Business of "ArcelorMittal Tubular Products" Roman down almost 50% in H1

"ArcelorMittal Tubular Products" Roman SA (symbol:PTRO, on the Rasdaq tier of the BSE) posted a significant drop in turnover, from 426,346,998 lei in H1 2008, to 219,268,184 lei at the end of June 2009, according to the semi-annual report sent to the Bucharest Stock Exchange.

At the same time, sales dropped from 426,106,415 lei in June 2008, to 219,219,415 lei in June 2009. Total operating revenues of the company dropped from 408,786,429 lei in H1 2008, to 185,827,805 lei in H1 2009. The company"s operating expenses nearly doubled YOY in H1 2009, to 81,579,166 lei, from 43,420,431 lei at the end of H1 2008. This negative result was compounded by the 37,067,079 loss from financial operations, which caused "ArcelorMittal Tubular Products" Roman SA to post a gross loss of 118,646,245 lei, at the end of H1 2009, up YOY from 40,891,488 lei.

The company"s receivables decreased YOY, from 185,125,754 lei in H1 2008, to 79,287,686 lei in H1 2009, due to shrinking sales. At the same time, debts due within one year, dropped to 443,839,410 lei in H1 2009, (down 40,660,751 lei YOY), and debts due after more than one year dropped to 187,032,007 lei, down 3.386.946 lei YOY. Current liabilities dropped just 9% from the beginning of 2009, on the back of amounts due as part of the Voluntary Layoff Scheme implemented in the first semester of 2009, worth 11.6 million lei, which will be paid over the course of the next two years. The company also has major outstanding liabilities in the form of unpaid interest for loans taken out in the past few years.

According to the Board of Directors, compared to H1 2008, the global pipe and tubing market was hit hard by the global economic crisis, which caused a great slowdown in construction, and in investments and drilling in the oil and natural gas industry. In order to mitigate the effects of the crisis, the company has already taken several steps: major output cuts to eliminate inventory, improve internal management processes, improve working capital, lower net assets in order to insure financial flexibility once demand recovers as expected, the revision of the company"s investment strategy in order to ensure that the investments would not endanger the company"s financial resources, as well as the implementation of a voluntary staff departure scheme intended to match the company"s number of workers to current demand levels.

Another important step taken by the company was to temporarily suspend the operation of the rolling-mill for 6-inch tubing, starting June 1st, 2009. "This decision was made after a careful evaluation, intended to ensure the efficient management of the company in the current extremely tough economic environment and market conditions, in order to minimize the losses that the company is currently facing, caused by the extremely low level of orders. This decision did not lead to individual/collective layoffs of the workers of the steel mill; their individual work contracts were suspended for the duration of the interruption of the rolling mill"s operations, and they will receive 75% of their base salary plus the seniority bonus. The company expects the steel mill to resume operation as soon as market conditions become favorable again", report says.

SC "ArcelorMittal Tubular Products" Roman SA is the main domestic maker of unwelded steel tubes. The company was created in 1951, under the name "The New Metallurgic Plant", and the construction of the first rolling mill was completed in 1957, which is when the current company began its operations. After going through several name changes, in 1991 the factory in Roman became a public limited company named Petrotub. On October 28, 2003, LNM Holdings NV acquired a 69.768% of the shares of SC Petrotub SA Roman from APAPS (The State Authority for Privatization).

According to the latest filing, ArcelorMittal Tubular Products Holding B.V. holds 69.76% of the tubing maker, SIF Moldova (SIF2) holds 14.08%, with the remaining stock owned by various other shareholders.