Tenaris Earnings: Strong End-Market Demand and Favorable OCTG Pricing Drive Strong Fiscal First Half

Tenaris’ second-quarter results rounded out an overall robust first half for the firm. Revenue expanded 45% year over year but contracted slightly compared with last quarter, reflecting decelerating drilling and completions activity in North America that will likely persist through year-end. Lower sales volumes contributed to a slightly contracted EBITDA margin, which dropped about 100 basis points to 35%. Continued activity declines in North America—composing more than 50% of overall sales—will likely elicit further weakness from Tenaris in the second half, though we expect heightened international and offshore activity will slightly offset these headwinds. We maintain our $37 per share fair value estimate (EUR 16, down from EUR 20 due to foreign-exchange movements) and no-moat rating following results.