Tenaris S.A. 2022 Sustainability Report Summary
Business Context and Reporting Period
This Form 6-K filing, dated March 31, 2023, contains Tenaris S.A.'s 2022 Sustainability Report. Tenaris is a leading global manufacturer of steel pipe products and related services for the energy industry, operating an integrated network across the Americas, Europe, the Middle East, Asia, and Africa. The reporting period covers the fiscal year ended December 31, 2022.
Key Financial Metrics (2022)
| Metric | Value (USD) | Margin/Rate |
|---|---|---|
| Net Sales | 11.8 billion | - |
| EBITDA | 3.6 billion | 31% of Net Sales |
| Net Income | 2.5 billion | 22% of Net Sales |
| Operating Cash Flow | 1.2 billion | - |
| Capital Expenditures (CapEx) | 378 million | - |
| Net Cash Position | 921 million | - |
| Dividends Paid/Proposed | 602 million | 0.51 per share |
Production Volume: Over 3.5 million tons of steel pipes produced globally.
Material Changes vs. Prior Period
- Revenue Growth: Net sales increased 80% year-over-year to USD 11.8 billion, driven by favorable market conditions, particularly in North America, and higher realized prices.
- Profitability: EBITDA rose to USD 3.6 billion, and Net Income more than doubled compared to 2021. Operating margins expanded to 31%.
- Working Capital: Operating cash flow was USD 1.2 billion, impacted by a USD 2.1 billion build-up in working capital to support higher sales and industrial ramp-up.
- Production Ramp-up: The company brought the Bay City mill to full capacity and restarted welded pipe production and heat treatment at Baytown and Koppel sites in the USA.
- Workforce Expansion: Hired 6,500 new employees globally, including over 1,500 in the USA, bringing total US employment to 3,600.
Outlook, Guidance, and Management Commentary
Market Outlook: Management expects global OCTG demand to reach approximately 16 million tons in 2023, the highest level since 2014, driven by increased drilling activity and high demand for LNG. Sales growth is anticipated in offshore developments, the Middle East, and South American pipeline infrastructure.
Sustainability Strategy: Tenaris maintains a target to reduce carbon emissions intensity by 30% by 2030 (vs. 2018 baseline). In 2022, intensity declined to 1.17 tons CO2-eq per ton of steel. Approximately 30% of CapEx is directed toward decarbonization projects, including a USD 200 million wind farm in Argentina expected to operate in late 2023.
Risks and Contingencies: Key risks include climate change impacts, regulatory changes, and supply chain disruptions. The company utilizes an internal carbon price of USD 80/ton to evaluate investments. Safety remains a priority, with the Lost Time Injury Frequency Rate (LTIFR) declining 10% to 0.9 per million man-hours.
Investor Verification Checklist
- Dividend Approval: Verify shareholder approval of the proposed 24% dividend increase to USD 0.51 per share at the May 3, 2023, annual general meeting.
- Working Capital Impact: Assess the sustainability of the USD 2.1 billion working capital build-up and its effect on future free cash flow.
- US Production Capacity: Confirm the operational status and output levels of the newly ramped-up US facilities (Bay City, Baytown, Koppel).
- Carbon Intensity Progress: Monitor the 2023 progress toward the 30% carbon intensity reduction target, specifically the impact of the new Argentine wind farm.
- Scope 3 Emissions: Review the increase in Scope 3 emissions intensity due to the higher proportion of welded pipes in the product mix and the associated reliance on third-party steel.