Steel pipe producer Tenaris forecast a further rise in sales in the second quarter driven by the Middle East and South America, after revenue doubled in the first three months from a year earlier.
The company, which makes seamless and welded steel pipes for oil and gas exploration activities, said in a statement late on Wednesday its first-quarter core profit more than tripled thanks to higher prices for oil country tubular goods (OCTG) in the Americas and higher line pipe shipments in Europe and South America.
Earnings before interest, tax, depreciation and amortization (EBITDA) came in at $627 million in the January-to-March period, up 220% from $196 million a year earlier, Tenaris said.
That includes severance charges of $12 million linked to the winding down of the groups industrial equipment business in Brazil and its NKKTubes joint venture.
The core profit margin stood at 26.5%, up from 23.5% in the previous quarter, as higher prices offset a surge in energy and raw material costs.
By 0725 GMT, Milan-listed shares in Tenaris were up 2%, outperforming a 1% rise in Milans All-Share index.
Analysts at Barclays said in a note the rise in the EBITDA margin, which touched a level last seen in 2014, was “an impressive mark supported by increased North America drilling activity and a notable pickup in offshore activity”.
The steel pipe maker added in the statement that it also expects a positive free cash flow for the second quarter, reversing the trend of the last four quarters, as well as stable margins and higher sales in the last half of the year.
