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Shares in Tenaris Jump on Quarterly Recovery, Upbeat Outlook

Feb 25 (Reuters) - Tenaris shares rose as much as 13% on Thursday after the Milan-listed steel pipe maker beat fourth-quarter earnings expectations and issued 2021 guidance that forecast a further rise in drilling activity and better prices.

Sales and core profits at the company, which produces seamless and welded steel pipes for oil and gas exploration activities, showed a gradual improvement in the fourth quarter of 2020 from earlier in the year, helping overcome some of the impact caused by the coronavirus crisis.

The company posted late on Wednesday fourth-quarter earnings before interests, taxes, depreciation and amortization (EBITDA) of $192 million, down 34% compared with the same period a year earlier but up 79% on the previous quarter.

Profit margins recovered to 17% in the quarter, the highest level since the third quarter of 2019.

By 0838 GMT, the stock was up 10.8% at 8.52 euros ($10.39), making it the top gainer on Milan’s stock exchange.

“Tenaris reported a much stronger than expected set of results,” Jefferies analysts said in a note.

Tenaris said it expected first-quarter EBITDA to be “similar” to the previous three months, saying it would face higher costs and production losses worth about $20 million in the United States and Mexico linked to the recent gas and power shortages in Texas.

Core earnings are expected to increase from the second quarter, with margins stabilising at about 20% as price increases compensate for higher raw material costs, it added.

The Luxembourg-based group, whose global services and distribution networks are present in over 30 countries, said it plans to propose a dividend of $0.14 per share.

$1 = 0.8199 euros

Reporting by Federico Maccioni; Editing by Agnieszka Flak and Edmund Blair

Source: Reuters


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