form6k.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 August 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 Second 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: August 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 Second Quarter Results

The financial and operational information contained in this press release is based on unaudited consolidated condensed interim financial statements presented in U.S. dollars (US$) and prepared in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standard Board (IASB) and adopted by the European Union.

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

Summary of 2008 Second Quarter Results

(Comparison with first quarter of 2008 and second quarter of 2007)
 
Q2 2008
Q1 2008
Q2 2007
Net sales (US$ million)
3,148.4
2,626.2
20%
2,555.0
23%
Operating income (US$ million)
823.7
710.9
16%
771.2
7%
Net income (US$ million)
1,030.0
500.0
106%
534.5
93%
Shareholders’ net income (US$ million)
987.5
473.0
109%
496.0
99%
Earnings per ADS (US$)
1.67
0.80
109%
0.84
99%
Earnings per share (US$)
0.84
0.40
109%
0.42
99%
EBITDA (US$ million)
958.1
845.4
13%
895.8
7%
EBITDA margin (% of net sales)
30%
32%
  
35%
  

Our results in the second quarter reflect an improving market environment particularly in North America. Earnings per share, excluding income from discontinued operations, were up 21% year on year and 30% sequentially at $0.50 ($1.00 per ADS). Net sales were boosted by record shipments of seamless and welded pipe products. Net financial debt (total financial debt less cash and other current investments) declined in the quarter by US$1,056.5 million to US$1,444.7 million as of June 30, 2008 following the sale of the Hydril Pressure Control business.

 
 
 

Market Background and Outlook

In the first half of 2008, global oil prices rose sharply before coming off their highs in the past few weeks, reflecting steady global demand and concerns about supply. North American gas prices also rose sharply, reflecting increased demand and lower levels of imports, but have fallen sharply in the past month as markets show increased volatility.

Oil and gas drilling activity, as measured by the Baker Hughes count of active rigs, has increased worldwide with the total world rig count up 5% in the first half of 2008, compared to the corresponding period of 2007. In North America,  there has been increased activity in U.S. oil drilling and the development of U.S. gas shale reserves. Additionally, there are signs that the sharp decline in Canadian gas drilling activity seen in 2007 has bottomed out with expectations for an increase in activity in the second half. In the rest of the world, drilling activity has continued to increase in most regions with the international count of active rigs, as published by Baker Hughes, showing an average increase of 7% in the first half of 2008 compared to the same period of 2007.

Demand for OCTG and other pipe products from the oil and gas industry has increased this year, particularly in the USA, reflecting increased drilling activity worldwide. Distributor inventory levels in the USA remain at low levels  following last year’s destocking activity. However, apparent demand in the Middle East is being affected by inventory adjustments after the build-up of stocks in the past two years.

Demand for our large diameter pipes for pipeline projects in South America in 2008 remains good as we make deliveries to gas and mineral pipeline projects in Brazil and Argentina and orders for additional projects in Brazil and Colombia have been received. We expect our sales in this segment will remain strong in the second half of the year but segment margins may decline as we make shipments to projects with higher logistics costs in Colombia.

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. Energy and labor costs have also increased. Pipe prices are adjusting to the cost increases and a stronger demand environment, though not at the same pace across all markets. We expect that net sales will continue to grow strongly in the second half, particularly in the fourth quarter, but that the impact of cost increases will continue to affect margins during the third quarter.

 
 
 

Analysis of 2008 Second Quarter Results

Sales volume (metric tons)
Q2 2008
Q2 2007
Increase/(Decrease)
Tubes - Seamless
784,000
750,000
5%
Tubes – Welded
270,000
215,000
26%
Tubes - Total
1,054,000
965,000
9%
Projects - Welded
170,000
115,000
48%
Total
1,224,000
1,080,000
13%

Tubes
Q2 2008
Q2 2007
Increase/(Decrease)
(Net sales - $ million)
      
North America
986.5
693.8
42%
South America
334.2
326.5
2%
Europe
480.8
421.6
14%
Middle East & Africa
565.6
547.3
3%
Far East & Oceania
187.1
203.2
(8%)
Total net sales ($ million)
2,554.2
2,192.3
17%
Cost of sales (% of sales)
56%
50%
  
Operating income ($ million)
707.1
719.5
(2%)
Operating income (% of sales)
28%
33%
  

Net sales of tubular products and services rose 17% to US$2,554.2 million in the second quarter of 2008, compared to US$2,192.3 million in the second quarter of 2007, due to higher volumes and higher average selling prices. In North America, sales rose strongly as oil and gas drilling activity increased in the USA and Mexico and selling prices began to reflect higher raw material costs. In the Middle East and Africa, increased sales of high-end OCTG products offset lower volumes of API and line pipe products. In Europe, sales increased primarily due to an increase in average selling prices reflecting, in part, higher sales of OCTG products and lower sales to industrial customers.

Projects
Q2 2008
Q2 2007
Increase/(Decrease)
Net sales ($ million)
368.1
200.8
83%
Cost of sales (% of sales)
71%
72%
  
Operating income ($ million)
77.6
38.3
103%
Operating income (% of sales)
21%
19%
  

Net sales of pipes for pipeline projects increased 83% to US$368.1 million in the second quarter of 2008, compared to US$200.8 million in the second quarter of 2007, reflecting a quarterly record level of shipments in this segment as deliveries were made to various projects in Brazil, including Petrobras’ Plangas and a mineral slurry pipeline, and to the loops extension project in Argentina.
 
 
 
 
 
Others
Q2 2008
Q2 2007
Increase/(Decrease)
Net sales ($ million)
226.1
161.8
40%
Cost of sales (% of sales)
69%
79%
  
Operating income ($ million)
39.0
13.4
191%
Operating income (% of sales)
17%
8%
  

Net sales of other products and services rose 40% to US$226.1 million in the second quarter of 2008, compared to US$161.8 million in the second quarter of 2007, reflecting higher sales of industrial equipment in Brazil and of welded pipes for electric conduits in the USA. In addition to higher sales, the increase in operating income reflects a solid recovery in the electric conduit business, higher plant utilization in the industrial equipment business and higher margins on sales of surplus raw materials.

Selling, general and administrative expenses, or SG&A, decreased as a percentage of net sales to 15.2% in the quarter ended June 30, 2008, compared to 15.6% in the corresponding quarter of 2007.

Net interest expenses decreased to US$18.7 million in the second quarter of 2008 compared to US$47.8 million in the same period of 2007 reflecting a lower net debt position and lower interest rates.

Other financial results recorded a gain of US$1.1 million during the second quarter of 2008, compared to a gain of US$15.2 million during the second quarter of 2007.

Equity in earnings of associated companies generated a gain of US$48.1 million in the second quarter of 2008, compared to a gain of US$29.4 million in the second quarter of 2007. These gains were derived mainly from our equity investment in Ternium.

Income tax charges totalled US$218.6 million in the second quarter of 2008, equivalent to 27% of income before equity in earnings of associated companies and income tax, compared to US$240.7 million in the second quarter of 2007, equivalent to 33% of income before equity in earnings of associated companies and income tax. The result in the second quarter of 2008 benefited from a tax reduction equivalent to US$28.3 million incurred on the reversal of deferred taxes in Italy due to the anticipated payment of taxes at a reduced rate.

Income from discontinued operations amounted to US$394.3 million in the second quarter of 2008. This income corresponds to the result of the sale of Hydril’s pressure control business, completed on April 1, 2008.

Income attributable to minority interest amounted to US$42.6 million in the second quarter of 2008, compared to US$38.5 million in the corresponding quarter of 2007. Although net 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 second quarter of 2008 was US$274.0 million (US$842.9 million in the first half), compared to US$211.1 million in the second quarter of 2007 (US$899.4 million in the first half). Working capital increased by US$326.9 million during the second quarter. Trade receivables and trade payables rose US$372.7 million and US$225.4 million respectively during the second quarter as quarterly net sales increased. Inventories rose U$243.2 million during the second quarter, primarily due to increases in raw material and production costs.

Capital expenditures amounted to US$116.9 million in the second quarter of 2008 ($205.4 million in the first half), compared to US$109.2 million in the second quarter of 2007 (US$229.1 million in the first half).

During the first half of 2008, total financial debt decreased by US$885.8 million to US$3,134.5 million at June 30, 2008 from US$4,020.2 million at December 31, 2007. Net financial debt during the first half of 2008 decreased by US$1,525.5 million to US$1,444.7 million at June 30, 2008 following the receipt of proceeds from the sale of Hydril’s pressure control business and the payment of the balance of the annual dividend, amounting to approximately US$295 million in June 2008.


Analysis of 2008 First Half Results

Net income attributable to equity holders in the company during the first semester of 2008 was US$1,460.5 million, or US$1.24 per share (US$2.47 per ADS), which compares with net income attributable to equity holders in the company during the first semester of 2007 of US$976.3 million, or US$0.83 per share (US$1.65 per ADS). Operating income was US$1,534.6 million, or 27% of net sales, compared to US$1,528.8 million, or 31% of net sales. Operating income plus depreciation and amortization for this semester was US$1,803.5 million, or 31% of net sales, compared to US$1,753.9 million, or 35% of net sales during the first semester of 2007.

Sales volume (metric tons)
H1 2008
H1 2007
Increase/(Decrease)
Tubes – Seamless
1,475,000
1,497,000
(1%)
Tubes – Welded
552,000
466,000
18%
Tubes – Total
2,027,000
1,963,000
3%
Projects – Welded
302,000
190,000
59%
Total
2,329,000
2,153,000
8%
 
 
 
 
 
Tubes
H1 2008
H1 2007
Increase/(Decrease)
(Net sales - $ million)
      
North America
1,819.1
1,421.6
28%
South America
572.4
587.1
(3%)
Europe
928.4
840.3
10%
Middle East & Africa
1,041.3
1,127.2
(8%)
Far East & Oceania
363.7
360.9
1%
Total net sales ($ million)
4,724.8
4,337.1
9%
Cost of sales (% of sales)
55%
50%
  
Operating income ($ million)
1,344.6
1,441.5
(7%)
Operating income (% of sales)
28%
33%
  

Net sales of tubular products and services rose 9% to US$4,724.8 million in the first half of 2008, compared to US$4,337.1 million in the first half of 2007, due to higher average selling prices, reflecting in part higher sales of specialized high-end products, and an increase in welded pipe sales volumes.

Projects
H1 2008
H1 2007
Increase/(Decrease)
Net sales ($ million)
639.8
325.3
97%
Cost of sales (% of sales)
71%
70%
  
Operating income ($ million)
128.9
64.6
99%
Operating income (% of sales)
20%
20%
  

Net sales of pipes for pipeline projects increased 97% to US$639.8 million in the first half of 2008, compared to US$325.3 million in the first half of 2007, reflecting higher deliveries in Brazil and Argentina to gas and other pipeline projects.

Others
H1 2008
H1 2007
Increase/(Decrease)
Net sales ($ million)
409.9
318.0
29%
Cost of sales (% of sales)
71%
80%
  
Operating income ($ million)
61.2
22.6
170%
Operating income (% of sales)
15%
7%
  

Net sales of other products and services rose 29% to US$409.9 million in the first half of 2008, compared to US$318.0 million in the first half of 2007, reflecting higher sales of electric conduit pipes and industrial equipment.

Selling, general and administrative expenses, or SG&A, remained stable as a percentage of net sales at 15.4% in the semester ended June 30, 2008 compared to 15.5% in the corresponding semester of 2007.

Net interest expenses decreased to US$73.5 million in the first half of 2008 compared to US$83.3 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$13.2 million during the first half of 2008, compared to a gain of US$2.1 million during the first half of 2007.

 
 
 

Equity in earnings of associated companies generated a gain of US$98.1 million in the first half of 2008, compared to a gain of US$55.3 million in the first half of 2007. These gains were derived mainly from our equity investment in Ternium.

Income tax charges totalled US$427.2 million in the first half of 2008, equivalent to 30% of income before equity in earnings of associated companies and income tax, compared to US$466.2 million in the first half 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 half 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 amounted to US$69.5 million in the first half of 2008, compared to US$67.6 million in the corresponding semester 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.
 
 
 
 

Consolidated Condensed Interim Income Statement

(all amounts in thousands of U.S. dollars, unless otherwise stated)
  
Three-month period
ended June 30,
    
Six-month period
ended June 30,
  
   
2008
    
2007
    
2008
    
2007
  
Continuing operations
  
(Unaudited)
    
(Unaudited)
  
Net sales
     3,148,385       2,554,968       5,774,572       4,980,267  
Cost of sales
     (1,842,911 )     (1,374,318 )     (3,343,600 )     (2,665,816 )
Gross profit
     1,305,474       1,180,650       2,430,972       2,314,451  
Selling, general and administrative expenses
     (478,076 )     (399,009 )     (891,670 )     (773,276 )
Other operating income (expense), net
     (3,676 )     (10,415 )     (4,667 )     (12,352 )
Operating income
     823,722       771,226       1,534,635       1,528,823  
Interest income
     16,510       20,191       28,779       42,382  
Interest expense
     (35,178 )     (67,982 )     (102,270 )     (125,709 )
Other financial results
     1,146       15,169       (13,156 )     2,126  
Income before equity in earnings of associated companies and income tax
     806,200       738,604       1,447,988       1,447,622  
Equity in earnings of associated companies
     48,102       29,398       98,096       55,305  
Income before income tax
     854,302       768,002       1,546,084       1,502,927  
Income tax
     (218,590 )     (240,683 )     (427,196 )     (466,214 )
Income for continuing operations
     635,712       527,319       1,118,888       1,036,713  
                                 
Discontinued operations
                                
Income for discontinued operations
     394,323       7,167       411,110       7,167  
                                 
Income for the period
     1,030,035       534,486       1,529,998       1,043,880  
                                 
Attributable to:
                                
Equity holders of the Company
     987,471       495,950       1,460,514       976,254  
Minority interest
     42,564       38,536       69,484       67,626  
      1,030,035       534,486       1,529,998       1,043,880  
 
 
 
 

Consolidated Condensed Interim Balance Sheet

(all amounts in thousands of U.S. dollars)
  
At June 30, 2008
    
At December 31, 2007
  
   
(Unaudited)
        
ASSETS
                        
Non-current assets
                        
Property, plant and equipment, net
     3,423,072             3,269,007        
Intangible assets, net
     4,427,486             4,542,352        
Investments in associated companies
     614,006             509,354        
Other investments
     36,215             35,503        
Deferred tax assets
     323,094             310,590        
Receivables
     65,841       8,889,714       63,738       8,730,544  
                                 
Current assets
                                
Inventories
     2,991,850               2,598,856          
Receivables and prepayments
     227,667               222,410          
Current tax assets
     188,553               242,757          
Trade receivables
     2,182,535               1,748,833          
Other investments
     351,931               87,530          
Cash and cash equivalents
     1,337,838       7,280,374       962,497       5,862,883  
Current and non current assets held for sale
             -               651,160  
              7,280,374               6,514,043  
Total assets
             16,170,088               15,244,587  
EQUITY
                                
Capital and reserves attributable to the Company’s equity holders
             8,324,767               7,006,277  
Minority interest
             577,061               523,573  
Total equity
             8,901,828               7,529,850  
                                 
LIABILITIES
                                
Non-current liabilities
                                
Borrowings
     1,589,712               2,869,466          
Deferred tax liabilities
     1,150,807               1,233,836          
Other tax liabilities
     8,566               -          
Other liabilities
     198,498               185,410          
Provisions
     100,674               97,912          
Trade payables
     800       3,049,057       47       4,386,671  
 
 
Current liabilities
                        
Borrowings
     1,544,755             1,150,779        
Current tax liabilities
     813,402             341,028        
Other liabilities
     315,647             252,204        
Provisions
     31,823             19,342        
Customer advances
     418,361             449,829        
Trade payables
     1,095,215       4,219,203       847,842       3,061,024  
Liabilities associated with current and non-current assets held for sale
             -               267,042  
              4,219,203               3,328,066  
Total liabilities
             7,268,260               7,714,737  
                                 
Total equity and liabilities
             16,170,088               15,244,587  

 
 
 

Consolidated Condensed Interim Cash Flow Statement

   
Three-month period
ended June 30,
    
Six-month period
ended June 30,
  
(all amounts in thousands of U.S. dollars)
  
2008
    
2007
    
2008
    
2007
  
   
(Unaudited)
    
(Unaudited)
  
Cash flows from operating activities
                        
Income for the period
     1,030,035       534,486       1,529,998       1,043,880  
Adjustments for:
                                
Depreciation and amortization
     134,390       130,284       268,873       230,771  
Income tax accruals less payments
     (17,791 )     (375,170 )     89,747       (249,793 )
Equity in earnings of associated companies
     (48,102 )     (29,398 )     (98,096 )     (55,305 )
Income from the sale of the pressure control business
     (394,323 )     -       (394,323 )     -  
Interest accruals less payments, net
     (62,202 )     (40,564 )     (7,894 )     4,865  
Changes in provisions
     7,747       3,750       15,243       (3,480 )
Changes in working capital
     (326,894 )     (34,846 )     (545,614 )     (125,365 )
Other, including currency translation adjustment
     (48,874 )     22,560       (15,017 )     53,803  
Net cash provided by operating activities
     273,986       211,102       842,917       899,376  
                                 
Cash flows from investing activities
                                
Capital expenditures
     (116,911 )     (109,237 )     (205,366 )     (229,149 )
Acquisitions of subsidiaries and minority interest
     (839 )     (1,925,432 )     (1,865 )     (1,927,182 )
Other disbursements relating to the acquisition of Hydril
     -       (71,580 )     -       (71,580 )
Proceeds from the sale of the pressure control business
     1,113,805       -       1,113,805       -  
Decrease in subsidiaries
     -       -       -       (1,195 )
Proceeds from disposal of property, plant and equipment and intangible assets
     3,819       1,903       8,826       4,596  
Dividends received
     13,636       11,496       13,636       11,496  
Investments in short term securities
     (216,483 )     19,277       (264,401 )     14,193  
Other
     -       -       (3,428 )     -  
Net cash provided by / (used in) investing activities
     797,027       (2,073,573 )     661,207       (2,198,821 )
                                 
Cash flows from financing activities
                                
Dividends paid
     (295,134 )     (354,161 )     (295,134 )     (354,161 )
Dividends paid to minority interest in subsidiaries
     (55,136 )     (36,563 )     (55,136 )     (39,922 )
Proceeds from borrowings
     299,701       2,159,852       430,088       2,208,026  
Repayments of borrowings
     (842,478 )     (657,814 )     (1,332,755 )     (1,018,713 )
Net cash (used in) / provided by financing activities
     (893,047 )     1,111,314       (1,252,937 )     795,230  
                                 
Increase / (decrease) in cash and cash equivalents
     177,966       (751,157 )     251,187       (504,215 )
Movement in cash and cash equivalents
                                
At the beginning of the period
     1,072,985       1,614,686       954,303       1,365,008  
Effect of exchange rate changes
     68,098       19,513       113,559       22,249  
Increase / (decrease) in cash and cash equivalents
     177,966       (751,157 )     251,187       (504,215 )
At June 30,
     1,319,049       883,042       1,319,049       883,042  

Cash and cash equivalents
  
At June 30,
    
At June 30,
  
   
2008
    
2007
    
2008
    
2007
  
Cash and bank deposits
     1,337,838       891,159       1,337,838       891,159  
Bank overdrafts
     (18,789 )     (8,096 )     (18,789 )     (8,096 )
Restricted bank deposits
     -       (21 )     -       (21 )
      1,319,049       883,042       1,319,049       883,042  
                         
Non-cash financing activity
                        
Conversion of debt to equity in subsidiaries
     -       35,140       -       35,140