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ChelPipe Group announces operating results for FY 2019

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ChelPipe Group announces operating results for FY 2019
PJSC Chelyabinsk Pipe Rolling Plant (“ChelPipe Group” or “the Company”), a leading Russian steel pipe maker and provider of integrated solutions to companies in the fuel and energy sector, today announces its operating results for the 12 months ending December 31, 2019 (FY 2019).

 FY 2019 highlights

  • In FY 2019, ChelPipe Group shipped a total of 2,070 kt of pipes to customers (up 8% y-o-y).
  • A key growth driver was an increase in export shipments to 736 kt, or 36% of all shipments.
  • Shipments to the Russian market totalled 1,334 kt.
  • Large-diameter pipe (LDP) shipments reached 916 kt (up 33%), strengthening ChelPipe Group’s position as the largest LDP manufacturer in the Russian market.
  • Oil country tubular goods (OCTG) shipments increased by 3% to 469 kt.
  • Shipments of pipes with ChelPipe Prime threaded connections rose by 23%, driven by stronger demand from Russian customers.
  • Shipments of trunk pipeline division products increased by 17% to 21.3 kt.
  • Sales of tubular products through the online store increased by 160%.


In 2019, ChelPipe Group delivered robust growth in shipments of tubular products. The Company strengthened its position as the largest LDP manufacturer in the Russian market while also continuing to expand its international presence, with exports hitting a 25-year high. In response to increased competition, ChelPipe Group is taking a number of steps to boost operational efficiency and put the customer at the heart of the transformed business model, in line with the Company’s 2024 strategy. Over the next five years, we will focus on strengthening our customer proposition, primarily in the high added value segments; developing services and integrated engineering solutions; a smoother customer experience; and diversifying our sales channels. Delivering in these areas will give us a significant competitive edge over our Russian and international peers, and strengthen ChelPipe Group’s appeal as a long-term partner for our clients.
Boris Kovalenkov
CEO of ChelPipe Group
Pipe and tube division

Shipments by product
kt, unless otherwise specified Q4
2019
Q4
2018
Change,
%
FY
2019
FY
2018
Change,
%
Seamless industrial pipes
100 150 (33%) 498 562 (11%)
OCTG 111 127 (13%) 469 454 3%
Line pipes (O&G)
51 27 90% 152 180 (16%)
LDP
217 85 157% 916 688 33%
Other welded pipes
9 5 70% 35 32 7%
Total
489 394 24% 2 070 1 916 8%

In 2019, Pervouralsk New Pipe Plant and Chelyabinsk Pipe Rolling Plant (both part of ChelPipe Group) shipped 2,070 kt of pipes to customers. As a result, the Company accounted for 18% of total shipments by Russian pipe producers.

Exports increased to 36% of all shipments on the back of the Group’s successful international expansion, reflecting high demand for ChelPipe Group products and consistent efforts to enhance the Company’s customer proposition. The increase in pipe shipments was largely driven by the Company’s involvement in the construction of major international trunk pipelines. ChelPipe Group contributed to the Saryarka gas pipeline project to supply gas to the Kazakh capital, Nur-Sultan, and took part in the construction of the Turkmenistan section of the TAPI (Turkmenistan-Afghanistan-Pakistan-India) gas pipeline, for which it was the exclusive LDP supplier.

These projects were among the drivers of the 33% increase in LDP y-o-y, strengthening ChelPipe’s position as Russia’s largest LDP producer.

In 2019, OCTG shipments rose by 3% to 469 kt, offsetting lower profitability in the industrial segment. Shipments of pipes with ChelPipe Prime threaded connections were up 23%, driven by an anticipated increase in oil exploration and production.

Domestic shipments were 1,334 kt, down 6% y-o-y. The decrease was due to a larger share of exports and a slight decrease in demand for seamless pipes.

Trunk pipeline division
In 2019, ChelPipe Group sold 21.3 kt of trunk pipeline division products, up 17% y-o-y.
Shipments of pipeline connecting bends increased by 22% y-o-y from 12.4 kt to 15.2 kt. A significant part of these shipments – 2.6 kt – were export sales, which doubled from the previous year.

Shipments by production site:
kt, unless otherwise specified
Q4
2019
Q4
2018
Chang,
%
12М
2019
12М
2018
Change,
%
Stamp-welded pipeline parts
1.4 1.7 (18%) 6.1 5.8 6%
Bends and other products
6.6 3.1 (112%) 15.2 12.4 22%

Outlook for 2020

  • ChelPipe Group expects robust demand for pipe products from both Russian and international customers. Volumes are expected to remain flat vs 2019.
  • The Company will focus on further delivery against its strategic priorities of improving operational efficiency, enhancing the customer experience and streamlining the customer proposition, as well as gradually gaining market share in adjacent segments and entering new geographies.
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