• TUBACEX is committed to its strategy of becoming a worldwide supplier of tubular solutions.
  • The company is dealing with the worst crisis in the sector with a cost-cutting plan, operational improvements at its plants, diversification towards Premium products, markets and sectors with growth potential and reductions in financial costs.
  • The Asian market will have the highest growth in the world where TUBACEX has already grown by 64% in the last two years.
  • The fall in raw materials and cuts in capital expenditure in Oil&Gas will continue to define 2016, and a gradual recovery of the market is forecast for the second half of 2017
  • The company announces that it will not stop key strategic investments which favor medium and long-term growth.
  • In order to improve its product range in the Asian market, TUBACEX has signed a letter of intent for creating a joint venture with the Japanese company, Awaji.

TUBACEX forecasts a complicated market environment for 2016, dominated by the decline in raw materials, cuts to capital expenditure and delays in the implementation of projects linked to Oil & Gas. In spite of this, at its Shareholders’ General Meeting held today in its Llodio headquarters, the company announced that it will continue with key strategic investments and that corrective measures will continue to be developed to optimize short-term results, ensuring medium and long-term growth.

These measures include some which have already been announced, geared towards cost reductions; operational improvements at the production plants; diversification towards Premium products, markets and sectors with growth potential; and the reduction of financial costs.

Global supplier of tubular solutions
Moreover, TUBACEX is committed to a value-added business focus and a strong position as a worldwide supplier of tubular solutions. This allows it to offer its customers a full range of services throughout the entire value chain, allowing for optimization of costs.

“Our command of the technological processes, added to the knowledge of the performance of the product and of the market itself, allows us to strengthen our range of solutions, taking a qualitative leap in the business concept from manufacturer to global supplier of tubular solutions” stated Jesús Esmorís, CEO of TUBACEX.

This business concept is possible thanks to its commitment to Innovation, an area which has continued to focus on capital expenditure in order to develop new products, processes and technologies. In this regard, it is worth mentioning the loan of €65 million granted by the EIB to boost R&D&I activities of the TUBACEX Group. The loan fosters the innovation strategy from a threefold perspective: new product R&D activities; developing their corporate R&D center; and advanced manufacturing and new technologies.

Strategic plan status
In 2015, TUBACEX launched the second phase of its Strategic Plan (2013 – 2017), corresponding to growth; a phase that was brought forward to June 2014 due to the smooth pace of implementation of other initiatives during the first two years of the plan.

As part of its strategy, TUBACEX continued its movement towards the sale of Premium products, which currently represent 60% of its invoicing. In this sense, it is important to point out the good performance of the boiler market for new power generation plants with supercritical technology, which has reached record sales figures during 2015.

Furthermore, TUBACEX has continued its diversification strategy towards other sectors which will allow it to reduce its dependence on Oil&Gas.

Finally, during 2015 TUBACEX integrated IBF and completed the acquisition of 68% of the stainless steel tube division of Prakash Steelage in India, renamed TUBACEX India, with the aim of strengthening its position in the standard product segment and in a key market in TUBACEX’s business strategy.

Growth in Asia
Over the last two years, TUBACEX sales on the Asian continent have increased by 64%, representing 59% of its sales in 2015, establishing itself as the market with the highest worldwide growth potential and one of the main axes for the development of the Group’s commercial strategy. A strategy which is undergoing further strengthening of its sales network, with an operational presence in the main economic centers.

In this regard, the Group has signed a letter of intent for creating a joint venture with the Japanese company Awaji, for manufacturing special stainless steel components (elbows, reductions, Tees and Caps) in its Thailand factory.

Awaji Materia, founded in 1944 and dedicated to the manufacture of approved stainless steel and carbon fittings, has a high level of market penetration in Southeast Asia, as well as in North America and Japan.

This operation enables TUBACEX to complete its range of products and improve its offer in the oil and gas sector, holding a leadership position in the supply of tubular solutions.

The process is expected to be completed in the third quarter of the year, in accordance with the terms of the final agreement resulting in a capital increase subscribed by the TUBACEX Group through IBF with the aim of achieving majority shareholding in the Joint Venture. “This is a low-key deal with a target turnover of €20-25 million over three years, which will allow us to gain in competitiveness in certain market segments, generating productive synergies in our Asia plants” stated Jesús Esmorís, CEO of the TUBACEX Group.

2015 Financial Year
The Shareholders’ General Meeting has today approved the company’s annual accounts for 2015, which achieved a gross operating profit (EBITDA) of €48.9 million, with a 9.2% sales margin representing 23.7% less than the 2014 financial year. In addition to this, the company’s sales amounted to €533.4 million, representing a drop of only 2.4% and a net profit of €8.4 million.
Therefore, the generation of net cash prior to acquisitions has been €37 million, accumulating a cash flow generation prior to acquisitions in excess of €150 million over the past three years.
The net financial debt over EBITDA ratio at the end of the year was 4.5x, over the target of 3x. However, it must be pointed out that this is a transitional situation as a result of the payments made during the year to acquire two new companies and coincides with a year of falling profits as a consequence of the weak market situation.

Shareholders’ Meeting Agreements
The Shareholders’ Annual General Meeting has approved a proposal from the Board of Directors of TUBACEX, in line with the commitment to the Strategic Plan, for the payment of a dividend of €0.0259 per share payable in the month of June for a total amount of €3.34 million, representing a pay out of 40% of the consolidated profit.

Capital expenditure of €27.3 million
The company invested €27.3 million in technical installations and machinery during 2015. The most significant investments during the financial year were a continuation of those commenced in previous years, in order to reinforce the strategic development of production capacity in those segments requiring a higher level of expertise and added value within the oil, gas and power generation sectors.

It should be noted that Tubacex invested almost €200 million between 2010-2015 both in strategic product developments and in process improvement. Other investments were aimed at improvements to the efficiency of the key facilities in the manufacturing processes of different plants, occupational safety, respect for the environment, the maintenance and replacement of industrial equipment, quality improvement and increase in the added value of the products.


Press relations
Nagore Larrea