general meeting of shareholders - tubos reunidos1t 2016 1t 2017 1t 2016 1t 2017 11.0 (2.3) 16...
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GeneralMeetingofShareholders
June2017
1
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1. 125YearsofHistory2. Resultsfor2016andFirstQuarter20173. StockMarketEvolution
4. Creating3600Value5. ProposedAgreements
Contents
2
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GeneralMeetingofShareholdersJune2017
1.125YearsofHistory
3
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125thANNIVERSARYOFTUBOSREUNIDOS:§ We’recelebratingthe125thanniversaryofthefoundingin1892ofTubosForjados,
theforerunnerofthepresentTubosReunidos.§ TubosReunidoshassurvivedallkindsofpolitical,social,wartimeandeconomic
situations§ Todaythecoreoffoundingshareholderscontinuestobemaintained.KeystoourHistory:§ Anearlyandpioneeringcommitmenttotheinternationalizationofthecompanyto
turnitintoaglobalbusiness.§ Undertakingtocontinuouslyadaptitsproductiveresourcestothelatest
manufacturingtechnologies.§ Realizationofcorporateoperationsuntilarrivingatthecurrentstructure.§ Astableboardandmanagementteam,withastrongcommitmenttothecompany.§ ValuesandvirtuesrecognizedandshapedbyallemployeesoftheCompany.
4
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KEYSTOTHE2016FINANCIALYEAR:§ Economicandtechnological“war”betweenoilproducingcountriesandnewnon-
conventionaltechnologies.§ Theconsequencehasbeenacollapseinthepriceofoil.Cancellationinthechainof
investmentprojects.§ 23%reductioninoilplatformsoperatingworldwideand46%reductionintheUS,a
marketwhichfellby72%comparedto2014.§ Worldwideproductionovercapacity,especiallyinChina.Additionally:§ Needtofinalizetheplantomodernizeourfacilities.§ Developmentofaportfolioofmorespecializedproducts.§ EstablishmentofanewindustrialconfigurationinSpainandNorthAmerica.Consequences:§ ThenetturnoveroftheGroupfellby30%to195millioneuros.§ NegativeEBITDAof15.5millioneuros.§ Netlossof50.2millioneuros.§ Resultsequivalenttothoseofourmainglobalcompetitors,althoughthatisoflittle
consolationtous.
5
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RESPONSEOFTUBOSREUNIDOS:TheBoardofDirectorsintervenedtodirectthecourseoftheprojectaroundthefollowingactions:§ ConcentrationoftheGrouponitsmainactivityofseamlesspiping:saleofthe
automotivebusinessandstartoftheprocessofdivestmentofthedistributionbusiness.
§ PurchaseofindustrialassetsofROTARYDRILLINGTOOLS(RDT)intheUSA.§ Financialdebtreorganizationplan:syndicatedloansignedin2017with10banks.§ EfficiencyandTransformationPlan(PET).§ RenewaloftheGroup’sproductcatalogue:ownproductsandthosepurchased
throughRDT.§ ProgressinTRPT:standardizationandappropriatetrainingplans.
6
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ANEWTUBOSREUNIDOSISNEEDEDIN2017:§ Thenewscenariosmeanprofoundstructuralchangesinthesector,which
representnewchallenges.§ TheBoard’sproposalistomakealeaptowardsanewbusinessmodelthatwill
ensuregreateradaptabilityinthefaceoftheincreasingglobalcomplexity.§ NeedforanewleadershipheadedbyGuillermoUlaciaArnaizasExecutiveVice
President.Newmanagementmodelfocusedon:A. ThecustomerB. CompetitivecostC. FlexibilityD. Profitability:7-10%oncapitalemployed
7
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GeneralMeetingofShareholdersJune2017
2.2016ResultsandFirstQuarter2017
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2016:Yearofaseverecrisiswithoutprecedentinthesector
§ Ouractivityduring2016hastakenplaceinthecontextofaseverecrisis.
§ Thecollapseofthepriceofoil resultedinsharpdeclinesininvestmentintheenergysector.
§ Inparticular,theAmericanmarkethassuffered thegreatestdropindemandfortubing.
§ Asaresult,during2016wehavehadsignificantdeclinesinvolumesandprices.
§ Inthiscontext,duringtheyearwehave:
§ Maintainedourstrategy ofdevelopmentandpositioninginhighaddedvalueproducts.
§ Carriedoutcorporateactionsofgrowth,serviceimprovementanddiversificationintonewmarkets,aswellasconcentrationonourcorebusiness.
§ ContinuedwiththeexecutionofourEfficiencyandTransformationPlan.
9
2016Highlights
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2012 2013 2014 2015 2016
International USA Canada
2030405060708090
100110120
11.217.717.516.5
USA-72%
8.8
Dec-13 Dec-15 Dec-16Source:Bloomberg Source:Tenaris
25%fallininvestmentforthesecondconsecutiveyear
Fallof46%inactiveplatformsintheUSAcomparedto2015andfallof72%comparedto2014
Dec-14
10
MarketContext
FallintheglobalconsumptionofOCTG,withgreaterintensityintheUSAandaccentuatedbythefallofinventories
BrentpriceevolutionUSD/BBL
CurrentglobalconsumptionofOCTGMill.TMs
9.6 10.6 9.7 7.4 6.6
5.7 5.7 6.5
31.8
2.2 1.2 1.5
0.8
0.4
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295337
278
195
2013 2014 2015 2016(ExcludesAutomotiveandAlmesathroughouttheperiod)
14%2%
20%
13%
51%
20%
15%
32%
33%
EUROPEANUNION
NORTHAMERICA(USAandCANADA)FAREASTMIDDLEEASTANDAFRICA
OIL&GAS
ENERGYGENERATION
CHEMICALANDPETROCHEMICALINDUSTRIALAPPLICATIONS
OTHERS
11
SalesEvolution
Fallinsalesof30%withfallsinallsectorsandmajorgeographies
SalesevolutionofTUBOSREUNIDOSGROUP,(Inmillioneuros)
Compositionbysector andgeography,2016
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38 37
7
(15)
2013 2014 2015 2016
7 7
(16)
(50)
2013 2014 2015 2016
12
Results
Thedeclineinmarginsandtheeffectofunderactivityhavehadanegativeimpactontheincomestatement
EvolutionofEBITDAofTUBOSREUNIDOSGROUP,(Inmillioneuros)
EvolutionoftheNetResultofTUBOSREUNIDOSGROUP,(Inmillioneuros)
(ExcludesAutomotiveandAlmesathroughouttheperiod)
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45
2833
25
20
2013 2014 2015 2016
182172
167
195
2013 2014 2015 2016
13
Evolutionofthedebt
Increaseofdebtheavilyinfluencedbyinvestments
Grossinvestmentsintangibleandintangiblefixedassets(Inmillionsofeuros)
Evolutionofthenetfinancialdebt,(Inmillionsofeuros)
Saleofassetsfor16millioneurosin2016
Liquidityasof31December2016:63millioneuros
AcquisitionofRDT
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14
Evolutionof1Q2017Sales
Thebestquarterforsalesinthelast8quarterswith53%growthcomparedto1Q2016
Sales(inmillionsofeuros)
1T2014
2T2014
3T2014
4T2014
1T2015
2T2015
3T2015
4T2015
1T2016
2T2016
3T2016
4T2016
1T2017
83.2 91.2 75.2 87.8 82.3 79.6 58.7 57.5 51.1 52.4 44.4 47.0 80.0
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Salesoftubes,(thousandeuros)
1Q2017
1Q2016
%Inter-anual
variation
NationalEuropeNorthAmericaFarEastMENAOthers
11,56533,75828,5066,0806,2181,127
10,29127,8987,1574,8878,924647
12%21%
298%24%
(30)%74%
RefiningandPetrochemicalsEnergygenerationOil&gasConstruction,mechanical,automotive
7,51618,35735,90213,914
9,01918,64812,7319,115
(17)%(2)%182%53%
TotalConsolidatedGROUP 75,689 49,513 53%
Salesoftubing,tonnes 57,918 33,755 72%
15%
30%
38%
9%8%
1T2017
National Europe
NorthAmerica FarEast
MENA
10%
48%
24%
18%
1T2017
Construction&Industry
Energygeneration
Oil&Gas
RefiningandPetrochemicals
15
CompositionbySectorandGeography
NorthAmerica(40%ofsales)quadrupledsalescomparedtothepreviousquarterandtheOil&Gassector(50%ofsales)almosttripledsales.
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1T2016 1T20171T2016 1T2017
11.0
(2.3)
16
Results1Q2017
RecoveryofthepositiveEBITDApath
EBITDAoftheTUBOSREUNIDOSGROUP,(Inmillionsofeuros)
NetProfitofTUBOSREUNIDOSGROUP,(Inmillioneuros)
(11.1)
0.1
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4148
36
208 2
1111
5
15
2017 2018 2019 2020 2021 2022
BOND EIB BANKS
3 11 1126 33
96
58 8
8
15
2017 2018 2019 2020 2021 2022
BOND EIB BANKS
17
SignatureofSyndicatedFinancing
NewsyndicatedfinancingandtheagreementwiththeEIBsignificantlyreducerepaymentobligationsoverthecomingyears
DebtRepaymentBeforeSyndicatedFinancing,(Inmillionsofeuros)
DebtRepaymentafterSyndicatedFinancing,(Inmillionsofeuros)
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GeneralMeetingofShareholdersJune2017
3.EvolutionStockMarket
18
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Dec.2015
Dec.2016 2012 2013 2014 2015 2016
+47.9%
In2016,thesharepriceofTUBOSREUNIDOSwasrevaluedby47.9% fromtheclosingpriceofthe2015financialyearfrom0.585euros/shareto0.865euros/sharereachedby30December2016.
Sharetradinghasreducedby41.7%,reaching64millionshareswithavalueof46.3millioneurosaffectedbythedifficultsectoralenvironmentofthecompanyduringthefinancialyear.
19
StockMarketEvolution
EvolutionofthesharepriceofTUBOSREUNIDOS,(Eur/share)
VolumeofShareTrading,(InMillionsofshares)
22.036.0
82.0
108.0
64.0
0.8
0.6
0.4
0.2
1.0
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GeneralMeetingofShareholdersJune2017
4.Creating3600Value
20
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21
Index
▪ Introduction
▪ MarketoutlookandimplicationsforTR
▪ Assessmentofattainablepotential
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* Base year: tonnes of 2014 (229 thousand) with prices and mix of 2017. Increase in EBITDA at constant scope without the distribution business
“Toknowistoforesee,toforeseeistobeable”AugusteComte
§ TubosReunidos(TR)isaniconic companywith125yearsofhistory,whichhasevolvedandadaptedtothechangesinthemarket,tobecomeabenchmarkforindustryintheBasqueCountry.
§ However,in2016 weobtainedtheworstresult inourhistorywithrevenuesbelow€200million(50%capacityutilization)andanegativeEBITDAof€15million.
§ Toensurealong-termfuture,weneed toachieveasustainableresult (EBITDA)andoptimizetheinvestedcapital.
§ WehavesetanobjectivetoimprovetheEBITDAofabaseyear*by€45million,withinaperiodof24months.
§ Thisgoalwillnotbeeasytoachieveandwewillhavetoworkinallareasofthecompany:improvebusinessandmarketing,increaseoperationsefficiency,improveproductivityandgainflexibility,reducetheneedforcapitalinvestment.Weneeda360O globaltransformationplan
22
ExecutiveSummary
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410 385295 337
278195
2016201420132012 20152011
14%
57 5938 37
7
-15
24 11 7 7
-16
-50
EBITDA
NetResult
20142013 2015 201620122011
EBITDAandNetResultEURMillions
15% 13% 11% 3% (8)%Excludes automotive and distribution businesses
SalesEURMillions
Significantdropinsales,especiallyduringthelasttwoyears...
...andagradualfallinEBITDAsince2012,reachinganegativevaluein2016
EBITDA/Sales
23
In2016wesawtheworstresultsinour125yearhistory...
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Highcostsandinflexiblecoststructure
Highvolatilityduetostrongconcentrationinfewmarkets
Pooraccesstoendcustomersworkingmainlywithdistributors
Verycompletebutcomplexproductportfolio
Profitabilitybelowthatofcompetitors
ProductsforOil&Gasrepresent~50%ofturnoverin1Q2017
In2016only~10%ofsalesdirectlytoendcustomers
+2,000references
24
Lookingtothefuture,wefacechallengesarisingfromourpositioninthemarket...
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Dec16
Feb17
Apr17
Jun17
Aug17
Dec19
Assessment ofsituation
Marketoutlook1
Assessmentofmaximumpotential
2
Planning
Detaileddefinitionofinitiativesinvolvingallareasandfunctionsoftheorganization
3
IncorporationofExecutiveVicePresident
BoostEBITDA€45Millionoverabaseyear*,in24months
DebtRefinancing
Implementation
Implementationoftheinitiativesdefined
4
* Base year: tonnes of 2014 (229 thousand) with prices and mix of 2017. Increase in EBITDA at constant scope without the distribution business25
Wearelaunchinga360o ValueCreationPlan...
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26
Index
▪ Introduction
▪ MarketoutlookandimplicationsforTR
▪ Assessmentofattainablepotential
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Surpluscapacity
§ Overcapacity forseamlesspipingduemainlytotheabundantsupplyfromAsianproducers andthegrowingproduction fromemergingcountries1
Sophistication
§ Growingdemandformoresophisticatedproducts requiredbyoilandgasexploration(eg,horizontaldrilling)
§ Newdevelopmentsinthefieldofoilandgasrequiringtubescapableofwithstandinghigherpressuresinmoreadverseenvironmentsandhigherflows (especiallytubesusedintheoilindustry[OCTG])
2
Pricepressure
§ Fall inprices oftubesandreductionofthedifferential betweenbasicseamlesspipingandthoseofsuperiorquality3
ServicesandSolutions
§ Stronggrowthindemandforhighaddedvalueservices and“Premium”solutions4
Detailedbelow
27
Overall,weobservefourtrendsinthesteeltubemarket
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SOURCE:JamesF.King,Jan.2017
32
45
38
25
2
4
2
1
4
16
2
42
1
0
3
24
10
2 303
3
3
6
2020
14
49
27
2
2000
1
3
21
4
1118
001
2
2
4
1
1
05
3 10
434
+3% peryear
+6% peryear
0
12% 0%China
0% 2%WesternEurope
2% 3%EasternEurope1
0% 4%NorthAmerica
-1% 7%LatinAmerica
7% 3%MiddleEast
5% 5%OtherAsianRegions
3% 6%Oceania
6%4%Africa
2000-2016 2016-2020
TCMA, percentage
1 IncludingCIScountries
Aslowdowninoilandgasactivitybecauseofexcesssupplyinthemarketandthelowoilpricesin2015 haveaffecteddemandin2016
Demandforseamlesssteelpipes(Inmillionsdetonnes)
28
Demandforseamlesspipingisforecasttogrowat3%perannum(2016-2020)
1
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5
3
2016
5
3
20205
2020
16
6
2016
15
CapacityDemand
NorthAmerica
Overcapacityexistsinallregions- totalovercapacityof39%in2016 and30%in2020
EasternEurope1
OtherAsianRegions
China
EuropeEurope
LatinAmerica Africa
Global
2016
3 4
7
2020
7
2020
31
25
2016
30
24
70
49
2020
42
68
2016
2020
2
4
1
4
2016
12
2020
31
2016
0
2016
01
2020
1
2016
64
6
2020
3
Strongdependenceonimports
MiddleEast
Demandandcapacityforseamlesspiping(Inmilliontonnes)
SOURCE:JamesF.King,Jan.2017
1 IncludingCIScountries29
Globally,overcapacityisforecastinthesector,withamoremarkeddemand-capacityimbalanceattheregionallevel
1
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1,700
600
1,300
700
500
1,900
1,500
400
1.000
1,800
1,600
1,100
900
2,000
1,400
1,200
800EasternEurope
01/1601/14
USAJapan
Export.China
WesternEurope
MiddleEast
01/1501/1301/1201/11
-56%
-29%
-50%
-45%
-34%
-48%
Priceofseamlesspiping(2011-2016)1ThousandUSD/t
SOURCE:JFK,MetalBulletin
1OCTGcoatingJ/K55(BTCconnection)30
Seamlesspipingpriceshavefallen~30-50%since2011,asChineseproducersofferpriceswellbelowWesternprices
3
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600
2,000
400201520142012201120102009
1,200
20162013
1,600
800
2017
2,600
2,400
2,200
1,400
2,800
1,800
1,000
2006 2007 2008
Premiumgrade(OCTGcasingN80)
Commoditygrade(API5LB)
Priceshavebeenrecoveringsince2016duetoimproveddemandfromtheoilandgasindustryandhigherpricesforsteelrawmaterials,althoughtheyarestillbelowthefive-yearaveragepricelevel(USD1517)
Thepricedifferencebetweenbasicandhigh-qualitytubeshasbeensignificantlyreducedduetodecliningdemandfromtheoilandgassector,whichisthemainconsumerofhigh-qualitytubes
SOURCE:JFK,MetalBulletin
1Pricesoffinishedtubesforspecificquality
PricesforseamlesspipinginEurope1USD/ton(US)
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Thepricedifferentialbetweenbasictubesandpremiumqualitytubeshasreducedsignificantlyinrecentyears
3
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§ TRisacompanywithalegacyofhighquality productsandacompleteproductoffering (includingconnections),butalsowithacomparativelyhighproductioncost,andarelativelyhighlogisticalcostinmanyregions.
§ Withourstrategyofspecializationandservicewewereabletocompensateforthecoststructureofourindustrialandoperationalbases,however,theoutlookforthecomingyears anticipatesamorecomplicated environment:o Forecastfortheaveragegrowthoftheglobaldemandforseamlesspiping is3%peryear to2020.o Maintenance ofoversupply.o Prices ofsteeltubesarebelowboomlevels.o Increasing demandforhighqualityproducts derivedfromthedevelopmentofoilandshalegasis
notreflectedinapriceimprovement- competitors andsomenewoperators (mainlyAsian)haveimprovedqualityandofferlowerprices.
§ Inthisnewmarketenvironment,TRwillhavetoworkonthreekeyfronts:o Costs:TRmustbecompetitiveintermsofcosts,whichmeanstakingmeasuresatallofitscost
sources.o Commercial:sinceTRislikelytohavetoaccepttheprices andisarelativelysmalloperator,itmust
positionitselfinthemarketanddefineitsvalueproposition (ie,whereandhowtocompete,targetinterestingregions/segmentswithoutalteringmarketbalancesdrivenbylargeoperators).
o Service:TRmustensurethatitservesitsprioritycustomersegments optimally (rightservicefortherightprice),distinguishingitselffromcompetitiveoffersasappropriate.
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MainimplicationsofthemarketperspectiveforTubosReunidos
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Index
▪ Introduction
▪ MarketoutlookandimplicationsforTR
▪ Assessmentofattainablepotential
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Ensurealong-termfutureforTubosReunidosasamanufacturerofhighqualityproductswithalongtraditionbasedintheBasqueCountry
6 Reachlevelsofprofitability(EBITDA)of~17-20%
7 Ensureasolventposition withthepotentialtoundertakenewinvestments
8 AttainaROCE of~7-10% afterthetransformation,comparedto~2%in2014
5 Developanexcellence-orientedbusinessculture
3 Optimize investmentinworkingcapitalandassets
4 Providegreaterflexibility tothecoststructure
1 Reducedirectoperatingcosts pertonneby~16-18%
2 Promotemargin-orientedbusinessmanagement
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«Creating360OValue»isanacceleratedwaytoachieveouraspirations
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Productionprocesses
Manufacturingefficiency
INITIATIVES
§ Increase theproductivity oftheworkforce ~20p.p.
§ Optimizemaintenance(increaseofpreventative) ~25p.p.
§ Increase theOverallEquipmentEfficiency(OEE) ~20p.p.
OBJECTIVE
§ Reduce consumptionofenergy ~5%
§ Reduce thenumberofotherconsumables ~9%
§ Optimize themixofrawmaterials ~3%
§ Reduce wastage ~2%
Generalexpenses
Purchases
§ Optimize thecostofcontractors ~5%
§ Reducetheunitcost of energy ~4%
§ Reducetheunitcostofconsumablesandsupplies ~5%
§ ReduceOverheads ~30%
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Reducedirectoperatingcostspertonneby16-18%(1/2)1
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Doesnotincludelogisticscosts
SOURCE:JFK
Carbonseamlesspiping,directoperatingcost¹,1Q2017,USD/ton(US)ofseamlesstube
1Operatingcostforunfinishedseamlesscarbonsteelpipewithadiameterof168mmandawallthicknessof7.1mm,notincludingsales,general,administrativeorfinancialexpenses,assumingastandardactivitylevelof90%P-110,qualitygradeAPIforgeneraluseindeepwells,pipelines,drillingandextractionofoilandgas,andfinancialcosts,assumingastandardactivitylevelof90%Assumingthesamesupply/demandstructure
2CostpertonnebasedonweightedaveragecostpertonneoftheAmurrioandGalindoplants
Cumulativecapacity,milliontonnes
OperatingcostOperatingcost/tonne
1stquartile 2ndquartile 3rdquartile
~16-18%
Others
TubosReunidos
TubosReunidos2
36
Reducedirectoperatingcostspertonneby16-18%(2/2)
1
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OBJECTIVE
Margin-orientedbusinessmanagement
INITIATIVES
▪ EnhanceValueEngineering
▪ Redefinepricingpolicy
▪ Generatecross-sellingopportunities
▪ Evaluatethedevelopmentofonlinesaleschannels
▪ Streamline theproductportfolio
▪ Optimize theproductportfolio ▪ ~2%Changemix▪ ~3%Growth
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Promotemargin-orientedcommercialmanagementbyleveragingtheproductioncapacityofhigh-endproducts(1/3)
2
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INVESTMENTS PRODUCTS DIFFERENTIATION
OCTG:Oil&Gas
39%ofTR’sproductivecapacityishigh-endOCTG
▪ Casing,Tubing:Developmentofrangeofproprietaryproductsandhighalloysteelswithproprietarygradesofsteel
▪ TailorMadeSteelGrades– Improvedpropertiesoverstandardgrades– Forextremeenvironments:highcorrosion,acid,high
collapse,highpressureandtemperature
▪ UpsetCasingwithSemiPremiumBTXconnection:– Lowerconstructiontime(30%)and50%riskreduction
▪ Drillpipe ▪ WearKnotDrillPipe- Patent:– Designedforshaleformationsandabrasive
environments,3.5xlifeinservicecomparedwithstandarddrillpipe,designforlesswear
▪ PremiumJFEthreadedcapacityinnewplantwithMISI,TubosReunidosPremiumThreads:– Supplierinextremeenvironmentsofhighcorrosion
withTailorMadeSteelGrades– Metaltometalseal
▪ High-endfinishingcapabilities,inUSA,andPremiumthreadinTRPT-JFEthreads
▪ Installationofdegassinginsteelworks
▪ InductionHeatTreatmentLine
▪ NewTRPTpremiumthreadplant
▪ AcquisitionofRotaryDrillingToolsinUnitedStates
▪ Productdevelopment
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Promotemargin-orientedcommercialmanagementbyleveragingtheproductioncapacityofhigh-endproducts(2/3)
2
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▪ Installationofdegassinginsteelworks
▪ Adaptationoflinesforspeciallengths
▪ Newpilgertrainforlargedimensions
▪ Newkinematicchaininthedrill
▪ Productdevelopment/processengineering
▪ Highalloysteelswithmorecomplexchemicalcompositions
▪ Proprietarysteel– Moreresistanttohighpressuresandtemperatures
▪ High-ODandthicktubinginhighalloyandstainlesssteels
▪ Outerdiameter(OD)upto26”– Allowsgreaterefficiencyandperformanceinrefining,
petrochemicalandultra-supercriticalandnuclearpowergenerationfacilities
– Resistancetohightemperaturesandpressures
▪ Lengthsupto28metresandOD<16mm:Forexchangersinsolarthermalplantsandsteamgeneratingequipment
▪ Tubesupto26metresforHRSG’sinCombinedCyclePlants
▪ Colddrawntubeswithspeciallengths
12%ofTRcapacityishigh-endpipelineforpowergeneration,refiningandpetrochemicals
PRODUCTS
Energygeneration,refining,petrochemicals
DIFFERENTIATIONINVESTMENTS
39
Promotemargin-orientedcommercialmanagementbyleveragingtheproductioncapacityofhigh-endproducts(3/3)
2
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Average:16.5%
TRobtainedanEBITDAof8.8%between2010-2015 Reach~17-20%
24.5
13.8
8.8
5
12.2
64
14.817.3
321
~17%-20%
“Creating3600Value”
GRUPOTUBOS REUNIDOS
GRUPOTUBOS REUNIDOS
40
Reachlevelsofprofitability(EBITDA)of~17-20%6
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ROCE, %
-8
-3
34
8
2
201320122011
+5-8p.p.
2015 360º2014
~7-10%
2016
WACC=7.0%
MethodofcalculationofROCE▪ ROCE:NOPLAT/InvestedCapital▪ WACC:Strategicplan▪ NOPLAT:EBITx(1-Taxrate);Rate:28%▪ Cost(exD&A):Sales- EBIT+D&A
▪ Investedcapital:FixedAssets+WorkingCapital▪ FixedAssets:Non-CurrentAssets,excludingFinancialAssetsandDeferredTaxAssets▪ WorkingCapital:Inventory+AccountsReceivable- AccountsPayabletoSuppliers.ExcludesConfirmingandFactoring
41
AttainaROCEof~7-10%afterthetransformationcomparedto~2%in2014
8
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Preservingsustainableresults
StrategicPlanningandBusinessDevelopment,S&OP
DevelopmentofHumanResources
Economic-financial
TransformationTeam
CreateandGetResults
SupporttotheOrganizationatthelowestcost
GoalSettingandLeadershipoftheTransformation
CustomerValueCreationPlatform
Downstream UpstreamCUSTOMER
TUBOSREUNIDOS:UNIQUEBRAND
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Wehavedefinedanewmanagementmodel...
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Improvingcostcompetitiveness
Differentiationinhigheraddedvalueproducts
Increaseofservices
Digitalizethecompany
Manageculturalchange
Achieveefficienciesbymanagingsocialchallenges
UniqueBrandTubosReunidos
“Letusseekmoretobeparentsofourfuturethanchildrenofourpast”MigueldeUnamuno
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Seizingtheopportunityrequiresovercomingsomesignificantchallenges
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GeneralMeetingofShareholdersJune2017
5.Proposalofagreements
44
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First§ Toapprovetheannualaccounts(individualandconsolidated)for
the2016financialyear,andthesocialmanagementoftheboardofdirectors.
Second§ Applythelossesforthe2016financialyear,amountingto
332,652.36Euros,to"Negativeresultsfrompreviousyears".Third§ AppointmentandRenewalofDirectors
3.1Mr. GuillermoUlaciaArnaiz(Executive)(Ratification,co-optationandappointment).
3.2Mr. PedroAbásoloAlbóniga(OtherExternal)3.3Mr. AlfonsoBarandiaránOlleros(Proprietary)3.4Mr. FranciscoEsteveRomero(Proprietary)
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Proposedagreements
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3.5Mr. JorgeGabiolaMendieta(Independent)3.6Mr. EmilioYbarraAznar(Proprietary)3.7Ms. LeticiaZorrilladeLequerica(Proprietary)3.8Mr. JuanMaríaRománGoncalves(Independent)
(Newappointment)3.9MaintainvacancyofMs. MaríaLuisaJordáCastro.
§ Thosepresentacceptthepost;withoutconflictofinterest.§ Compositionoftheboard:12memberswithintheminimum(5)
andmaximum(14)accordingtostatute.
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Proposedagreements
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Fourth§ Re-electPriceWaterhouseCoopersasauditorforoneyear.Fifth§ Authorizetheacquisitionofownshares.SixthMODIFICATIONOFART.26ο SOCIALSTATUTES(CompensationoftheBoard).§ Includethepossibilityofremunerationthroughthedeliveryof
shares,options,referencetotheirprerequisitevalueàintheseventhagreement.
§ Civilliabilityinsurance(technicalimprovement).
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Proposedagreements
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SeventhRemunerationplanlinkedtoshares:Executivevice-president.§ NumberofPlanshares:2,000,000.§ Referenceprice:averageprice30sessionsfrom07-02-2017=0.997
Eur/share– Term:50%:March2019- bydifference(topayinMarch2021).– 50%:March2021- bydifference,sharesorboth.
§ Requirements:linkedtoTubosReunidosuntilMarch2021.Eighth§ Powersandauthorityinrelationtothepreviousagreements.Ninth§ Toapprovethe“AnnualReportonCompensationoftheBoard”ona
“consultative”basis.
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Proposedagreements
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GeneralMeetingofShareholders
June2017
49