TUBOS REUNIDOS : IMPROVES ITS PROFITS BY 41% IN THE FIRST HALF OF 2014

Tubos Reunidos businesses performed very positively in the first half of 2014. Net turnover reached 207 million euros, making it 10% more than in the same period of the previous year. Moreover, EBITDA stood at 24.6 million euros, 15% more, and consolidated net profit grew 41% to 4.4 million euros.

This positive progress has occurred due to the growth of Group sales in new segments and products, as well as greater competitiveness, as a result of investments made and sales policy in the context of the Strategic Plan.

1.- Increased sales in the first half, especially in new products derived from investments made:

a) Increase in sales of OCTG (Oil Country Tubular Goods) products for oil and gas exploration and production, through more competitive in-house manufacture of new special steels (investment in Degassing plant, commissioned in the first quarter of 2014) and the greater capabilities to supply products with more demanding finishes (investment in new heat treatment facility, commissioned in the first quarter of 2014). This increase has been especially significant in North America.

b) Special large diameter tubing: growth of 25% in this product segment, thanks to the investments taking place to manufacture tubes up to 28" diameter. This sales increase has occurred especially in projects for the Middle East, Russia and Korea, for applications in critical phases in power generation, refining and petrochemical plants.

2.- Improvement of the product mix in first half sales. Special product sales grew 15% in the first half of 2014, compared with the same period of the previous year, accounting for 65.4% of sales, vs. 65.1% the previous year.

3.- Good order book position, in volume and mix, at the end of June 2014, improving on the situation on 31 March and significantly higher (15%) than at the same date in the previous year, as a result of a higher contracting level in the second quarter.

4.- Presentation of the new 2014-2017 Strategic Plan in May 2014, with a business model approach, in line and consistent with the previous plan, towards increasingly more value added products. To this effect, the new Strategic Plan focuses on the following key points: a) More Premium Products, b) More Competitiveness, c) Comprehensive Service.

5.- Payment of a dividend for financial year 2013, on 20 June, of 0.018 euros gross per share, representing a total payout amount of 3.1 million euros.

6.- Employment creation. Grupo Tubos Reunidos has created 146 jobs in the first half of the year.

Europe (39.2% of sales): The evolution of Group sales in Europe in 2014 is being maintained at the levels of 2013, with the trend for stability being consolidated, as opposed to the decrease in 2013.

North America (32.2% of sales): Group sales in North America are progressing very positively, especially in OCTG products, backed by greater capability to supply new product into new segments and improved competitiveness.

 On 11 July, the U.S. Department of Commerce announced definitive anti-dumping measures against the nine countries exporting OCTG products into the U.S.A., about which an investigation was launched in July 2013, including imposing duties against tubing from South Korea, which had been excluded from the measures in the preliminary resolution of February 2014. These measures could positively affect the market situation and its final application depends on the ITC (US International Trade Commission) assessment of damage to American industry from these imports, which is expected by the end of August.

Middle East (14.1% of sales): Tubos Reunidos has significantly increased its sales in the Middle East, where, in addition to strengthening its commercial presence in 2013, it has supplied large diameter Premium tubing for power generation, refining and petrochemical projects.

Far East (11.6% of sales): Group sales remain stable in this region, focusing on high added value projects and products for the power generation, refining and petrochemical sectors.

In the first half of 2014 Tubos Reunidos has made positive progress in activity and results, which are expected to be maintained in the second part of the year. The high order backlog that the Group has in June, resulting from an increase in order volume and mix during the second quarter of 2014 will help and will be reflected in the results for the second half, as will the possible positive evolution of prices in North America in the event of final implementation of the anti-dumping measures, and a more favourable Eur/USD exchange rate. In any case, business evolution in the coming months will depend on the macroeconomic situation in the target geographical areas for the supply of Tubos Reunidos products.

Continuity in the business strategy, oriented towards products, segments and geographic markets with greater added value and growth, coupled with the growing differentiation of Group service solutions and greater competitiveness of its facilities, as a result of the investments implemented in 2013 and the first quarter of 2014, provide the foundations for growth in the medium term, in line with the objectives of the 2014-2017 Strategic Plan of Grupo Tubos Reunidos.