Tenaris S.A. announced its results for the quarter and nine months ended 30 September 2012 with comparison to its results for the quarter and nine months ended 30 September 2011.

Summary of 2012 Third Quarter Results
Sales increased year on year led by higher demand in North and South America, but, sequentially, they were affected by lower shipments to the Middle East and lower demand for industrial products in Europe, in addition to seasonal factors.

EBITDA, excluding extraordinary items, declined 10% sequentially with margins being affected by product mix (a lower proportion of seamless products in the sales mix) and efficiency losses related to operational issues at the Tamsa steel shop and plant maintenance shutdowns.

Changes in Segment Reporting
Following the acquisition of the non-controlling interests in Confab Industrial S.A. (Confab) and its further delisting, we have changed our internal organization and therefore combined the Tubes and Projects segments.

Therefore, starting with the financial statements for the period ended 30 September 2012, we will report under segments: Tubes (tubular products and services) and Others (other products and services).

Additionally, the coiled tubing operations, which were previously included in the Tubes segment and which accounted for 1% of total sales in 2011, have been reclassified to Others.

Market Background and Outlook
In spite of the weak economic recovery, demand for energy has remained stable and oil prices are at levels which should continue to support investment in exploration and production activity worldwide during 2013.

North American natural gas prices have risen above their early year lows as demand shows strong year on year growth. In 2013, we expect drilling activity for gas to recover gradually.

In the fourth quarter of 2012, however, our sales in North America will be affected by the current market uncertainty that is driving a reduction in OCTG inventories.

In the rest of the world, drilling activity should increase gradually led by the growth in the exploration and development of deepwater and unconventional reserves. In the coming quarters, sales to oil and gas customers in the Middle East are expected to recover from the low level of the third quarter.

Sales to industrial markets, particularly in Europe, are expected to remain at low levels.

EBITDA margins are expected to remain at the level of this third quarter, as the impact of lower prices in less differentiated segments is likely to offset product mix and industrial efficiency improvements.

Analysis of 2012 Third Quarter Results
Net sales of tubular products and services increased 8% year on year but decreased 4% sequentially as sales were mainly affected by lower shipments to the Middle East and lower demand for industrial products in Europe. In North America, sequentially lower sales of deepwater line pipe in the Gulf of Mexico were largely offset by higher sales in Mexico. Sales increased in South America, mainly in Argentina and Colombia. In Europe, lower demand from the industrial sector and seasonally lower sales to distributors were the main causes of the sequential decrease. In the Middle East and Africa sales decreased sequentially due to lower shipments relating to the timing of orders. In the Far East and Oceania sales decreased sequentially due to lower sales of OCTG and structural products.

Operating income from tubular products and services, which, in the third quarter of 2012, included a non-recurring gain of US$49.2 million, increased 27% year on year but decreased 5% sequentially. The sequential decline in operating income reflects a lower proportion of seamless pipes in the sales mix and efficiency losses related to operational issues at the Tamsa steel shop and plant maintenance shutdowns.

Net sales of other products and services decreased 14% year on year and 17% sequentially, reflecting lower sales of industrial equipment in Brazil, which also impacted operating income and margins.

Selling, general and administrative expenses, or SG&A, amounted to 17.3% of net sales in the third quarter of 2012, compared to 17.4% in the previous quarter and 18.5% in the third quarter of 2011.

Other operating income, net, amounted to US$44.2 million in the third quarter of 2012, compared to US$0.8 million in the previous quarter and US$1.6 million in the third quarter of 2011. In August, 2012, Confab, our Brazilian subsidiary, collected US$49 million from the Brazilian government, in interest and monetary adjustment over a tax benefit received in 1991.

Analysis of 2012 First Nine Months Results
Net sales of tubular products and services increased 13% to US$7,445.2 million in the first nine months of 2012, compared to US$6,586.1 million in the first nine months of 2011, reflecting a 6% increase in volumes and a 4% increase in average selling prices.

Operating income from tubular products and services increased 40% to US$1,679.6 million in the first nine months of 2012, from US$1,200.5 million in the first nine months of 2011, reflecting a 13% increase in sales and an improvement in the operating margin, mainly reflecting a better absorption of fixed and semi-fixed expenses on higher sales.

Net sales of other products and services decreased 1% to US$630.7 million in the first nine months of 2012, compared to US$635.8 million in the first nine months of 2011, mainly due to lower sales of industrial equipment in Brazil and coiled tubing, almost offset by higher sales of sucker rods.

Operating income from other products and services decreased 14% to US$91.0 million in the first nine months of 2012, compared to US$106.5 million during the first nine months of 2011, reflecting lower sales and operating margins.

SG&A amounted to 17.2% of net sales during the first nine months of 2012, compared to 19.2% in the same period of 2011.