TUBOS REUNIDOS GROUP Special Products & Integral Services Worldwide Tubos Reunidos May 2015
TUBOS May 2015 REUNIDOS Content GROUP Tubos Reunidos Group 1. Company Overview 2. Strategy 3. TR – MISI – JFE: Strategic Agreement 4. Financials 2
TUBOS REUNIDOS GROUP 1. Company Overview
TUBOS May 2015 REUNIDOS Tubos Reunidos Group GROUP • Seamless Steel tubes Company • Global International Footprint : 86% of Sales (2014) • Oriented to the Energy Sector: 83% of Sales (2014) • Focus on Special Products: 65% of Sales (2014) • Transformational Investment Plan Under Execution: 150 Mill Eur 2012-2016 (65% completed) • Strategy: Specialization + Service + Competitiveness. Current Strategic Plan 2014-2017: Towards a new Tubos Reunidos • Agreement with Marubeni-Itochu Tubulars Europe Plc. and JFE Steel Corporation announced in November 27 4
TUBOS May 2015 REUNIDOS Tubos Reunidos Market GROUP Global Demand for Global Demand for TR´s Seamless Steel Pipes market segments Applications 44 million MT 9 million MT • OCTG : Premium Oil & Gas 5,0 Special • Line Pipes: Special Grades tubes & 1,0 pipes: • Pressure Pipes: Special Grades 2,5 12 million MT Power Standard 0,4 • Large OD Stainless Steel generation, 0,5 Tubes tubes & petrochemicals • Large-diameter Pipes: Special pipes Grades 32,0 TR: - Focused on high end segments for the energy sector TR: - Focused on high end segments for the energy sector - Brand name and differentiation - Brand name and differentiation 5
TUBOS May 2015 REUNIDOS Sector Trends GROUP Seamless Steel Tubes Market Commodity Products CAGR Special Products Premium OCTG + 8% tubes (2012-2018, MT) High performance. Oil & Gas - Non-conventional oil & gas exploration technology tubes and pipes: Nuclear Plants (2012-2020, GWh • Directional drilling, off-shore, +6 % • High corrosion shale–gas, deeper drilling installed) • Extreme temperatures Fossil fuel power • Strong pressure Power generation & +4 % • More reliable plants (2012-2020, GWh Petrochemicals – Cutting-edge • Higher efficiency installed) technologies • Lower maintenance Petrochemicals • Stringent safety requirements +4 % • Maximum efficiency (2011-2018, MT) • Power > 600 MW Source: US EIA, : The Metal Bulletin Research. The Five Year Outlook for the Global OCTG Industry, 2013, Broker Share TR: - Exposed to markets with high growth prospects TR: - Exposed to markets with high growth prospects - Opportunity for sales increase and margin expansion - Opportunity for sales increase and margin expansion New and more efficient technologies – Growing need for specialty tubing 6
TUBOS May 2015 Focused on Special and REUNIDOS GROUP Niche Products Pressure Pipes, Pressure Pipes, Special service Special service Large diameter Large diameter OCTG Premium OCTG Premium Stainless steel Stainless steel Boilers and Boilers and line Pipes line Pipes Tubes Tubes Heaters Heaters Oil & Gas Power Generation and Petroquemicals Exploration in Exploration in Offshore and Offshore and extreme corrosion, extreme corrosion, Critical phases and cutting-edge Critical phases and cutting-edge special grades special grades pressure and pressure and technological processes technological processes temperature temperature linepipes linepipes conditions conditions Quenching and Tubes and pipes up to Quenching and tempering High chrome alloys Tubes of > 8" OD in tempering 25" OD and stainless steel up to High collapse Special lengths (up to > 40 mm WT in special 25” OD Sour service 27 meters) High chrome alloys types of steel Special grades Proprietary steel grades Rifle tube Offshore Premium threads JV with MISI - 2016 TR: - Wide portfolio of special products TR: - Wide portfolio of special products - Based in own know how and R+D capabilities - Based in own know how and R+D capabilities 7
TUBOS May 2015 Diversified Focused on REUNIDOS GROUP Special and Niche Products Sales breakdown by client, Sales breakdown by product, Seamless Steel Tubes and Pipes, Millions of Eur, FY 2014 Seamless Steel Tubes and Pipes, Millions of Eur, FY 2014 Special Products: Special Products: Energy Sector: Energy Sector: 65% of sales (2014) 65% of sales (2014) 83% of sales (2014) 83% of sales (2014) 16% Oil and gas Boilers, Heaters, 29,0% Pressure pipe, 24,7% linepipe 19% Power generation Special OCTG 12,1% 12,9% 40,8% Petrochemicals Stainless steel 34,7% 17,3% and Special 28,5% large OD Industry and Standard others TR: - Diversified by products and market segments with a TR: - Diversified by products and market segments with a common commercial strength: quality and service common commercial strength: quality and service 8
TUBOS May 2015 Manufacturing of a Wide REUNIDOS GROUP Portfolio of Pipes • 325,000 MT production capacity • Small and large size outside diameter tubes • Carbon, alloyed, high alloyed: 1/2”-25” (12mm – 635 mm) • Stainless steel tubes: 8”-25” (190 mm – 635 mm) • Production sites located in the Basque Country (Northern Spain) • Production process vertically integrated Large diameter Small and mid-size diameter Tubes: up to 25” tubes: up to 7” Diameter: 26.7 – 180 mm. • Diameter: 190-635 mm. • (6-120mm upon cold- Thickness: 6.30 – 120 mm. • drawn). • Carbon, high alloy and Thickness: 2.6 – 20 mm. • stainless. Carbon, alloyed and high • alloy. Manufactured at Manufactured at Tubos Reunidos Industrial Productos Tubulares TR: - Vertically integrated from scrap to finished pipes TR: - Vertically integrated from scrap to finished pipes - Flexible and efficient production processes - Flexible and efficient production processes 9
TUBOS May 2015 REUNIDOS Worldwide Presence GROUP Sales Breakdown by Region, Seamless Steel Tubes and Pipes, Millions of Eur, FY 2014 Total Europe Historic worldwide presence • 32% North America 86% of sales in international markets • 10% Far East 42% 13% 58% of sales out of Europe Middle East • 3% Other TR: - Balanced geographic diversification TR: - Balanced geographic diversification - Presence in major markets for energy applications - Presence in major markets for energy applications 10
TUBOS September 2014 Shareholder structure REUNIDOS GROUP BBVA 14,9% Zorrilla Lequerica Family 10,2% N+1 por QMC II Iberian Capital Fund (N+1 Asset Management) Ybarra Family 49,1% 9,0% Barandiaran Family 6,6% De Miguel Nart 6,4% 3,8% Free Float 11
TUBOS REUNIDOS GROUP 2. Strategy
TUBOS May 2015 REUNIDOS Strategic Cornestones GROUP Towards a New Tubos Reunidos From generalist Specialist in Premium Premium 1 manufacturers to… and niche products Service 2 From flexibility and Integrated Service Solutions versatility to… Competitive 3 From cost-efficient to… Structurally competitive From geographically 4 Global Global and local presence diversified to… TR: - Capturing growth opportunities to be a larger company TR: - Capturing growth opportunities to be a larger company offering Special Products & Integral Services Worldwide offering Special Products & Integral Services Worldwide 13
TUBOS May 2015 REUNIDOS Sales volume increase GROUP + Volume + OCTG MTs, Thousands • High demand from non-conventional technologies • TR´s new high-added value products – investment program • TR´s historic presence in the US – large growing market • Agreement with MITE – JFE: Stronger capabilities and geographic reach + Pressure Pipes – Power Gen & Petrochemicals • Emerging countries development • Global replacement towards clean technologies • TR´s new high value added products + Large OD and Stainless • Strong competitive advantages and entry barriers for TR • Niche product - TR Group large market share • New special products since 2013 2013 2014 2017 + Service, + Competitiveness, + Global Mechanical and others Linepipe presence OCTG Pressure Pipes Large OD & Stainless TR: - Available capacity without capex requirements TR: - Available capacity without capex requirements - Main investments for new products already executed - Main investments for new products already executed 14
TUBOS May 2015 REUNIDOS Product Mix Improvement GROUP + Better mix Eur Millions 78% Sales and technology strategy focused 64% 65% on higher added-value products: in high-growth, high-return segments • Heat treated tubes and pipes • High alloy steels • Cleaner steels • OCTG products with Premium threads • Special large OD tubes and pipes • Larger portfolio of Stainless Steel tubes 2013 2014 2017 TR: - Most new high value added products already TR: - Most new high value added products already developed and industrialized developed and industrialized 15
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