Italy's Tenaris sees H2 profit margin drop on N. America slowdown, stoppages
Adds EBITDA margin forecast, share move, quotes
April 26 (Reuters) -Italian steel pipe maker Tenaris TENR.MI expects a drop in core profit margins to 20%-25% in the second half of the year, its chief executive Paolo Rocca told analysts on Friday, sending its shares tumbling more than 6%.
The Luxembourg-based group had forecast on Thursday that its sales and margins would decrease in the second quarter due to sluggish drilling in North America and in the third quarter due to stoppages at many of its mills.
The margin on core earnings (EBITDA) for the full year would be slightly higher than 25%, Rocca said.
Tenaris reported a better-than-expected 17% yearly fall in first-quarter sales to $3.44 billion, with earnings before interest, tax, depreciation and amortisation (EBITDA) down 33% to $987 million and an EBITDA margin of 28.7%.
The yearly drop was mainly due to lower prices of oil country tubular goods in the Americas, with sales and EBITDA marginally higher than in the fourth quarter, Tenaris said in a statement.
"Although oil prices have risen, there has been no pick up in drilling activity in the USA so far this year and in North America it remains below last year's level," the statement said.
While lower than a year earlier, sales and EBITDA were stronger than analysts' expectations.
Post results, Jefferies hailed "beats across all reporting lines", while J.P. Morgan mentioned the mitigating effect of international and offshore strength on the group's margins.
Tenaris president for the U.S. Luca Zanotti said the group expected a pickup of oil drilling toward the end of the year, while CEO Rocca envisioned an expansion in the Middle East and Latin America starting from 2025.
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
