TUBACEX OBTAINS FIRST HALF NET PROFITS OF 13.1 MILLION EUROS

(Llodio, 28 July 2005).-

TUBACEX, the world’s second largest seamless stainless steel tube manufacturer, has obtained consolidated net profits of 13.1 million euros during the first half of  2005. This figure means an increase of 117% in comparison with the net profits obtained in the same period of 2004, when profits amounted to 6.02 million euros.

Net cash flow generated in the first half totalled 21.65 million euros, representing an increase of 50.6% with regard to the amount obtained the previous year, when it stood at 14.38 million euros.

The consolidated sales for the January-June period reached 225.31 million euros, a figure 34.0% higher than that achieved in 2004, when Group sales amounted to 168.13 million euros.

TUBACEX places a very positive evaluation on these results, which are the result of the market situation -both in demand and in prices- as well as the effect that implementing the activities included in the Competitiveness Plan is having not only on reducing costs but also on increasing the productivity of the Group’s industrial facilities.

If the current market situation continues throughout the second half, TUBACEX estimates that it will obtain a very important increase in profits this financial year when compared with the figure obtained in 2004.

 

EVOLUTION OF CONSOLIDATED RESULTS: JANUARY-JUNE 2005
	2005	2004	%2005/2004
SALES	225.31	168.13	+34.0%
OPERATING RESULT (EBIT)	23.71	11.77	+101.4%
NET PROFIT	13.10	6.02	+117.4%
NET CASH-FLOW	21.65	14.38	+50.6%

      Figures in millions of euros.

Ordinary General Meeting of Shareholders for financial year 2004

TUBACEX INCREASES ITS DIVIDEND BY 179%

(Llodio, 17 May 2005).-

The Ordinary General Meeting of Shareholders of TUBACEX, meeting today at the company’s headquarters in the locality of Llodio, in the province of Alava, has approved the distribution of two dividends, one ordinary and the other extraordinary, for the joint amount of 0.0515 euros gross per share, to be charged to profits obtained in financial year 2004. The president of the company, Alvaro Videgain, has informed the Meeting of Shareholders that payment of this dividend is due to the good results obtained by the company in financial year 2004 and means an increase of 179% compared to the dividend paid the previous year.

TUBACEX, the world’s second largest seamless stainless steel tube manufacturer, will assign a total of 6.76 million euros to the payment of this dividend, a figure that represents a pay-out of 50% of the net profit obtained in 2004, which rose to 13.51 million euros.

According to the agreement reached at the Meeting of Shareholders, the ordinary dividend will be paid in the month of July and will amount to 0.0371 euros gross per share, involving a total of 4.86 million euros.

Payment of the extraordinary dividend will take place in September and will involve an amount of 0.0144 euros gross per share, accounting for the amount of 1.89 million euros.

In his speech to the Meeting, Videgain informed the assembled shareholders that Fidelity, one of the world’s leading investment funds, has notified the company that it has acquired, since April, a total of 6,731,550 TUBACEX shares, which represent 5.06% of the company’s share capital. In the same way, Santander Central Hispano Investment has informed that holds 6,701,833 TUBACEX shares, which represent 5.04% of the capital.

With regard to financial year 2004, whose annual accounts were approved at the Meeting today, the president of TUBACEX pointed out that it was a year of recovery for the seamless stainless steel tube manufacturing sector. The factors which have contributed to this recovery are, on the one hand, the improvement in the world economic situation and, on the other hand, the reactivation of investment projects in the oil and gas, petrochemical, chemical and energy sectors, the main purchasers of the products manufactured by the company.

In spite of some negative factors continuing to exist throughout the year, such as the appreciation of the euro against the dollar and the high increases in the prices of some raw materials, such as scrap and nickel, the improvement in the market, both in demand and in prices, and the application of the Competitiveness Plan have enabled TUBACEX to substantially improve its results.

Consequently, the consolidated sales rose to 347.45 million euros, a figure 34.2% higher than in the previous financial year. Of special significance is the growth of sales on the North American market (+70%), despite the appreciation of the euro against the dollar, which penalises the sales of European enterprises exporting to that market. Sales in the European Union grew by 30% and account for 67% of consolidated sales.

The operating profit (EBIT) amounted to 24.92 million euros, showing an increase of 144.3% over 2003.

The consolidated net profit reached 13.51 million euros, representing an increase of 123.7% with regard to the profit obtained the year before.

The net cash flow generated totalled 29.76 million euros, 40.8% higher than in 2003.

The president of TUBACEX explained that the high degree of industrial and commercial integration of the different business units within the Group has been a key element in achieving the current competitive position of the company and emphasised that the company consolidated its 22% share of the world market during the year.

In 2003, TUBACEX started the implementation of an ambitious Competitiveness Plan in the leading companies in the Group -Acerálava, TTI and SBER- in order to capitalise on their industrial synergies and maximise the economies of scale derived from the industrial configuration of the Group, with the aim of improving the operating profit margins by obtaining a differentiating competitive position in productivity and costs.

As regards the Competitiveness Plan, the president of TUBACEX pointed out that, after an initial phase to diagnose and identify aspects for improvement, carried out in 2003, several investment projects were initiated in early 2004, among which those to increase the volume of production of the steel mill and achieve improvements in the productivity of the extrusion presses and tube cold rolling mill stand out, as do the reductions in maintenance costs. Implementation of these activities will continue to take place throughout 2005.

The putting into operation of these investments ensures increases in productivity and capability at the Group’s key facilities, without creating increases in the workforce structures or in fixed costs, as a limited volume of investment is involved.

Moreover, Alvaro Videgain informed the shareholders of the launching of the Strategic Plan during the year, a Plan that defines the TUBACEX business project in a time horizon that lasts until 2010, with the aim of guaranteeing future growth and profitability, as well as converting the company into the world’s largest seamless stainless steel tube manufacturer.

The strategic alternative adopted is committed to profitable organic growth, minimises investment requirements in the Group and maximises value creation for shareholders.

The Plan foresees growth of the company through optimising the use of the capabilities of the current production structure and by means of the search for commercial excellence, paying attention to the position of leadership and profitability in Europe, to growth in traditional areas like the U.S.A. and Canada, as well as to those areas where greatest growth in demand for seamless stainless steel tube is foreseen, such as in the case of Asia. Entering into production of new products with high added value and strong growth potential is also anticipated.

Plants will specialise in manufacturing the products they are best capable of producing and implementation of the measures foreseen in the Competitiveness Plan will continue, which will have a decisive influence on reducing the average costs per tonne expected in the period.

Concerning the way in which the present financial year is going to develop, Alvaro Videgain announced to the Meeting of Shareholders that the estimates about the evolution of the international economy are optimistic and a continuation of the expansive cycle is expected during 2005. To this effect, he pointed out that the good market situation allowed TUBACEX, earlier this year, to increase the process of its products.

This good market situation has already been confirmed in the months which have passed since the start of the year, with an increase in sales of 39.4% having been attained, taking the figure up to 107.25 million euros, as well as an increase in the net profit of 112%, with the amount of  6.15 million euros having been reached.

EVOLUTION OF THE KEY FIGURES FOR THE CONSOLIDATED TUBACEX GROUP
	2004	2003	2002	2001	2000
SALES	347,45	258,92	286,70	286,67	262,03
OPERATING PROFIT (EBIT)	24,92	10,20	17,95	15,71	19,38
NET PROFIT	13,51	6,04	16,31	15,51	15,28
NET CASH FLOW	29,76	21,13	32,58	30,55	30,83
TOTAL ASSETS	386,32	341,24	348,16	335,11	344,49
NET WORTH	184,12	173,93	177,25	168,08	158,63
FINANCIAL DEBTS	115,43	101,58	104,75	105,28	124,89
FINANCIAL PROFIT / LOSS	(5,32)	(3,24)	(5,02)	(3,85)	(4,80)
SHARE CAPITAL	59,84	59,84	59,84	59,84	61,17
OPERATING PROFIT /SALES (%)	7,17	3,94	6,26	5,48	7,39
NET PROFIT /SALES (%)	3,89	2,33	5,69	5,41	5,83
NET CASH FLOW /SALES (%)	8,57	8,16	11,36	10,66	11,76
NET PROFIT/EQUITY (ROE) (%)	7,34	3,47	9,20	9,23	9,63
NET PROFIT/ASSETS (ROA) (%)	3,50	1,77	4,68	4,63	4,44
NET PROFIT PER SHARE (PPS) In euros	0,102	0,045	0,123	0,116	0,112
CASH FLOW PER SHARE (CFPS) In euros	0,22	0,16	0,24	0,23	0,23
BOOK VALUE/SHARE In euros	1,38	1,31	1,33	1,26	1,16
DIVIDEND  in euros per share	0,018	0,042	0,042	0,030	0,042
MARKET CAPITALISATION	251,33	188,83	166,22	164,89	149,26
PRICE/ BOOK VALUE Times	1,37	1,08	0,94	0,98	0,95
PER Times	18,60	31,26	10,20	10,64	9,8
AVERAGE WORKFORCE	1.517	1.485	1.504	1.577	1.493
EMPLOYEES IN SPAIN	904	871	837	836	820
EMPLOYEES ABROAD	613	614	667	741	673
Economic figures in millions of euros. ( ) Negative balances and figures.