Tenaris SA (TS) Misses Q4 EPS by 5c, Slight Beat on Revenues

Tenaris SA (NYSE: TS) reported Q4 EPS of $0.38, $0.05 worse than the analyst estimate of $0.43. Revenue for the quarter came in at $2.11 billion versus the consensus estimate of $2.1 billion.

Market Background and Outlook

Drilling activity in the US shales continued to grow in 2018, following the previous year’s strong recovery, while drilling activity in Canada was affected at the end of the year by the drop in oil prices. For 2019, following the recent reset of oil prices, US drilling activity is expected to be stable while in Canada drilling activity is expected to be well below the level of last year.

In Latin America, a recovery in drilling activity in Mexico is expected as the new government makes more funds available for Pemex and private operators begin implementing their energy reform commitments. In the rest of the regions drilling activity is expected to be relatively stable, with shale drilling activity in Argentina likely to switch from gas to oil.

In the eastern Hemisphere, drilling activity is expected to continue a gradual recovery with a focus on gas developments.

After our strong performance in 2018, we expect to consolidate our sales and margins through the year, with sales and margins in line with those of the second half of 2018. We should benefit from growing sales of premium connection products for offshore projects around the world, and the inclusion of consolidated revenues from our new operation in Saudi Arabia, but we will not repeat the exceptional level of offshore line pipe shipments to the Eastern Mediterranean and will have lower sales in Canada. With a stable level of sales, and limited capital investment requirements, we should be able to generate a strong free cash flow during the year.

For earnings history and earnings-related data on Tenaris SA (TS) click here.

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