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 May 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 ü  Form 40-F ¨

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 ¨  No  ü


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 First 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: May 7, 2008
 
 
Tenaris, S.A.
 
 
By:
/s/ Cecilia Bilesio
  
Cecilia Bilesio
  
Corporate Secretary
  
 
 
 
 

Nigel Worsnop
Tenaris
1-888 300 5432
www.tenaris.com


Tenaris Announces 2008 First 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, May 6, 2008. - Tenaris S.A. (NYSE, Buenos Aires and Mexico: TS and MTA Italy: TEN) (“Tenaris”) today announced its results for the quarter ended March 31, 2008 with comparison to its results for the quarter ended March 31, 2007.


Summary of 2008 First Quarter Results

(Comparison with fourth and first quarters of 2007)

 
Q1 2008
Q4 2007
Q1 2007
Net sales (US$ million)
2,626.2
2,628.0
(0%)
2,425.3
8%
Operating income (US$ million)
710.9
756.7
(6%)
757.6
(6%)
Net income (US$ million)
500.0
595.8
(16%)
509.4
(2%)
Shareholders’ net income (US$ million)
473.0
546.5
(13%)
480.3
(2%)
Earnings per ADS (US$)
0.80
0.93
(13%)
0.81
(2%)
Earnings per share (US$)
0.40
0.46
(13%)
0.41
(2%)
EBITDA (US$ million)
845.4
890.9
(5%)
858.1
(1%)
EBITDA margin (% of net sales)
32%
34%
  
35%
  

Our earnings per share in the first quarter of 2008 were marginally lower than that recorded in the first quarter of 2007. At the operating level, our results reflect lower shipments of seamless pipe products in the Middle East and Africa region partially offset by higher demand for our welded pipe products in North America and in our Projects segment. Margins in dollars per ton for our seamless and welded pipe products remained stable compared to the fourth quarter of 2007 notwithstanding higher costs. Free cash flow (net cash provided by operations less capital expenditures) totaled US$480.5 million during the quarter, and net debt declined to US$2,501.2 million as of March 31, 2008.

 
 
 

Market Background and Outlook

In the first quarter of 2008, global oil prices continued to rise reflecting steady global demand and concerns about supply. North American gas prices also rose reflecting a tighter market as seasonally adjusted storage levels declined from the high levels of the past two years. Despite the recent increase in North American gas prices, they remain below international prices for LNG and residual fuel oil as US gas production has increased in line with demand.

Oil and gas companies continue to increase their level of spending and drilling activity to offset declining rates of production from mature fields and to explore and develop new reserves. However, the supply-side response to high international oil and gas prices is constrained by limited industry resources, restrictions on the access to the majority of the world’s known reserves and the time needed to develop significant new reserves.

The international count of active drilling rigs, as published by Baker Hughes, averaged 1046 during the first quarter of 2008, an increase of 7% compared to the same quarter of the previous year and 3% higher than the fourth quarter of 2007. The corresponding rig count in USA, which is more sensitive to North American gas prices, was 2% higher in the first quarter of 2008 than the same quarter of the previous year but registered a 1% decline compared to the fourth quarter of 2007. In Canada, however, the corresponding rig count during the first quarter of 2008 was 5% lower than in the first quarter of 2007.

Demand for our OCTG and other pipe products from the oil and gas industry is expected to increase this year, particularly in North America following last year’s destocking by U.S. distributors. However, inventory adjustments will continue to affect some markets and competitive activity is increasing in many areas reflecting higher capacity availability.

Demand for our large diameter pipes for pipeline projects in South America  remains good as we continue to make deliveries to previously contracted gas pipeline infrastructure projects in Brazil and Argentina. Orders for new projects in Brazil and Colombia have been received and we expect to maintain a strong level of sales in this segment in 2008.

Steelmaking raw material costs for our seamless pipe products and steel costs for our welded pipe products have risen steeply in the year to date and are expected to go on rising in the near term. Energy and labor costs are also increasing. Pipe prices, are also rising, though not at the same pace across all markets. We expect that, over time, we will maintain our margins in dollars per ton notwithstanding the increased volatility in costs.


Annual Shareholders Assembly

The annual general shareholders’ meeting of the  Company will take place at 11:00 am on June 4, 2008 in Luxembourg. The notice and agenda for the meeting, the shareholder meeting brochure and proxy statement together with the Company’s 2007 annual report can be downloaded from our website at www.tenaris.com/investors and may be obtained on request by calling 1-800-555-2470 (within the USA) or + 1-267-468-0786 (outside the USA).

 
 
 

Analysis of 2008 First Quarter Results

Sales volume (metric tons)
Q1 2008
Q1 2007
Increase/(Decrease)
Tubes - Seamless
691,000
746,000
(7%)
Tubes – Welded
282,000
252,000
12%
Tubes - Total
973,000
998,000
(3%)
Projects - Welded
132,000
75,000
76%
Total
1,105,000
1,073,000
3%

Tubes
Q1 2008
Q1 2007
Increase/(Decrease)
(Net sales - $ million)
      
North America
832.6
727.8
14%
South America
238.2
260.5
(9%)
Europe
447.6
418.7
7%
Middle East & Africa
475.7
580.0
(18%)
Far East & Oceania
176.6
157.7
12%
Total net sales ($ million)
2,170.7
2,144.7
1%
Cost of sales (% of sales)
54%
50%
  
Operating income ($ million)
637.4
722.0
(12%)
Operating income (% of sales)
29%
34%
  

Net sales of tubular products and services rose 1% to US$2,170.7 million in the first quarter of 2008, compared to US$2,144.7 million in the first quarter of 2007, as an increase in our average selling price for tubular products and services and an increase in sales volume of welded pipe products offset a 7% decline in sales volume of seamless pipe products. Sales rose in North America, where there was a recovery in demand in USA following a period of inventory destocking but demand in Canada continued to be affected by lower drilling activity. Sales in South America declined due primarily to lower sales in Ecuador. Sales in the Middle East and Africa declined as sales of OCTG products were lower throughout the region.

Projects
Q1 2008
Q1 2007
Increase/(Decrease)
Net sales ($ million)
271.7
124.4
118%
Cost of sales (% of sales)
72%
66%
  
Operating income ($ million)
51.3
26.3
95%
Operating income (% of sales)
19%
21%
  

Net sales of pipes for pipeline projects rose 118% to US$271.7 million in the first quarter of 2008, compared to US$124.4 million in the first quarter of 2007, reflecting a relatively high level of deliveries to gas and other pipeline projects in Brazil and deliveries to the loops expansion project in Argentina.

Others
Q1 2008
Q1 2007
Increase/(Decrease)
Net sales ($ million)
183.8
156.2
18%
Cost of sales (% of sales)
73%
82%
  
Operating income ($ million)
22.2
9.3
140%
Operating income (% of sales)
12%
6%
  
 
 
 
 


Net sales of other products and services rose 18% to US$183.8 million in the first quarter of 2008, compared to US$156.2 million in the first quarter of 2007, led by higher sales of electric conduit pipes.

Selling, general and administrative expenses, or SG&A, increased as a percentage of net sales to 15.7% in the quarter ended March 31, 2008 compared to 15.4% in the corresponding quarter of 2007 due to an increase in amortization expenses following the incorporation of Hydril. Amortization of customer relationships and other intangibles acquired with Hydril amounted to US$20.3 million in the quarter, or 0.8% of net sales.

Net interest expense rose to US$54.8 million in the first quarter of 2008 compared to a net interest expense of US$35.5 million in the same period of 2007 reflecting an increased net debt position following the Hydril acquisition.

Other financial results contributed a loss of US$14.3 million during the first quarter of 2008, compared to a loss of US$13.0 million during the first quarter of 2007.

Equity in earnings of associated companies generated a gain of US$50.0 million in the first quarter of 2008, compared to a gain of US$25.9 million in the first quarter of 2007. These gains were derived mainly from our equity investment in Ternium (NYSE:TX). In April 2008, the Venezuelan government announced its intention to nationalize Ternium’s subsidiary Sidor, and negotiations regarding the transfer of Termium’s interest in Sidor are currently in progress. The impact of Sidor’s nationalization on Ternium’s earnings, and our share in them, is not determinable at this time.

Income tax charges totalled US$208.6 million in the first quarter of 2008, equivalent to 33% of income from continuing operations before equity in earnings of associated companies and income tax, compared to US$225.5 million, or 32% of income before equity in earnings of associated companies and income tax, in the first quarter of 2007.

Income from discontinued operations amounted to US$16.8 million in the first quarter of 2008. This income corresponds to the Hydril pressure control business, whose sale was completed on April 1, 2008. An after-tax gain of approximately US$400 million will be recorded in the second quarter in respect of this disposal.

Income attributable to minority interest was US$26.9 million in the first quarter of 2008, compared to US$29.1 million in the corresponding quarter of 2007. Although operating and financial results at our Confab subsidiary were higher during the period, they were lower at our NKKTubes subsidiary.


Cash Flow and Liquidity

Net cash provided by operations during the first quarter of 2008 was US$568.9 million, compared to US$688.3 million in the first quarter of 2007. Working capital increased by US$218.7 million during the quarter with the value of inventories rising by US$149.8 million, reflecting rising input costs, and trade receivables increased by $61.0 million.

Capital expenditures amounted to US$88.5 million for the first quarter of 2008, compared to US$119.9 million in the first quarter of 2007.

 
 
 

During the first quarter of 2008, total financial debt decreased by US$303.0 million to US$3,717,2 million at March 31, 2008 from US$4,020.2 million at December 31, 2007, and net financial debt decreased by US$469.0 million to US$2,501.2 million at March 31, 2008. Our net financial debt position decreased further at the beginning of the second quarter following the divestment of the Hydril pressure control business which was completed on April 1, 2008.


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.
 
 
 
 

 Consolidated Condensed Interim Income Statement

(all amounts in thousands of U.S. dollars, unless otherwise stated)
  
Three-month period ended March 31,
  
   
2008
    
2007
  
Continuing operations
  
(Unaudited)
  
Net sales
     2,626,187       2,425,299  
Cost of sales
     (1,500,689 )     (1,291,498 )
Gross profit
     1,125,498       1,133,801  
Selling, general and administrative expenses
     (413,594 )     (374,267 )
Other operating income (expense), net
     (991 )     (1,937 )
Operating income
     710,913       757,597  
Interest income
     12,269       22,191  
Interest expense
     (67,092 )     (57,727 )
Other financial results
     (14,302 )     (13,043 )
Income before equity in earnings of associated companies and income tax
     641,788       709,018  
Equity in earnings of associated companies
     49,994       25,907  
Income before income tax
     691,782       734,925  
Income tax
     (208,606 )     (225,531 )
Income for continuing operations
     483,176       509,394  
                 
Discontinued operations
                
Income for discontinued operations
     16,787       -  
                 
Income for the period
     499,963       509,394  
                 
Attributable to:
                
Equity holders of the Company
     473,043       480,304  
Minority interest
     26,920       29,090  
      499,963       509,394  

 
 
 

Consolidated Condensed Interim Balance Sheet

(all amounts in thousands of U.S. dollars)
  
At March 31, 2008
    
At December 31, 2007
  
   
(Unaudited)
        
ASSETS
                        
Non-current assets
                        
Property, plant and equipment, net
     3,350,197             3,269,007        
Intangible assets, net
     4,469,360             4,542,352        
Investments in associated companies
     562,691             509,354        
Other investments
     35,138             35,503        
Deferred tax assets
     313,149             310,590        
Receivables
     56,917       8,787,452       63,738       8,730,544  
                                 
Current assets
                                
Inventories
     2,748,654               2,598,856          
Receivables and prepayments
     203,859               222,410          
Current tax assets
     200,602               242,757          
Trade receivables
     1,809,803               1,748,833          
Other investments
     135,448               87,530          
Cash and cash equivalents
     1,080,555       6,178,921       962,497       5,862,883  
Current and non current assets held for sale
             650,698               651,160  
              6,829,619               6,514,043  
Total assets
             15,617,071               15,244,587  
                                 
EQUITY
                                
Capital and reserves attributable to the Company’s equity holders
                                
Share capital
     1,180,537               1,180,537          
Legal reserves
     118,054               118,054          
Share premium
     609,733               609,733          
Currency translation adjustments
     345,984               266,049          
Other reserves
     20,132               18,203          
Retained earnings
     5,286,744       7,561,184       4,813,701       7,006,277  
                                 
Minority interest
             576,793               523,573  
Total equity
             8,137,977               7,529,850  
                                 
LIABILITIES
                                
Non-current liabilities
                                
Borrowings
     2,753,441               2,869,466          
Deferred tax liabilities
     1,224,758               1,233,836          
Other liabilities
     197,898               185,410          
Provisions
     96,329               97,912          
Trade payables
     32       4,272,458       47       4,386,671  
                                 
Current liabilities
                                
Borrowings
     963,773               1,150,779          
Current tax liabilities
     426,381               341,028          
Other liabilities
     272,771               252,204          
Provisions
     28,421               19,342          
Customer advances
     375,569               449,829          
Trade payables
     869,846       2,936,761       847,842       3,061,024  
Liabilities associated with current and non-current assets held for sale
             269,875               267,042  
              3,206,636               3,328,066  
Total liabilities
             7,479,094               7,714,737  
                                 
Total equity and liabilities
             15,617,071               15,244,587  
 
 
 
 

Consolidated Condensed Interim Cash Flow Statement

   
Three-month period ended March 31,
  
(all amounts in thousands of U.S. dollars)
  
2008
    
2007
  
   
(Unaudited)
  
             
Cash flows from operating activities
            
Income for the period
     499,963       509,394  
Adjustments for:
                
Depreciation and amortization
     134,483       100,487  
Income tax accruals less payments
     107,538       125,377  
Equity in earnings of associated companies
     (49,994 )     (25,907 )
Interest accruals less payments, net
     54,308       45,429  
Changes in provisions
     7,496       (7,230 )
Changes in working capital
     (218,720 )     (90,519 )
                 
Other, including currency translation adjustment
     33,857       31,243  
Net cash provided by operating activities
     568,931       688,274  
                 
Cash flows from investing activities
                
Capital expenditures
     (88,455 )     (119,912 )
Acquisitions of subsidiaries and minority interest
     (1,026 )     (1,750 )
Decrease in subsidiaries
     -       (1,195 )
Proceeds from disposal of property, plant and equipment and intangible assets
     5,007       2,693  
Investments in short terms securities
     (47,918 )     (5,084 )
Other
     (3,428 )     -  
Net cash used in investing activities
     (135,820 )     (125,248 )
                 
Cash flows from financing activities
                
Dividends paid to minority interest in subsidiaries
     -       (3,359 )
Proceeds from borrowings
     130,387       48,174  
Repayments of borrowings
     (490,277 )     (360,899 )
Net cash used in financing activities
     (359,890 )     (316,084 )
                 
Increase in cash and cash equivalents
     73,221       246,942  
Movement in cash and cash equivalents
                
At the beginning of the period
     954,303       1,365,008  
Effect of exchange rate changes
     45,461       2,736  
Increase in cash and cash equivalents
     73,221       246,942  
At March 31,
     1,072,985       1,614,686  

Cash and cash equivalents
  
At March 31,
  
   
2008
    
2007
  
Cash and bank deposits
     1,080,555       1,634,812  
Bank overdrafts
     (7,570 )     (20,105 )
Restricted bank deposits
     -       (21 )
      1,072,985       1,614,686