form6-k.htm
FORM 6 - K


SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


Report of Foreign Private Issuer
Pursuant to Rule 13a - 16 or 15d - 16 of
the Securities Exchange Act of 1934


As of November 7, 2008


TENARIS, S.A.
(Translation of Registrant's name into English)


TENARIS, S.A.
46a, Avenue John F. Kennedy
L-1855 Luxembourg
(Address of principal executive offices)
 
 
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or 40-F.
 
Form 20-F  þ Form 40-F  o
 
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12G3-2(b) under the Securities Exchange Act of 1934.
 
Yes  o No  þ
 
 
If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-.
 
 
 
 

The attached material is being furnished to the Securities and Exchange Commission pursuant to Rule 13a-16 and Form 6-K under the Securities Exchange Act of 1934, as amended.  This report contains Tenaris's press release announcing its 2008 Third Quarter Results

SIGNATURE


Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


Date: November 7, 2008

 
Tenaris, S.A.


By: /s/ Cecilia Bilesio
Cecilia Bilesio
Corporate Secretary

 
 
 

Giovanni Sardagna
Tenaris
1-888 300 5432
www.tenaris.com


Tenaris Announces 2008 Third Quarter Results

The financial and operational information contained in this press release is based on unaudited consolidated condensed interim financial statements prepared in accordance with International Financial Reporting Standards (IFRS) and presented in U.S. dollars.

Luxembourg, November 6, 2008 - Tenaris S.A. (NYSE, Buenos Aires and Mexico: TS and MTA Italy: TEN) (“Tenaris”) today announced its results for the quarter and nine months ended September 30, 2008 with comparison to its results for the quarter and nine months ended September 30, 2007.

Summary of 2008 Third Quarter Results

(Comparison with second quarter of 2008 and third quarter of 2007)
     
Q3 2008
    
Q2 2008
    
Q3 2007
  
Net sales (US$ million)
     3,118.5       3,148.4       (1 %)     2,433.8       28 %
Operating income (US$ million)
     933.9       823.7       13 %     671.7       39 %
Net income (US$ million)
     631.2       1,030.0       (39 %)     436.4       45 %
Shareholders’ net income (US$ million)
     570.6       987.5       (42 %)     401.0       42 %
Earnings per ADS (US$)
     0.97       1.67       (42 %)     0.68       42 %
Earnings per share (US$)
     0.48       0.84       (42 %)     0.34       42 %
EBITDA (US$ million)
     1,068.8       958.1       12 %     804.5       33 %
EBITDA margin (% of net sales)
     34 %     30 %             33 %        

Our operating results in the third quarter reached a quarterly high with operating income up 39% year on year and 13% sequentially. Sales rose strongly in North America where the market environment remained favourable and we continue to advance our alliance business model. Operating margins, after falling in the first half of the year as costs increased rapidly, recovered to the levels recorded in 2007. Our net financial debt (total financial debt less cash and other current investments) amounted to US$1,488 million, broadly in line with the previous quarter as our cash flow generation has been negatively affected by the timing of tax payments and by an increase in working capital mainly due to the increase in inventories.

Payment of Interim Dividend

Tenaris’s board of directors approved the payment of an interim dividend of US$0.13 per share (US$0.26 per ADS), or approximately US$153 million, on November 27, 2008 (or, only in those jurisdictions where such date is not a business day, on November 28, 2008), with an ex-dividend date of November 24.

 
 
 

Market Background and Outlook

Since September the world economy has undergone a major financial crisis whose consequences are spreading to the real economy throughout the world. Business conditions have changed so rapidly that at this point it is not clear how deep and long the impact on the real economy and consequently on the demand for energy will be. We are expecting a gradual reduction in exploration and production budgets and, consequently, drilling activity and demand for OCTG and other pipe products in 2009 and 2010, both in North America and globally. However, we believe that the energy sector will be impacted less than most other sectors of the economy mainly due to the constraints on the supply base which is characterized by ever increasing depletion rates, difficulties in replacing reserves and the long lead times to develop new reserves.

Global oil prices, after peaking in July in excess of US$140 per barrel, have retreated rapidly to the current level of US$60-70 per barrel in the expectation of reduced global demand in the current recessionary environment. North American gas prices also rose rapidly during the first half of this year and have fallen even more sharply since then to their current levels of US$6-7 per million BTU as increased investment in US gas production resulted in significantly higher production levels for the first time in many years.

During the third quarter, the international count of active drilling rigs, as published by Baker Hughes, continued to rise and averaged 1,096, an increase of 1% over the previous quarter and one of 7% compared to the same quarter of the previous year. The U.S. rig count increased 6% compared to the second quarter of 2008 and was up 11% compared to the third quarter of 2007. In Canada, activity has risen from last year’s low levels, with the rig count registering a 24% increase in the third quarter of 2008 compared to the same quarter of 2007, and is now up 9% for the first nine months of 2008 compared to the same period of 2007.

Demand for OCTG and other pipe products from the oil and gas industry has increased so far this year, particularly in North America, following last year’s distributor destocking activities and increased drilling activity. In the rest of the world, however, apparent demand for OCTG products has lagged operative consumption due to inventory adjustment activity in the larger Middle East markets. Demand for high-end pipe products has also increased in the year to date reflecting the increasing complexity of drilling activity in most regions worldwide.

Steelmaking raw material costs for our seamless pipe products and steel costs for our welded pipe products rose steeply in the first half of the year but, more recently, have fallen as the global financial crisis and the recessionary environment has had an almost immediate impact on global steelmaking activity. Pipe prices, which had been adjusting to the rising cost environment at different paces across markets, have been showing resilience as demand remains firm but are likely to come under pressure if demand weakens. We expect to maintain a good level of net sales and operating income for our tubular products going into 2009.

 
 
 

Analysis of 2008 Third Quarter Results

Sales volume (metric tons)
    
Q3 2008
      
Q3 2007
    
Increase/(Decrease)
  
Tubes – Seamless
     682,000       659,000       3 %
Tubes – Welded
     263,000       240,000       10 %
Tubes – Total
     945,000       899,000       5 %
Projects – Welded
     155,000       127,000       22 %
Total
     1,100,000       1,026,000       7 %

Tubes
    
Q3 2008
      
Q3 2007
    
Increase/(Decrease)
  
(Net sales - $ million)
                      
North America
     1,280.8       744.1       72 %
South America
     398.4       310.6       28 %
Europe
     408.1       360.3       13 %
Middle East & Africa
     344.2       471.7       (27 %)
Far East & Oceania
     169.9       175.9       (3 %)
Total net sales ($ million)
     2,601.4       2,062.6       26 %
Cost of sales (% of sales)
     53 %     54 %        
Operating income ($ million)
     859.5       615.5          
Operating income (% of sales)
     33 %     30 %        

Net sales of tubular products and services rose 26% to US$2,601.4 million in the third quarter of 2008, compared to US$2,062.6 million in the third quarter of 2007 due to higher volumes and higher average selling prices. Sales in North America were up by 72% as market conditions reflected a surge in oil and gas drilling activity and comparatively low levels of OCTG inventories. In South America sales increased 28% reflecting a good level of demand in the Andean countries. In the Middle East and Africa, our sales continue to be affected by inventory adjustments and lower demand for our API products in the region.

Projects
  
Q3 2008
    
Q3 2007
    
Increase/(Decrease)
  
Net sales ($ million)
     319.1       235.6       35 %
Cost of sales (% of sales)
     73 %     72 %        
Operating income ($ million)
     44.3       42.0       5 %
Operating income (% of sales)
     14 %     18 %        

Net sales of pipes for pipeline projects increased 35% to US$319.1 million in the third quarter of 2008, compared to US$235.6 million in the third quarter of 2007, reflecting a high level of shipments to gas and other pipeline projects in Brazil and Colombia.

Others
  
Q3 2008
    
Q3 2007
    
Increase/(Decrease)
  
Net sales ($ million)
     198.0       135.6       46 %
Cost of sales (% of sales)
     69 %     73 %        
Operating income ($ million)
     30.1       14.2       112 %
Operating income (% of sales)
     15 %     10 %        

 
 
 

Net sales of other products and services rose 46% to US$198.0 million in the third quarter of 2008, compared to US$135.6 million in the third quarter of 2007, mainly reflecting higher sales of excess raw materials, welded pipes for electric conduits in the USA and sucker rods.

Selling, general and administrative expenses, or SG&A, decreased as a percentage of net sales to 14.7% in the quarter ended September 30, 2008 compared to 15.9% in the corresponding quarter of 2007.

Other operating income totaled US$19.6 million mainly due to a reimbursement from insurance in Italy and earnings from the disposal of assets.

Net interest expenses decreased to US$23.3 million in the third quarter of 2008 compared to US$57.1 million in the same period of 2007 reflecting a lower net debt position and lower interest rates.

Other financial results recorded a loss of US$32.0 million during the third quarter of 2008, compared to a loss of US$12.9 million during the third quarter of 2007. These results largely reflect gains and losses on net foreign exchange transactions and the fair value of derivative instruments and are partially offset by changes to our net equity position. They arise due to the fact that most of our subsidiaries prepare their financial statements in currencies other than the US dollar in accordance with IFRS.

Equity in earnings of associated companies generated a gain of US$24.3 million in the third quarter of 2008, compared to a gain of US$18.3 million in the third quarter of 2007. These gains mainly derived from our equity investment in Ternium.

Income tax charges totalled US$271.7 million in the third quarter of 2008, equivalent to 31% of income before equity in earnings of associated companies and income tax, compared to US$195.9 million in the third quarter of 2007, equivalent to 33% of income before equity in earnings of associated companies and income tax.

Income attributable to minority interest rose to US$60.5 million in the third quarter of 2008, compared to US$35.4 million in the corresponding quarter of 2007. Although net results at our Confab subsidiary were higher during the period, they were partially offset by lower net results at our NKKTubes subsidiary.

Cash Flow and Liquidity

Net cash provided by operations during the third quarter of 2008 was US$242.8 million (US$1,085.7 million in the first nine months), compared to US$889.8 million in the third quarter of 2007 (US$1,789.1 million in the first nine months). Cash flow in the third quarter was affected by the tax payment on earnings from the sale of Hydril pressure control business and the postponement from the second to the third quarter of tax payments in Italy. Working capital increased by US$257.5 million during the third quarter driven primarily by an increase in inventories which rose US$342.2 million.

 
 
 

Capital expenditures amounted to US$131.8 million in the third quarter of 2008 ($337.1 million in the first nine months), compared to US$105.4 million in the third quarter of 2007 (US$334.6 million in the first nine months).

During the first nine months of 2008, total financial debt decreased by US$1,015.3 million to US$3,004.9 million at September 30, 2008 from US$4,020.2 million at December 31, 2007. Net financial debt during the first nine months of 2008 decreased by US$1,482.0 million to US$1,488.2 million at September 30, 2008 following the collection of Hydril’s pressure control business sale for US$1,114 million and the payment of the balance of the annual dividend, amounting to approximately US$295 million in June 2008. As of September 30, we had US$1.5 billion of liquidity in cash and cash equivalents.


Analysis of 2008 First Nine Months Results

Net income attributable to equity holders in the company during the first nine months of 2008 was US$2,031.1 million, or US$1.72 per share (US$3.44 per ADS), which compares with net income attributable to equity holders in the company during the first nine months of 2007 of US$1,377.2 million, or US$1.17 per share (US$2.33 per ADS). Net income for the first nine months of 2008 includes the result for the sale of Hydril’s pressure control business of US$394.3 million, or US$0.33 per share (US$0.67 per ADS). Operating income was US$2,468.6 million, or 28% of net sales, compared to US$2,200.5 million, or 30% of net sales. Operating income plus depreciation and amortization was US$2,872.3 million, or 32% of net sales, compared to US$2,558.4 million, or 35% of net sales.


Sales volume (metric tons)
  
9M 2008
    
9M 2007
    
Increase/(Decrease)
  
Tubes – Seamless
     2,157,000       2,156,000       0 %
Tubes – Welded
     815,000       706,000       15 %
Tubes – Total
     2,972,000       2,862,000       4 %
Projects – Welded
     457,000       317,000       44 %
Total
     3,429,000       3,179,000       8 %


Tubes
  
9M 2008
    
9M 2007
    
Increase/(Decrease)
  
(Net sales - $ million)
                  
North America
     3,099.9       2,165.7       43 %
South America
     970.8       897.7       8 %
Europe
     1,336.5       1,200.6       11 %
Middle East & Africa
     1,385.5       1,598.9       (13 %)
Far East & Oceania
     533.5       536.8       (1 %)
Total net sales ($ million)
     7,326.2       6,399.7       14 %
Cost of sales (% of sales)
     54 %     51 %        
Operating income ($ million)
     2,204.1       2,057.0       7 %
Operating income (% of sales)
     30 %     32 %        

 
 
 

Net sales of tubular products and services rose 14% to US$7,326.2 million in the first nine months of 2008, compared to US$6,399.7 million in the first nine months of 2007. The improvement was mainly driven by our North American operations as the market strongly recovered from last year level both in terms of volumes and prices. In Middle East and Africa the market continues to be affected by inventory reductions.

Projects
  
9M 2008
    
9M 2007
    
Increase/(Decrease)
  
Net sales ($ million)
     959.0       560.9       71 %
Cost of sales (% of sales)
     72 %     71 %        
Operating income ($ million)
     173.2       106.7       62 %
Operating income (% of sales)
     18 %     19 %        

Net sales of pipes for pipeline projects increased 71% to US$959.0 million in the first nine months of 2008, compared to US$560.9 million in the first nine months of 2007, reflecting higher deliveries in Brazil, Argentina and Colombia to gas and other pipeline projects.

Others
  
9M 2008
    
9M 2007
    
Increase/(Decrease)
  
Net sales ($ million)
     607.9       453.5       34 %
Cost of sales (% of sales)
     70 %     78 %        
Operating income ($ million)
     91.3       36.8       148 %
Operating income (% of sales)
     15 %     8 %        

Net sales of other products and services rose 34% to US$607.9 million in the first nine months of 2008, compared to US$453.5 million in the first nine months of 2007, reflecting higher sales of electric conduit pipes, sucker rods and industrial equipment.

Selling, general and administrative expenses, or SG&A, decreased as a percentage of net sales to 15.2% in the nine months ended September 30, 2008 compared to 15.7% in the corresponding nine months of 2007.

Net interest expenses decreased to US$96.8 million in the first nine months of 2008 compared to US$140.4 million in the same period of 2007 reflecting a lower net debt position and lower interest rates.

Other financial results recorded a loss of US$45.2 million during the first nine months of 2008, compared to a loss of US$10.7 million during the first nine months of 2007. These results largely reflect gains and losses on net foreign exchange transactions and the fair value of derivative instruments and are partially offset by changes to our net equity position. They arise due to the fact that most of our subsidiaries prepare their financial statements in currencies other than the US dollar in accordance with IFRS.

Equity in earnings of associated companies generated a gain of US$122.4 million in the first nine months of 2008, compared to a gain of US$73.6 million in the first nine months of 2007. These gains were derived mainly from our equity investment in Ternium.

 
 
 

Income tax charges totalled US$698.9 million in the first nine months of 2008, equivalent to 30% of income before equity in earnings of associated companies and income tax, compared to US$662.1 million in the first nine months of 2007, equivalent to 32% of income before equity in earnings of associated companies and income tax.

Income from discontinued operations amounted to US$411.1 million in the first nine months of 2008. This included the result of the sale of Hydril’s pressure control business, completed on April 1, 2008, amounting to US$394.3 million.

Income attributable to minority interest rose to US$130.0 million in the first nine months of 2008, compared to US$103.0 million in the corresponding nine months of 2007. Although net results at our Confab subsidiary were higher during the period, they were lower at our NKKTubes subsidiary.

Some of the statements contained in this press release are “forward-looking statements”. Forward-looking statements are based on management’s current views and assumptions and involve known and unknown risks that could cause actual results, performance or events to differ materially from those expressed or implied by those statements. These risks include but are not limited to risks arising from uncertainties as to future oil and gas prices and their impact on investment programs by oil and gas companies.

As required by the articles 36 and 39 of Consob Regolamento Mercati n. 16191 dated October 29, 2007, Tenaris states as follows: Tenaris has received from its subsidiaries copies of their by-laws, articles of incorporation or other organizational documents (as applicable in their respective jurisdictions of organization), together with information regarding the composition and powers of their governing bodies. In addition, Tenaris has taken appropriate action to ensure that its subsidiaries (i) provide to the external auditors any information as may be necessary to conduct the audit of Tenaris's annual and interim accounts and (ii) have adequate accounting systems enabling them regularly to provide both to Tenaris's management and its external auditors any economic, financial or other data as may be required for the preparation or audit, as the case may be, of Tenaris's consolidated accounts.
 
 
 
 

Consolidated Income Statement

(all amounts in thousands of U.S. dollars, unless otherwise stated)
  
Three-month period ended September 30,
    
Nine-month period ended September 30,
  
   
2008
    
2007
    
2008
    
2007
  
Continuing operations
  
(Unaudited)
    
(Unaudited)
  
Net sales
     3,118,512       2,433,773       8,893,084       7,414,040  
Cost of sales
     (1,745,064 )     (1,375,736 )     (5,088,664 )     (4,041,552 )
Gross profit
     1,373,448       1,058,037       3,804,420       3,372,488  
Selling, general and administrative expenses
     (459,165 )     (387,632 )     (1,350,835 )     (1,160,908 )
Other operating income (expense), net
     19,633       1,277       14,966       (11,075 )
Operating income
     933,916       671,682       2,468,551       2,200,505  
Interest income
     16,881       22,635       45,660       65,017  
Interest expense
     (40,184 )     (79,728 )     (142,454 )     (205,437 )
Other financial results
     (32,032 )     (12,851 )     (45,188 )     (10,725 )
Income before equity in earnings of associated companies and income tax
     878,581       601,738       2,326,569       2,049,360  
Equity in earnings of associated companies
     24,290       18,280       122,386       73,585  
Income before income tax
     902,871       620,018       2,448,955       2,122,945  
Income tax
     (271,714 )     (195,856 )     (698,910 )     (662,070 )
Income for continuing operations
     631,157       424,162       1,750,045       1,460,875  
                                 
Discontinued operations
                                
Income for discontinued operations
     -       12,202       411,110       19,369  
                                 
Income for the period
     631,157       436,364       2,161,155       1,480,244  
                                 
Attributable to:
                                
Equity holders of the Company
     570,635       400,952       2,031,149       1,377,206  
Minority interest
     60,522       35,412       130,006       103,038  
      631,157       436,364       2,161,155       1,480,244  

 
 
 

Consolidated Balance Sheet

(all amounts in thousands of U.S. dollars)
  
At September 30, 2008
    
At December 31, 2007
  
   
(Unaudited)
        
ASSETS
                        
Non-current assets
                        
Property, plant and equipment, net
     3,307,590             3,269,007        
Intangible assets, net
     4,347,873             4,542,352        
Investments in associated companies
     630,426             509,354        
Other investments
     38,099             35,503        
Deferred tax assets
     356,333             310,590        
Receivables
     50,857       8,731,178       63,738       8,730,544  
                                 
Current assets
                                
Inventories
     3,334,040               2,598,856          
Receivables and prepayments
     248,805               222,410          
Current tax assets
     143,251               242,757          
Trade receivables
     2,027,081               1,748,833          
Other investments
     26,997               87,530          
Cash and cash equivalents
     1,489,787       7,269,961       962,497       5,862,883  
Current and non current assets held for sale
             -               651,160  
              7,269,961               6,514,043  
Total assets
             16,001,139               15,244,587  
                                 
EQUITY
                                
Capital and reserves attributable to the Company’s equity holders
             8,686,199               7,006,277  
Minority interest
             572,234               523,573  
Total equity
             9,258,433               7,529,850  
                                 
LIABILITIES
                                
Non-current liabilities
                                
Borrowings
     1,600,884               2,869,466          
Deferred tax liabilities
     1,111,196               1,233,836          
Other tax liabilities
     7,772               -          
Other liabilities
     181,872               185,410          
Provisions
     100,292               97,912          
Trade payables
     1,155       3,003,171       47       4,386,671  
                                 
Current liabilities
                                
Borrowings
     1,404,051               1,150,779          
Current tax liabilities
     560,430               341,028          
Other liabilities
     296,819               252,204          
Provisions
     27,801               19,342          
Customer advances
     360,093               449,829          
Trade payables
     1,090,341       3,739,535       847,842       3,061,024  
Liabilities associated with current and non-current assets held for sale
             -               267,042  
              3,739,535               3,328,066  
Total liabilities
             6,742,706               7,714,737  
                                 
Total equity and liabilities
             16,001,139               15,244,587  
 
 
 
 

Consolidated Cash Flow Statement
   
Three-month period ended September 30,
    
Nine-month period ended September 30,
  
(all amounts in thousands of U.S. dollars)
  
2008
    
2007
    
2008
    
2007
  
   
(Unaudited)
    
(Unaudited)
  
                         
Cash flows from operating activities
                        
Income for the period
     631,157       436,364       2,161,155       1,480,244  
Adjustments for:
                     -       -  
Depreciation and amortization
     134,885       140,876       403,758       371,647  
Income tax accruals less payments
     (309,497 )     29,211       (219,750 )     (220,582 )
Equity in earnings of associated companies
     (24,290 )     (18,280 )     (122,386 )     (73,585 )
Income from the sale of pressure control business
     -       -       (394,323 )     -  
Interest accruals less payments, net
     34,401       58,654       26,507       63,519  
Changes in provisions
     (4,404 )     (799 )     10,839       (4,279 )
Changes in working capital
     (257,464 )     220,034       (803,078 )     94,669  
Other, including currency translation adjustment
     37,986       23,695       22,969       77,498  
Net cash provided by operating activities
     242,774       889,755       1,085,691       1,789,131  
                                 
Cash flows from investing activities
                                
Capital expenditures
     (131,772 )     (105,419 )     (337,138 )     (334,568 )
Acquisitions of subsidiaries and minority interest
     (8,003 )     (45 )     (9,868 )     (1,927,227 )
Other disbursements relating to the acquisition of Hydril
     -       -       -       (71,580 )
Proceeds from the sale of pressure control business
     -       -       1,113,805       -  
Decrease in subsidiaries
     -       -       -       (1,195 )
Proceeds from disposal of property, plant and equipment and intangible assets
     3,340       2,327       12,166       6,923  
Dividends received
     -       -       13,636       11,496  
Investments in short terms securities
     324,934       (45,035 )     60,533       (30,842 )
Other
     -       -       (3,428 )     -  
Net cash provided by / (used in) investing activities
     188,499       (148,172 )     849,706       (2,346,993 )
                                 
Cash flows from financing activities
                                
Dividends paid
     -       -       (295,134 )     (354,161 )
Dividends paid to minority interest in subsidiaries
     (4,981 )     (5,393 )     (60,117 )     (45,315 )
Proceeds from borrowings
     301,117       243,937       731,205       2,451,963  
Repayments of borrowings
     (444,709 )     (228,611 )     (1,777,464 )     (1,247,324 )
Net cash (used in) / provided by financing activities
     (148,573 )     9,933       (1,401,510 )     805,163  
                                 
Increase in cash and cash equivalents
     282,700       751,516       533,887       247,301  
Movement in cash and cash equivalents
                                
At the beginning of the period
     1,319,049       883,042       954,303       1,365,008  
Effect of exchange rate changes
     (138,107 )     13,996       (24,548 )     36,245  
Increase in cash and cash equivalents
     282,700       751,516       533,887       247,301  
At September 30,
     1,463,642       1,648,554       1,463,642       1,648,554  
                                 
Cash and cash equivalents
  
At September 30,
    
At September 30,
  
   
2008
    
2007
    
2008
    
2007
  
Cash and bank deposits
     1,489,787       1,651,780       1,489,787       1,651,780  
Bank overdrafts
     (26,145 )     (3,205 )     (26,145 )     (3,205 )
Restricted bank deposits
     -       (21 )     -       (21 )
      1,463,642       1,648,554       1,463,642       1,648,554  
                                 
Non-cash financing activity
                                
Conversion of debt to equity in subsidiaries
     -       -       -       35,140