TMK plans annual capex of up to $200 mln under new strategy
MOSCOW. Oct 31 (Interfax) - TMK , a major Russian pipe producer, is planning annual capital expenditures of around $200 million under a new ten-year development strategy approved by its board of directors, the company's vice president for strategy and development, Vladimir Shmatovich said at TMK's Investor Day in London.
"We're planning annual capex of up to $200 million," Shmatovich said, adding that the figure might vary as a great deal depends on the ruble's exchange rate and most capex is in rubles. "This figure also includes investment in maintenance and servicing of existing facilities," he said.
He reconfirmed the company's intention to reduce its net debt/EBITDA ratio to 3.0 by the end of 2019 and to 2.5 by 2021. The figure was at 4.8 at the end of 2016.
The net debt/EBITDA ratio will be reduced thanks to a combination of factors, including improvement in productivity, cost cuts and growth of EBITDA at TMK's U.S. division, which could double.
The company invested about $4 billion in expanding production facilities in the previous ten years. "In the next ten years we won't be making such large investments," Shmatovich said.
Under the approved strategy, in 2018-2022 TMK intends to maintain strong positions on the world market for oil country tubular goods (OCTG), as well as leading positions on the domestic OCTG market, company materials state. TMK also plans to optimize its portfolio of assets in this period, and maximize cash flow from operations.
High-tech products will generate 50% of revenue at the company's Russian division by 2022, according to TMK's plans. The company also plans to maintain its leadership on the domestic market for premium couplings. Sales of innovative products at the Russian division are expected to generate additional annual revenue of $100 million.
In the period from 2023 to 2027, TMK plans to maintain its leading positions by further optimizing and expanding capacity, including through participation in the process of consolidation of the global pipe and pipe products industry, implying the formation of new partnerships, mergers and acquisitions, as well as the process of digitization.