TPT September 2007

Industry News

Ukraine’s Interpipe: expanding plans for global growth

Interpipe, Ukraine, is on a fastrack to financial, technical and trading growth, according to company figures and independent verification from international financial agencies Fitch and Standard & Poor. Already a leading producer of seamless pipe and wheels for the domestic and eastern European market, the company has increased its global sales by over 10 per cent annually for the last five years. In this time, the company has also increased the countries it serves from 46 to 76. This growth has elevated the company into the league of fastest growing global pipe manufacturers. With an annual production of 1.4 million tons and gross revenue of around US$1.6 billion, Interpipe’s share of the world seamless pipe market already exceeds 4 per cent, with further expansion planned in the coming years. In 2006, the company achieved a sales revenue of US$1.44 billion and gross profit of over US$503 million. This equated to a sales growth of 11.8 per cent for seamless pipe and 20.3 per cent for welded pipe. This growth has been accelerated by the process of restructuring all Interpipe entities under one holding company. In addition to a rebranding process, several large-scale projects were initiated in 2006, including the construction of an electric steel making facility in Dnepropetrovsk. A reflection of this growth and expansion, the company has been awarded a positive rating by international financial agencies Fitch and Standard & Poor. Fitch rated

Interpipe as ‘B+’ (long-term) and ‘B’ (short- term), with an outlook rating of ‘stable’. Ratings agency Standard & Poors gave Interpipe a long-term credit rating of ‘B+’ and a rating of ‘uaA’ (by national scale). These ratings reflect Interpipe’s good position among its international pipe peers, based on its low indebtedness and relatively high profitability, driven by favourable industry prospects and

› (Above) Interpipe’s success in figures; and (top) a major part of Interpipe’s strategic investment is the turnkey installation of a 1.3 million ton electric arc meltshop in Dnepropetrovsk

pipes in the medium term. Fitch pinpointed Interpipe’s diversified product portfolio (ie pipes and wheels) as highly beneficial, together with its high export revenue (79 per cent for pipe). To further build its export portfolio, Interpipe has just gained pre-qualification from a number of leading oil producers. Interpipe Niko Tube has been approved for inclusion in the Kuwait Oil Company’s approved list of manufacturers (API 5CT pipe), while Interpipe Niko and Interpipe NTRP have both gained pre-qualification from the UAE's Abu Dhabi National Oil Company (API 5L pipe). Interpipe’s short-to-medium plan for 2007-2009 involves investment of almost US$730 million. This investment includes new product development, improved process control and non-destructive testing, extension of special finishing floors, and de- bottlenecking and flow rationalization.

a low-cost production base. Its 2006 earnings (EBITDA) margin was 25.5 per cent compared with an international pipe producers’ average of 22.6 per cent. Standard & Poor’s analysts expect Interpipe to benefit from a good market position, with strong demand for seamless and welded

fi The company’s geographical distribution has increased from 46 to 76 countries in 4 years

Interpipe – Ukraine Fax : +380 562 389482 Website : www.interpipe.biz

S eptember /O ctober 2007