November 16, 2017 / 7:27 AM / in a year

Russia's TMK says strong U.S. demand to support fourth-quarter earnings

MOSCOW (Reuters) - Russian pipemaker TMK said on Thursday strong demand in the United States and an improvement in the Russian market would support earnings in the last three months of the year after growth in the previous quarter.

The logo of Russia's maker of steel pipes for the oil and gas industry TMK is seen on a board at the St. Petersburg International Economic Forum 2017 (SPIEF 2017) in St. Petersburg, Russia, June 1, 2017. REUTERS/Sergei Karpukhin/File Photo

TMK, Russia’s largest maker of steel pipes for the oil and gas industry, said it was still on track for stronger financial results in 2017 despite some pressure on margins from higher raw materials prices. Margins are, however, expected to expand in the first quarter of 2018, it added.

“In the fourth quarter, TMK’s financial performance will continue to be driven by strong demand in the U.S., with improvement also expected in the Russian market,” Alexander Shiryaev, TMK’s chief executive, said in a statement.

The company, controlled by Russian businessman Dmitry Pumpyansky, posted third-quarter net profit of $22 million, up from $11 million a year ago.

Adjusted earnings before interest, taxation, depreciation and amortization (EBITDA) rose 34 percent to $169 million, it said, while revenue increased by 39 percent to $1.1 billion.

TMK has said it is considering different options for its U.S. subsidiary IPSCO but intended to keep a controlling stake in the firm.

The third-quarter results were stronger than expected, but the key market focus now is on the potential sale or initial public offering of its U.S. division, analysts at BCS investment bank said in a note.

“In the U.S., despite the recent stabilization of the rig count the company expects its North American division will achieve strong results in the fourth quarter of 2017 supported by OCTG (pipes for the oil and gas industry) and line pipe demand,” TMK said in its statement.

Reporting by Polina Devitt; Editing by Jack Stubbs and Mark Potter

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