation, petrochemicals * % of Tubos Reunidos seamless steel tube (SST) sales in 2013 in euro terms 5

6 Sector Trends Oil & Gas Non-conventional oil & gas exploration technology Directional drilling, off-shore, shale gas Deeper drilling wells More corrosive environments Extreme temperatures Off-shore pipes Need for tubing with more complex and highperformance specifications Steels that are more resistant to corrosion, pressure and aggressive atmospheres (HPHT) Tubes tailored to individual well characteristics Premium threading Power generation and petrochemicals New technologies: Larger-scale power generation facilities (> 600 MW) Work cycles exposed to higher pressure and temperatures Steels that are more resistant to corrosion, pressure and aggressive atmospheres Greater range of tube diameters, lengths and thicknesses More stringent safety requirements New and more efficient technologies Growing need for specialty tubing 6

7 OCTG OCTG Global demand will see a compound annual growth rate of 5% over , and the value of the market will double Shift towards Unconventional Drilling (Horizontal wells and deeper wells) drives higher demand for seamless steel and Premium Products. Premium OCTG demand will grow by 8% over Global OCTG x Growth + 5% OCTG Source: The Metal Bulletin Research. The Five Year Outlook for the Global OCTG Industry, 2013, sector companies + 8% Premium OCTG Tipe of well Length, KM % Seamless % Premium Connections OGTG Tons per well % small OD <7 Horizontal Shale vs. Vertical Shale +50% +25% +25% +4,2x +40% Source: JP Morgan, Industry Sources OCTG growth. Higher for non conventional technologies and for Premium Products 7

8 Expected Growth Demand for seamless tubes Millions of MT CAGR:±1.7% CAGR:± 4% SST Specialty SST Premium OCTG tubes ( ) Nuclear plants ( ) Fossil fuel power plants ( ) 8% MT 6% GWh installed 4% GWh installed Source: SBB, sector companies Petrochemicals ( ) 5% MT Source: US EIA, : The Metal Bulletin Research. The Five Year Outlook for the Global OCTG Industry, 2013, Broker Share Growth in specialty segment set to outpace overall growth in demand for SST products 8

9 2. Company Overview 9

10 Manufacturing of a Wide Portfolio of Pipes Small and large size outside diameter tubes Carbon, alloyed, high alloyed: 1/2-25 (12mm 635 mm) Stainless steel tubes: 8-25 (190 mm 635 mm) 325,000 MT production capacity Production sites located in the Basque Country (Northern Spain) Production process vertically integrated Small and mid-size diameter tubes: up to 7 Diameter: mm. (6-120mm upon cold-drawn). Thickness: mm. Carbon, alloyed and high alloy. Manufactured at Tubos Reunidos Industrial Large diameter Tubes: up to 24 Diameter: mm. Thickness: mm. Carbon, high alloy and stainless. Manufactured at Productos Tubulares Seamless Steel Tubes Company 10

11 Focused on Special and Niche Products Large diameter Tubes Stainless steel Boilers, Heaters and Pressure Pipes OCTG Premium and Special Grades Special service line Pipes Power generation and petrochemicals - Critical phases and cutting-edge technological processes Oil and gas exploration in extreme corrosion, pressure and temperature conditions Offshore and special grades linepipes Tubes and pipes up to 25" OD and > 40 mm WT in special types of steel Tubes of > 8" OD in stainless steel up to 25 OD High chrome alloys Special lengths (up to 27 meters) Rifle tube Quenching and tempering High collapse High chrome alloys Proprietary steel grades Quenching and tempering Sour service Special grades Offshore Special Products: 64% of sales (2013) 11

12 Focused on Special and Niche Products Sales breakdown by product, Seamless Steel Tubes and Pipes, Millions of Eur, 9M 2014 Sales breakdown by client, Seamless Steel Tubes and Pipes, Millions of Eur, 9M ,9% 26,0% 28,0% 33,1% Boilers, Heaters, Pressure pipe, linepipe Special OCTG Stainless steel and Special large OD Standard Oil and gas Power generation Petrochemicals Industry and others 39,0% 30,2% 16% 19% 13,4% 17,4% Special Products: 67% of sales (9M 2014) Energy Sector: 83% of sales (9M 2014) 12 12

13 Worldwide Presence Sales Breakdown by Region, Seamless Steel Tubes and Pipes, Millions of Eur, 9M % 31% 11% Total Europe North America Far East Historic worldwide presence 88% of seamless steel tubes and pipes sales in international markets 13% 3% Middle East Other 58% of seamless steel tubes and pipes sales out of Europe International Footprint: 88% of sales (9M 2014) 13

14 Shareholder structure BBVA 49,1% 14,9% 9,0% 10,2% Zorrilla Lequerica Family N+1 por QMC II Iberian Capital Fund (N+1 Asset Management) Ybarra Family 6,4% 3,8% 6,6% Barandiaran Family De Miguel Nart Free Float 14

15 Strategic Plan 15

16 Strategic cornerstones New Tubos Reunidos model Premium products From generalist manufacturers to Specialist in premium and niche products End-to-end service From service predicated on flexibility and versatility to... End-to-end service provider Competiveness From cost-efficient to... Structurally competitive 16

17 Product Mix Improvement Sales and technology strategy focused on higher added-value products: in high-growth, high-return segments 100% Special Aubes 64% High Value Added 55% New products 5% Sales 2013 ( ) Sales 2017 ( ) x2 x2 x6 25% 75% 78% 100% Focus on special products Stronger growth in high added-value products......on the back of new, more Premium products 17

18 Sales volume increase Mechanical industries and others Stainless steel large diameter for energy uses Service line pipe Boilers and heaters OCTG High-growth segments Stainless steel large outside diameter for energy uses: Strong competitive advantages and entry barriers for TR Niche product - TR Group large market share New special products since 2013 Boilers and Heaters: Present in the maximum grade range, with applications in the most efficient and high-growth technologies in the energy generation and petrochemical sectors OCTG: The oil and gas sector is the largest source of energy to meet future demands Non-conventional technologies: higher TSS demand Long-standing presence in the US - will be the largest oil producer by 2020 New high-added value products in TR since

19 Execution of Transforming Investment Plan: of 150 Million Eur Investments: : 24" diameter tubes, degassing, heat treatment Gradual consolidation of sales of new products 2017 target ROCE: 15% : 28" diameter tubes, OCTG threading 2017: Normalised CapEx News 2013: 24" diameter 2014: Premium OCTG 2016: 28 diameter 2017: Premium products: tubes, special service tubes, high alloy boilers tubes OCTG threading 0 line pipes and heaters CapEx - seamless tubes ( million) Sales of high added-value tubes ( million)

20 Geographic market strategy + + USA& Canada 30% -> 35% Asia + Higher investment in oil & gas Shale gas revolution TR boasts entrenched positioning, with new products and capabilities Vertical integration, finishing and increased local presence Europe 45% -> 35% Consumption recovering from lows of (-44% vs. 2007) Entrenched leadership position bolstered by new product capabilities Percentage of 2013 revenue in Percentage of 2017 revenue in RoW 25% -> 30% Positioned in highly value-added products Middle East + North Africa M. East: $525bn over 5 years: 50% oil, 33% gas, 17% electricity TR positioned in highly value-added segment New Almesa strategy Latam Opportunities in Mexico: energy sector reform Other areas by means of the new strategy for Almesa 20 20

21 New phase for growth Tubos Reunidos EBITDA margin in seamless steel tubes 28,2% 6,2% EBITDA margin expansion of 7pp between two cyclical troughs 13,3% 14,6% 15,6% 13,3% Strategic capex - New products - New processes : + Gradual volume traction + Mix / prices + Profitability Normalised capex Streamlined working capital requirements Cash flow generation New era of faster growth and enhanced profitability 21

22 Quantitative Objectives Consolidated revenue, million x Growth in all segments: seamless tubes, distribution and automotive Consolidated EBITDA, million , , x Revenue growth + margin expansion EBITDA margin, seamless tubes % of revenue 13% 19% Margin expansion of 6 percentage points: More profitable products Operational gearing

23 Quantitative Objectives mn 50 Consolidated Capex, million Leverage x 1.2x Cash flow generation throughout the projection period is expected to drive a significant reduction in leverage without having to jeopardise the capex programme or dividend policy 23

24 4. Financials 24

25 Consolidated Group: H financial performance ( million) Sales EBITDA & EBITDA Margin (%) Net Profit +14,1% +6,0% +15,9% 10,9 31,1 5,1 +25,4% 73,9 92,7 262,9 299,9 11,6%) 7,8 10,6% (17,3%) 6,5 7,0% 29,3 11,2% 10,4% 1,3 (49,5%) 0,6 4,4 Q Q M M 2014 Q Q M M 2014 Q Q M M 2014 Increase in Tubos Reunidos' profit in 9M, in line with the targets set for

26 9M 2014 milestones Increased sales in 9M and improvement of the product mix, derived from transformational Capex in : Significant increase in sales of OCTG (Oil Country Tubular Goods) products for oil and gas extraction, which has meant 20% growth in Group sales in North America, supported by: The greater offer of TR products with the Group s own, more competitive, special steels (after investment in the degassing facility) as well as tube with most demanding finishing processes (after heat treatment facility investment) The positive evolution of oil and gas extraction activity in North America, with growth of 5.6% in the average number of active rigs, particularly rigs with unconventional technologies (requiring higher consumption of seamless and Premium tubing) Growth in sales of special large diameter tube, at a rate of 17% in the first nine months of 2014, materialized in projects for the Middle East, Russia and Korea for applications in critical phases of power generation, refining and petrochemical plants Good order book position at the end of September 2014 Ongoing cost control and continued efforts to improve operating efficiency and productivity 26

27 Capital Expenditures M 2014 Consolidated Capex Seamless Steel Tubes Division Capex 2014: Year of consolidation of investments Consolidated D&A : Investments focused on seamless steel tubes (85%) in order to launch new higher added-value products and to boost the competitive edge: New degassing facility in the steelworks plant New quenching and tempering heat treatment line New facilities for large diameter special tubes 50% of investment plan already met, at 150 million 27

28 Consolidated Group: Debt 1H 2014 ( million) Debt structure Grosss debt at June 2014 Maturity schedule 80% Long Term 20% 3% 14% 3% Bank borrowings EIB financing Sales discounts and others 30% 84% 77% 20% 18% 12% 18% < 1 year 1 < years < 2 2 < years < 3 3 < years < 4 > 4 years Solid financial structure, with 80% of net financial debt maturing in the long term. Diversified financing sources, with a 59 million long-term loan from the European Investment Bank, in order to support the R&D&I investment plan. Available credit facilities at June 2014 amounted to 61 million. 28

29 Consolidated Group Financials INCOME STATEMENT, Thousands of Euros Q Q Q / Q M M M 2014 / 9M 2013 Revenue % % Changes in inventory (9.028) (5.795) (8.748) Supplies (43.166) (30.935) ( ) ( ) Personnel expenditure (19.962) (18.319) (75.546) (70.366) Other operating expenses (18.405) (17.475) (59.018) (56.286) Other operating income and net gains/(losses) EBITDA (17%) % Depreciation and amortisation charge (5.075) (4.849) (19.818) (18.835) EBIT (53%) % Financial income/(expense) (1.236) (2.288) (6.153) (7.096) Profit before income tax (78%) % Profits tax Consolidated profit for the period (41%) % Profit from minority interests (56) 87 (177) 536 Profit for the period (49%) % 29

30 Consolidated Group Financials BALANCE SHEET, Thousands of Euros Q Q NON-CURRENT ASSETS Inventories and customers Cash and other cash equivalents CURRENT ASSETS Assets held for sale TOTAL ASSETS NET EQUITY DEFERRED REVENUES Non-current provisions Bank borrowings and other financial liabilities Other non-current liabilities NON-CURRENT LIABILITIES Short-term provisions Bank borrowings and other financial liabilities Other current liabilities CURRENT LIABILITIES Liabilities held for sale - - TOTAL LIABILITIES Net financial debt

31 Financial Figures 1 Key Financial Figures EUR Mn M M 2014 Revenue 728,4 395,7 342,4 499,6 464,7 350,5 262,9 299,9 EBITDA 153,1 25,2 40,2 62,2 49,6 42,2 29,3 31,1 EBITDA Margin 21,0% 6,4% 11,7% 12,5% 10,7% 12,1% 11,2% 10,4% Net Income 81,8 1,5 14,6 25,2 10,6 6,6 4,4 5,1 Net Income Margin 11,2% 0,4% 4,3% 5,0% 2,3% 1,9% 1,7% 1,7% NFD 164,2 109,5 160,9 164,3 179,9 181,8 182,9 187,3 NFD / EBITDA 1,1x 4,4x 4,0x 2,6x 3,6x 4,3x 5,6x 4,4x Capex 37,0 37,8 29,1 36,9 40,7 41,9 35,2 14,6 Stock Performance 2014 YTD 2014 YTD as of 20 Nov Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Note: Rebased at 100 basis Source: Bloomberg Tubos Reunidos Ibex Medium Cap Index 26,0% (5,3%) 31

32 Consolidated Group Financials Consolidated Revenue Thousands of Euros Consolidated EBITDA and EBITDA Margin Thousands of Euros; % of revenue ,3% 11,1% 11,6% 12,8% 11,0% 10,6% ,0% 30,0% 25,0% 20,0% 15,0% 10,0% ,0% -- Q Q Q Q Q Q Q Q Q Q Q Q Q Q EBITDA Margin 0,0% 32

33 Consolidated Group Financials Consolidated Revenue Millions of Euros Consolidated EBITDA and EBITDA Margin Millions of Euros; % of revenue ,3% 18,9% 21,0% ,5% ,6% ,7% 12,1% 8,3% 11 5,8% 6,4% 3,0% ,0% 30,0% 20,0% 10,0% 0,0% EBITDA Margin 33

34 Special Products & Integral Services Worldwide Tubos Reunidos 34