RESULTS FOR THE FIRST HALF OF FINANCIAL YEAR 2022

The Tubos Reunidos Group has published its results for the first half of financial year 2022, confirming the upwards trend in its activity compared to the previous half, the second half of financial year 2021. Significant increases in the prices of raw materials, energy (electricity and natural gas) and freight transport costs had a marked impact on activities in financial year 2021.

The receipt in 2021 of SEPI's FASEE (Fondo de Apoyo a la Solvencia de Empresas Estratégicas - Strategic Enterprise Solvency Support Fund) enabled the Company to implement the initiatives envisaged in its 2021-2026 Strategic Plan, including the processes of concentrating steel mills and cold-drawing units into a single location in the Amurrio plant and the implementation of the non-traumatic exit plan. These measures will make the Group more efficient and more competitive.

In the area of responsibility for the environment, sustainability and governance (ESG), the actions taken in the first half of the year to strengthen the Group's corporate governance through amendments to the Rules and Regulations of the Board and the Articles of Association are noteworthy. Similarly, on 20 June 2022, Tubos Reunidos was incorporated into the IBEX® GENDER EQUALITY index, which is in line with its commitment to ensuring the presence of women on the board of directors and will further this strategy. These measures are part of the Group's long-term strategic vision, which includes respect for the environment, leading the energy transition and a firm commitment to sustainable development, contributing to the transformation to a carbon-neutral world.

The Group is committed to making this transition with the support of our most sustainable competitive advantage-the people who make up the Tubos Reunidos team-as well as with the main stakeholders with whom the company operates, for which the management has been in contact since September with the entire workforce and the main agents involved.

KEY FIGURES FOR THE FIRST HALF OF FINANCIAL YEAR 2022

The main financial figures of the income statement for the first half of financial year 2022 and 2021, compared to the results for the second half of 2021, are shown below:

EBIT adjusted (not including asset impairment and non

Net income for the period

* See calculation in Financial Statements

The significant increase in sales as a result of the strong demand and the passing on of the cost increase to the sales price, together with the start of efficiency actions earmarked in the Strategic Plan, have led to a significant improvement in EBITDA and the consolidated operating result. Coupled with the improvement in the financial result, this has enabled the TR Group to obtain a positive net result of 1.9 million euro in the six-month period for the first time since 2014. This represents an improvement of 47.3 million euro compared to 45.3 million euro in losses the previous year. This confirms the trend towards recovery and the fulfilment of the Strategic Plan.

The Group achieved a positive EBITDA of 14.5 million euro in the first half of 2022, an improvement of 25.4 million euro compared to a EBITDA of negative 10.9 million in the first half of 2021. In turn, the Group's consolidated positive operating result for the first half of 2022 amounted to 5.9 million euro, compared to the negative 18.0 million euro in the same period of the previous financial year.

The net consolidated financial result for the half year amounts to negative 4.2 million euro (2021: 27.3). The cost of interest on financing contracts, 9.5 million euro (2021: 12.1 million euro), was partially offset by the positive impact of exchange rate differences of 3.0 million euro (2021: 1.4 million euro), and the long-term contract for the supply of renewable electricity for

2.3 million euro (2021: negative 16.6 million euro for the valuation of the debt conversion derivative).

2. Business trends and consolidated pipe1 sales by geographical markets and business sectors

Pipeline sales during the first six months of financial year 2022 amounted to 228.8 million euro, 113% higher than the same period of the previous year. Sales have been heavily focused on carbon steel pipe, given that the starting portfolio was more oriented towards commodity products, as a result of the replenishment of inventories by customers and the distribution chain over the course of 2021.

By area, shipments to the US are notable at 104.9 million euro, or 46% of turnover, which is almost 4 times the figure for the same period of the previous year. The second largest market was Europe, with 95.4 million euro and 42% of turnover.

Sales growth is across all business segments: upstream (OCTG) accounts for 28% of total turnover, up 281% on the first half of 2021; pipes for mechanical-industrial applications account for 29%, up 184%; downstream stands at 25%, up only 18%; and midstream 18% of the total, up 127%. Sales reached 120,663 tonnes, almost double (+84%) those of the same period of the previous year.

In relation to projects related to electric power generation, refining and petrochemicals (downstream) that provide a mix of alloyed and stainless steels, although there has been some reactivation of projects paralysed by the pandemic, the impetus we expected in the major markets in Asia and the Middle East has not yet been recovered.

Average prices at the end of the half year amounted to 1,896 euro per tonne (17% higher than in the same period of 2021), a historical record for this product mix, although they do reflect cost levels that have never been seen before. The reality is that it has taken a lot of effort to pass on these constant cost increases to procurement, particularly for electricity and natural gas.

Sales, in Thousands of euros

Oil&Gas - OCTG (Upstream)

Oil&Gas - Linepipes (Midstream)

Pipe sales by geographical source of orders and not by destination.

The financing and novation agreements signed in 2021 have provided the Group with a framework of stability in its debt structure and have afforded it, as of the final months of 2021, the financial resources to begin the implementation of the Plan, based on energy transition and carbon neutrality. This has opened up the possibility for Tubos Reunidos to address new markets and sectors of activity, especially those more related to clean energy and hydrogen.

In terms of investments, in the first half of 2022, work has begun at the Amurrio plant to unify the two current steel mills into a single mill. The new steel mill is expected to be operational by the end of the year.

Similarly, the increase in activity following a period of very low demand combined with increases in both sales and main input prices has put considerable pressure on the working capital. As a result, the Group consumed EUR 19.5 million of working capital in the first half of the year.

Debt service in the first half of the year amounted to 5.6 million euro, corresponding mainly to the repayment of ICO-guaranteed financing and the A1 tranche of the syndicated financing, which means compliance with the repayment schedule agreed with the institutions in 2021.

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Tubos Reunidos SA published this content on 22 July 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 22 July 2022 07:03:03 UTC.