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Tenaris S.A. Half-Year 2017 Filing Summary

Business Context and Reporting Period

This Form 6-K filing contains the unaudited interim management report and consolidated condensed financial statements for Tenaris S.A. for the six-month period ended June 30, 2017. Tenaris is a leading global manufacturer of steel pipe products and related services for the energy industry. The financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) and expressed in U.S. dollars.

Key Financial Metrics

Material Changes vs. Prior Period

• Revenue Growth: Net sales increased 6% year-over-year, driven by a 22% increase in shipment volumes, particularly in North America (USA and Canada), which offset lower sales in South America and the Middle East/Africa.
• Profitability Turnaround: Operating income swung from a $32 million loss in 2016 to an $88 million profit in 2017. This was driven by improved capacity utilization, reduced severance costs ($22 million in 2017 vs. $56 million in 2016), and better pricing conditions.
• Discontinued Operations: The company recorded a significant after-tax gain of $90 million from the sale of its North American electric conduit business (Republic Conduit) to Nucor Corporation, completed in January 2017.
• Equity Earnings: Equity in earnings of non-consolidated companies (primarily Ternium) more than doubled to $65 million from $30 million.
• Cash Flow: Operating cash flow turned negative ($7 million used) compared to $689 million provided in the prior year, primarily due to a $365 million increase in working capital to support higher production and shipments.

Outlook, Risks, and Contingencies

Management Outlook: Management expects demand growth from Rig Direct customers in North America and Argentina in the second half of 2017. However, sales in the Middle East and Europe are expected to slow in the third quarter. While pricing conditions are improving, rising raw material costs are expected to dampen margin improvements. EBITDA growth is anticipated, particularly in the fourth quarter due to East Mediterranean offshore gas pipeline shipments.

Principal Risks and Contingencies:

• Venezuela Nationalization: Tenaris holds arbitral awards against Venezuela totaling approximately $310 million (including interest) for the expropriation of subsidiaries Tavsa, Matesi, and Comsigua. Venezuela has requested annulment of these awards; payment is not guaranteed.
• Legal Proceedings: Significant ongoing litigation includes a tax assessment in Italy (Dalmine) regarding withholding taxes (approx. $257 million claim), claims by CSN regarding the Usiminas acquisition, and product liability claims related to the Veracel Celulose accident.
• Investigation: The company is cooperating with Italian, Swiss, and U.S. authorities regarding an investigation into potential payments involving affiliates and officers of Petrobras (Operation Lava Jato).
• Market Risks: Demand remains sensitive to oil and gas prices, which dipped below $50 per barrel in June 2017, potentially slowing drilling activity.

Investor Verification Checklist

• Working Capital Impact: Verify the sustainability of the $365 million increase in working capital and its effect on future operating cash flows.
• Venezuela Recovery: Assess the likelihood of collecting the $310 million arbitral award from Venezuela given the ongoing annulment proceedings.
• Raw Material Costs: Monitor the impact of rising raw material costs on the ability to maintain the improved EBITDA margin of 16.6%.
• Discontinued Operations: Confirm that the $90 million gain from the Republic Conduit sale is treated as a one-time event and excluded from core operating performance analysis.
• Legal Reserves: Review the adequacy of provisions for the Italian tax assessment and Veracel Celulose litigation, as outcomes remain uncertain.