Russia's TMK Sees Flat Core Earnings In 2016
MOSCOW, May 19 (Reuters) - TMK, Russia's largest maker of steel pipes for the oil and gas industry, expects its 2016 core earnings to be flat compared with last year, amid a stable Russian market and a recovery at its U.S business from a weak first quarter
The company reported on Thursday a 35-percent fall year-on-year in first-quarter adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) to $120 million, due to the weaker results at its U.S. division.
"TMK believes its full-year 2016 EBITDA will be above the first quarter 2016 annualised level and remain roughly flat compared to FY 2015," it said in a statement. Its adjusted EBITDA was at $636 million in 2015.
The company, controlled by businessman Dmitry Pumpyansky, said first-quarter net profit fell 53 percent from the same period a year ago to $14 million. Revenue was down 33 percent to $761 million.
Revenue in the U.S. division tumbled 80 percent to $65 million due to falling drilling activity and exchange rate losses.
TMK said the U.S. results should now gradually improve, while it forecast industrial pipe demand in the European market would be stable in the second quarter.
The company's total debt was flat at $2.8 billion at the end of March compared with the end of 2015.
Results from ongoing improvement initiatives at the U.S. division should start to benefit TMK's financials from the second quarter, Sberbank CIB analysts said in a note this week.
As both changes in selling prices and raw materials costs translate into TMK's financial results with some lag, an improvement in the company's performance is expected in the second half of 2016, Sberbank CIB added.
Shares in TMK were down 0.6 percent in Moscow, outperforming the broader MICEX index, which was down 1.0 percent.
(Reporting by Polina Devitt; Editing by Alexander Winning and Mark Potter)
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