Interpipe hosts inaugural conference call on 1H19 results

Ukraine’s largest pipe and railway wheel producer
Interpipe (INTHOL) conducted its first conference call on Nov. 12 in which it
discussed its 1H19 operational and financial results.

Among the information that was not disclosed on Oct.
16 in Interpipe’s condensed financial release
were sales volumes, which dropped for pipes 8% yoy in 1H19 to 317 kt and rose
by 1% yoy to 96 kt for wheels.

The drop in pipe sales volumes was due to an 11% yoy
decrease in seamless pipe sales volumes to 261 kt in 1H19, while welded pipe
sales volumes rose 6% yoy to 56 kt. Seamless pipe sales volumes fell due to
lower drilling activity in Ukraine and a ban on Ukrainian pipes in Russia that
took effect in April.

Europe pipe sales also declined, the reason being the
quotas introduced by the EU Commission. However, Americas pipe sales volumes
rose 33% to 82 kt, according to Concorde Capital estimates, which the company
attributed to stronger cooperation with OCTG clients and welded line pipe
sales.

In the wheel segment, the volume of sales to Europe
jumped 44% yoy to 26 kt, according to Concorde Capital estimates, which
compensated a 27% slide in sales in Ukraine to 23 kt. However, Interpipe noted
on the call that the indicators that might be considered leading for railway
wheel demand, namely, railcar freight rates and prices for new railcars, have
demonstrated weakness recently, which might lead to eventual declines in demand
and prices for Interpipe’s wheels.

The company said it does not plan to invest in its
working capital in 2020 because of its strong such investments already this
year, particularly in 1H19.

Dmytro Khoroshun: Interpipe’s
business was strong in 1H19, and ahead lay both risks and opportunities.

In particular, oil prices have recently been depressed
owing to the U.S.-China standoff (trade and other), and further escalation
might result in weaker oil prices and lower demand for pipes worldwide.
Conversely, if the U.S. and China lower their tensions, oil prices might jump,
eventually lifting drilling activity and demand for pipes.