GeneralMeetingofShareholders
June2017
1
1. 125YearsofHistory2. Resultsfor2016andFirstQuarter20173. StockMarketEvolution
4. Creating3600Value5. ProposedAgreements
Contents
2
GeneralMeetingofShareholdersJune2017
1.125YearsofHistory
3
125thANNIVERSARYOFTUBOSREUNIDOS:§ We’recelebratingthe125thanniversaryofthefoundingin1892ofTubosForjados,
theforerunnerofthepresentTubosReunidos.§ TubosReunidoshassurvivedallkindsofpolitical,social,wartimeandeconomic
situations§ Todaythecoreoffoundingshareholderscontinuestobemaintained.KeystoourHistory:§ Anearlyandpioneeringcommitmenttotheinternationalizationofthecompanyto
turnitintoaglobalbusiness.§ Undertakingtocontinuouslyadaptitsproductiveresourcestothelatest
manufacturingtechnologies.§ Realizationofcorporateoperationsuntilarrivingatthecurrentstructure.§ Astableboardandmanagementteam,withastrongcommitmenttothecompany.§ ValuesandvirtuesrecognizedandshapedbyallemployeesoftheCompany.
4
KEYSTOTHE2016FINANCIALYEAR:§ Economicandtechnological“war”betweenoilproducingcountriesandnewnon-
conventionaltechnologies.§ Theconsequencehasbeenacollapseinthepriceofoil.Cancellationinthechainof
investmentprojects.§ 23%reductioninoilplatformsoperatingworldwideand46%reductionintheUS,a
marketwhichfellby72%comparedto2014.§ Worldwideproductionovercapacity,especiallyinChina.Additionally:§ Needtofinalizetheplantomodernizeourfacilities.§ Developmentofaportfolioofmorespecializedproducts.§ EstablishmentofanewindustrialconfigurationinSpainandNorthAmerica.Consequences:§ ThenetturnoveroftheGroupfellby30%to195millioneuros.§ NegativeEBITDAof15.5millioneuros.§ Netlossof50.2millioneuros.§ Resultsequivalenttothoseofourmainglobalcompetitors,althoughthatisoflittle
consolationtous.
5
RESPONSEOFTUBOSREUNIDOS:TheBoardofDirectorsintervenedtodirectthecourseoftheprojectaroundthefollowingactions:§ ConcentrationoftheGrouponitsmainactivityofseamlesspiping:saleofthe
automotivebusinessandstartoftheprocessofdivestmentofthedistributionbusiness.
§ PurchaseofindustrialassetsofROTARYDRILLINGTOOLS(RDT)intheUSA.§ Financialdebtreorganizationplan:syndicatedloansignedin2017with10banks.§ EfficiencyandTransformationPlan(PET).§ RenewaloftheGroup’sproductcatalogue:ownproductsandthosepurchased
throughRDT.§ ProgressinTRPT:standardizationandappropriatetrainingplans.
6
ANEWTUBOSREUNIDOSISNEEDEDIN2017:§ Thenewscenariosmeanprofoundstructuralchangesinthesector,which
representnewchallenges.§ TheBoard’sproposalistomakealeaptowardsanewbusinessmodelthatwill
ensuregreateradaptabilityinthefaceoftheincreasingglobalcomplexity.§ NeedforanewleadershipheadedbyGuillermoUlaciaArnaizasExecutiveVice
President.Newmanagementmodelfocusedon:A. ThecustomerB. CompetitivecostC. FlexibilityD. Profitability:7-10%oncapitalemployed
7
GeneralMeetingofShareholdersJune2017
2.2016ResultsandFirstQuarter2017
8
2016:Yearofaseverecrisiswithoutprecedentinthesector
§ Ouractivityduring2016hastakenplaceinthecontextofaseverecrisis.
§ Thecollapseofthepriceofoil resultedinsharpdeclinesininvestmentintheenergysector.
§ Inparticular,theAmericanmarkethassuffered thegreatestdropindemandfortubing.
§ Asaresult,during2016wehavehadsignificantdeclinesinvolumesandprices.
§ Inthiscontext,duringtheyearwehave:
§ Maintainedourstrategy ofdevelopmentandpositioninginhighaddedvalueproducts.
§ Carriedoutcorporateactionsofgrowth,serviceimprovementanddiversificationintonewmarkets,aswellasconcentrationonourcorebusiness.
§ ContinuedwiththeexecutionofourEfficiencyandTransformationPlan.
9
2016Highlights
2012 2013 2014 2015 2016
International USA Canada
2030405060708090
100110120
11.217.717.516.5
USA-72%
8.8
Dec-13 Dec-15 Dec-16Source:Bloomberg Source:Tenaris
25%fallininvestmentforthesecondconsecutiveyear
Fallof46%inactiveplatformsintheUSAcomparedto2015andfallof72%comparedto2014
Dec-14
10
MarketContext
FallintheglobalconsumptionofOCTG,withgreaterintensityintheUSAandaccentuatedbythefallofinventories
BrentpriceevolutionUSD/BBL
CurrentglobalconsumptionofOCTGMill.TMs
9.6 10.6 9.7 7.4 6.6
5.7 5.7 6.5
31.8
2.2 1.2 1.5
0.8
0.4
295337
278
195
2013 2014 2015 2016(ExcludesAutomotiveandAlmesathroughouttheperiod)
14%2%
20%
13%
51%
20%
15%
32%
33%
EUROPEANUNION
NORTHAMERICA(USAandCANADA)FAREASTMIDDLEEASTANDAFRICA
OIL&GAS
ENERGYGENERATION
CHEMICALANDPETROCHEMICALINDUSTRIALAPPLICATIONS
OTHERS
11
SalesEvolution
Fallinsalesof30%withfallsinallsectorsandmajorgeographies
SalesevolutionofTUBOSREUNIDOSGROUP,(Inmillioneuros)
Compositionbysector andgeography,2016
38 37
7
(15)
2013 2014 2015 2016
7 7
(16)
(50)
2013 2014 2015 2016
12
Results
Thedeclineinmarginsandtheeffectofunderactivityhavehadanegativeimpactontheincomestatement
EvolutionofEBITDAofTUBOSREUNIDOSGROUP,(Inmillioneuros)
EvolutionoftheNetResultofTUBOSREUNIDOSGROUP,(Inmillioneuros)
(ExcludesAutomotiveandAlmesathroughouttheperiod)
45
2833
25
20
2013 2014 2015 2016
182172
167
195
2013 2014 2015 2016
13
Evolutionofthedebt
Increaseofdebtheavilyinfluencedbyinvestments
Grossinvestmentsintangibleandintangiblefixedassets(Inmillionsofeuros)
Evolutionofthenetfinancialdebt,(Inmillionsofeuros)
Saleofassetsfor16millioneurosin2016
Liquidityasof31December2016:63millioneuros
AcquisitionofRDT
14
Evolutionof1Q2017Sales
Thebestquarterforsalesinthelast8quarterswith53%growthcomparedto1Q2016
Sales(inmillionsofeuros)
1T2014
2T2014
3T2014
4T2014
1T2015
2T2015
3T2015
4T2015
1T2016
2T2016
3T2016
4T2016
1T2017
83.2 91.2 75.2 87.8 82.3 79.6 58.7 57.5 51.1 52.4 44.4 47.0 80.0
Salesoftubes,(thousandeuros)
1Q2017
1Q2016
%Inter-anual
variation
NationalEuropeNorthAmericaFarEastMENAOthers
11,56533,75828,5066,0806,2181,127
10,29127,8987,1574,8878,924647
12%21%
298%24%
(30)%74%
RefiningandPetrochemicalsEnergygenerationOil&gasConstruction,mechanical,automotive
7,51618,35735,90213,914
9,01918,64812,7319,115
(17)%(2)%182%53%
TotalConsolidatedGROUP 75,689 49,513 53%
Salesoftubing,tonnes 57,918 33,755 72%
15%
30%
38%
9%8%
1T2017
National Europe
NorthAmerica FarEast
MENA
10%
48%
24%
18%
1T2017
Construction&Industry
Energygeneration
Oil&Gas
RefiningandPetrochemicals
15
CompositionbySectorandGeography
NorthAmerica(40%ofsales)quadrupledsalescomparedtothepreviousquarterandtheOil&Gassector(50%ofsales)almosttripledsales.
1T2016 1T20171T2016 1T2017
11.0
(2.3)
16
Results1Q2017
RecoveryofthepositiveEBITDApath
EBITDAoftheTUBOSREUNIDOSGROUP,(Inmillionsofeuros)
NetProfitofTUBOSREUNIDOSGROUP,(Inmillioneuros)
(11.1)
0.1
4148
36
208 2
1111
5
15
2017 2018 2019 2020 2021 2022
BOND EIB BANKS
3 11 1126 33
96
58 8
8
15
2017 2018 2019 2020 2021 2022
BOND EIB BANKS
17
SignatureofSyndicatedFinancing
NewsyndicatedfinancingandtheagreementwiththeEIBsignificantlyreducerepaymentobligationsoverthecomingyears
DebtRepaymentBeforeSyndicatedFinancing,(Inmillionsofeuros)
DebtRepaymentafterSyndicatedFinancing,(Inmillionsofeuros)
GeneralMeetingofShareholdersJune2017
3.EvolutionStockMarket
18
Dec.2015
Dec.2016 2012 2013 2014 2015 2016
+47.9%
In2016,thesharepriceofTUBOSREUNIDOSwasrevaluedby47.9% fromtheclosingpriceofthe2015financialyearfrom0.585euros/shareto0.865euros/sharereachedby30December2016.
Sharetradinghasreducedby41.7%,reaching64millionshareswithavalueof46.3millioneurosaffectedbythedifficultsectoralenvironmentofthecompanyduringthefinancialyear.
19
StockMarketEvolution
EvolutionofthesharepriceofTUBOSREUNIDOS,(Eur/share)
VolumeofShareTrading,(InMillionsofshares)
22.036.0
82.0
108.0
64.0
0.8
0.6
0.4
0.2
1.0
GeneralMeetingofShareholdersJune2017
4.Creating3600Value
20
21
Index
▪ Introduction
▪ MarketoutlookandimplicationsforTR
▪ Assessmentofattainablepotential
* Base year: tonnes of 2014 (229 thousand) with prices and mix of 2017. Increase in EBITDA at constant scope without the distribution business
“Toknowistoforesee,toforeseeistobeable”AugusteComte
§ TubosReunidos(TR)isaniconic companywith125yearsofhistory,whichhasevolvedandadaptedtothechangesinthemarket,tobecomeabenchmarkforindustryintheBasqueCountry.
§ However,in2016 weobtainedtheworstresult inourhistorywithrevenuesbelow€200million(50%capacityutilization)andanegativeEBITDAof€15million.
§ Toensurealong-termfuture,weneed toachieveasustainableresult (EBITDA)andoptimizetheinvestedcapital.
§ WehavesetanobjectivetoimprovetheEBITDAofabaseyear*by€45million,withinaperiodof24months.
§ Thisgoalwillnotbeeasytoachieveandwewillhavetoworkinallareasofthecompany:improvebusinessandmarketing,increaseoperationsefficiency,improveproductivityandgainflexibility,reducetheneedforcapitalinvestment.Weneeda360O globaltransformationplan
22
ExecutiveSummary
410 385295 337
278195
2016201420132012 20152011
14%
57 5938 37
7
-15
24 11 7 7
-16
-50
EBITDA
NetResult
20142013 2015 201620122011
EBITDAandNetResultEURMillions
15% 13% 11% 3% (8)%Excludes automotive and distribution businesses
SalesEURMillions
Significantdropinsales,especiallyduringthelasttwoyears...
...andagradualfallinEBITDAsince2012,reachinganegativevaluein2016
EBITDA/Sales
23
In2016wesawtheworstresultsinour125yearhistory...
Highcostsandinflexiblecoststructure
Highvolatilityduetostrongconcentrationinfewmarkets
Pooraccesstoendcustomersworkingmainlywithdistributors
Verycompletebutcomplexproductportfolio
Profitabilitybelowthatofcompetitors
ProductsforOil&Gasrepresent~50%ofturnoverin1Q2017
In2016only~10%ofsalesdirectlytoendcustomers
+2,000references
24
Lookingtothefuture,wefacechallengesarisingfromourpositioninthemarket...
Dec16
Feb17
Apr17
Jun17
Aug17
Dec19
Assessment ofsituation
Marketoutlook1
Assessmentofmaximumpotential
2
Planning
Detaileddefinitionofinitiativesinvolvingallareasandfunctionsoftheorganization
3
IncorporationofExecutiveVicePresident
BoostEBITDA€45Millionoverabaseyear*,in24months
DebtRefinancing
Implementation
Implementationoftheinitiativesdefined
4
* Base year: tonnes of 2014 (229 thousand) with prices and mix of 2017. Increase in EBITDA at constant scope without the distribution business25
Wearelaunchinga360o ValueCreationPlan...
26
Index
▪ Introduction
▪ MarketoutlookandimplicationsforTR
▪ Assessmentofattainablepotential
Surpluscapacity
§ Overcapacity forseamlesspipingduemainlytotheabundantsupplyfromAsianproducers andthegrowingproduction fromemergingcountries1
Sophistication
§ Growingdemandformoresophisticatedproducts requiredbyoilandgasexploration(eg,horizontaldrilling)
§ Newdevelopmentsinthefieldofoilandgasrequiringtubescapableofwithstandinghigherpressuresinmoreadverseenvironmentsandhigherflows (especiallytubesusedintheoilindustry[OCTG])
2
Pricepressure
§ Fall inprices oftubesandreductionofthedifferential betweenbasicseamlesspipingandthoseofsuperiorquality3
ServicesandSolutions
§ Stronggrowthindemandforhighaddedvalueservices and“Premium”solutions4
Detailedbelow
27
Overall,weobservefourtrendsinthesteeltubemarket
SOURCE:JamesF.King,Jan.2017
32
45
38
25
2
4
2
1
4
16
2
42
1
0
3
24
10
2 303
3
3
6
2020
14
49
27
2
2000
1
3
21
4
1118
001
2
2
4
1
1
05
3 10
434
+3% peryear
+6% peryear
0
12% 0%China
0% 2%WesternEurope
2% 3%EasternEurope1
0% 4%NorthAmerica
-1% 7%LatinAmerica
7% 3%MiddleEast
5% 5%OtherAsianRegions
3% 6%Oceania
6%4%Africa
2000-2016 2016-2020
TCMA, percentage
1 IncludingCIScountries
Aslowdowninoilandgasactivitybecauseofexcesssupplyinthemarketandthelowoilpricesin2015 haveaffecteddemandin2016
Demandforseamlesssteelpipes(Inmillionsdetonnes)
28
Demandforseamlesspipingisforecasttogrowat3%perannum(2016-2020)
1
5
3
2016
5
3
20205
2020
16
6
2016
15
CapacityDemand
NorthAmerica
Overcapacityexistsinallregions- totalovercapacityof39%in2016 and30%in2020
EasternEurope1
OtherAsianRegions
China
EuropeEurope
LatinAmerica Africa
Global
2016
3 4
7
2020
7
2020
31
25
2016
30
24
70
49
2020
42
68
2016
2020
2
4
1
4
2016
12
2020
31
2016
0
2016
01
2020
1
2016
64
6
2020
3
Strongdependenceonimports
MiddleEast
Demandandcapacityforseamlesspiping(Inmilliontonnes)
SOURCE:JamesF.King,Jan.2017
1 IncludingCIScountries29
Globally,overcapacityisforecastinthesector,withamoremarkeddemand-capacityimbalanceattheregionallevel
1
1,700
600
1,300
700
500
1,900
1,500
400
1.000
1,800
1,600
1,100
900
2,000
1,400
1,200
800EasternEurope
01/1601/14
USAJapan
Export.China
WesternEurope
MiddleEast
01/1501/1301/1201/11
-56%
-29%
-50%
-45%
-34%
-48%
Priceofseamlesspiping(2011-2016)1ThousandUSD/t
SOURCE:JFK,MetalBulletin
1OCTGcoatingJ/K55(BTCconnection)30
Seamlesspipingpriceshavefallen~30-50%since2011,asChineseproducersofferpriceswellbelowWesternprices
3
600
2,000
400201520142012201120102009
1,200
20162013
1,600
800
2017
2,600
2,400
2,200
1,400
2,800
1,800
1,000
2006 2007 2008
Premiumgrade(OCTGcasingN80)
Commoditygrade(API5LB)
Priceshavebeenrecoveringsince2016duetoimproveddemandfromtheoilandgasindustryandhigherpricesforsteelrawmaterials,althoughtheyarestillbelowthefive-yearaveragepricelevel(USD1517)
Thepricedifferencebetweenbasicandhigh-qualitytubeshasbeensignificantlyreducedduetodecliningdemandfromtheoilandgassector,whichisthemainconsumerofhigh-qualitytubes
SOURCE:JFK,MetalBulletin
1Pricesoffinishedtubesforspecificquality
PricesforseamlesspipinginEurope1USD/ton(US)
31
Thepricedifferentialbetweenbasictubesandpremiumqualitytubeshasreducedsignificantlyinrecentyears
3
§ TRisacompanywithalegacyofhighquality productsandacompleteproductoffering (includingconnections),butalsowithacomparativelyhighproductioncost,andarelativelyhighlogisticalcostinmanyregions.
§ Withourstrategyofspecializationandservicewewereabletocompensateforthecoststructureofourindustrialandoperationalbases,however,theoutlookforthecomingyears anticipatesamorecomplicated environment:o Forecastfortheaveragegrowthoftheglobaldemandforseamlesspiping is3%peryear to2020.o Maintenance ofoversupply.o Prices ofsteeltubesarebelowboomlevels.o Increasing demandforhighqualityproducts derivedfromthedevelopmentofoilandshalegasis
notreflectedinapriceimprovement- competitors andsomenewoperators (mainlyAsian)haveimprovedqualityandofferlowerprices.
§ Inthisnewmarketenvironment,TRwillhavetoworkonthreekeyfronts:o Costs:TRmustbecompetitiveintermsofcosts,whichmeanstakingmeasuresatallofitscost
sources.o Commercial:sinceTRislikelytohavetoaccepttheprices andisarelativelysmalloperator,itmust
positionitselfinthemarketanddefineitsvalueproposition (ie,whereandhowtocompete,targetinterestingregions/segmentswithoutalteringmarketbalancesdrivenbylargeoperators).
o Service:TRmustensurethatitservesitsprioritycustomersegments optimally (rightservicefortherightprice),distinguishingitselffromcompetitiveoffersasappropriate.
32
MainimplicationsofthemarketperspectiveforTubosReunidos
33
Index
▪ Introduction
▪ MarketoutlookandimplicationsforTR
▪ Assessmentofattainablepotential
Ensurealong-termfutureforTubosReunidosasamanufacturerofhighqualityproductswithalongtraditionbasedintheBasqueCountry
6 Reachlevelsofprofitability(EBITDA)of~17-20%
7 Ensureasolventposition withthepotentialtoundertakenewinvestments
8 AttainaROCE of~7-10% afterthetransformation,comparedto~2%in2014
5 Developanexcellence-orientedbusinessculture
3 Optimize investmentinworkingcapitalandassets
4 Providegreaterflexibility tothecoststructure
1 Reducedirectoperatingcosts pertonneby~16-18%
2 Promotemargin-orientedbusinessmanagement
34
«Creating360OValue»isanacceleratedwaytoachieveouraspirations
Productionprocesses
Manufacturingefficiency
INITIATIVES
§ Increase theproductivity oftheworkforce ~20p.p.
§ Optimizemaintenance(increaseofpreventative) ~25p.p.
§ Increase theOverallEquipmentEfficiency(OEE) ~20p.p.
OBJECTIVE
§ Reduce consumptionofenergy ~5%
§ Reduce thenumberofotherconsumables ~9%
§ Optimize themixofrawmaterials ~3%
§ Reduce wastage ~2%
Generalexpenses
Purchases
§ Optimize thecostofcontractors ~5%
§ Reducetheunitcost of energy ~4%
§ Reducetheunitcostofconsumablesandsupplies ~5%
§ ReduceOverheads ~30%
35
Reducedirectoperatingcostspertonneby16-18%(1/2)1
Doesnotincludelogisticscosts
SOURCE:JFK
Carbonseamlesspiping,directoperatingcost¹,1Q2017,USD/ton(US)ofseamlesstube
1Operatingcostforunfinishedseamlesscarbonsteelpipewithadiameterof168mmandawallthicknessof7.1mm,notincludingsales,general,administrativeorfinancialexpenses,assumingastandardactivitylevelof90%P-110,qualitygradeAPIforgeneraluseindeepwells,pipelines,drillingandextractionofoilandgas,andfinancialcosts,assumingastandardactivitylevelof90%Assumingthesamesupply/demandstructure
2CostpertonnebasedonweightedaveragecostpertonneoftheAmurrioandGalindoplants
Cumulativecapacity,milliontonnes
OperatingcostOperatingcost/tonne
1stquartile 2ndquartile 3rdquartile
~16-18%
Others
TubosReunidos
TubosReunidos2
36
Reducedirectoperatingcostspertonneby16-18%(2/2)
1
OBJECTIVE
Margin-orientedbusinessmanagement
INITIATIVES
▪ EnhanceValueEngineering
▪ Redefinepricingpolicy
▪ Generatecross-sellingopportunities
▪ Evaluatethedevelopmentofonlinesaleschannels
▪ Streamline theproductportfolio
▪ Optimize theproductportfolio ▪ ~2%Changemix▪ ~3%Growth
37
Promotemargin-orientedcommercialmanagementbyleveragingtheproductioncapacityofhigh-endproducts(1/3)
2
INVESTMENTS PRODUCTS DIFFERENTIATION
OCTG:Oil&Gas
39%ofTR’sproductivecapacityishigh-endOCTG
▪ Casing,Tubing:Developmentofrangeofproprietaryproductsandhighalloysteelswithproprietarygradesofsteel
▪ TailorMadeSteelGrades– Improvedpropertiesoverstandardgrades– Forextremeenvironments:highcorrosion,acid,high
collapse,highpressureandtemperature
▪ UpsetCasingwithSemiPremiumBTXconnection:– Lowerconstructiontime(30%)and50%riskreduction
▪ Drillpipe ▪ WearKnotDrillPipe- Patent:– Designedforshaleformationsandabrasive
environments,3.5xlifeinservicecomparedwithstandarddrillpipe,designforlesswear
▪ PremiumJFEthreadedcapacityinnewplantwithMISI,TubosReunidosPremiumThreads:– Supplierinextremeenvironmentsofhighcorrosion
withTailorMadeSteelGrades– Metaltometalseal
▪ High-endfinishingcapabilities,inUSA,andPremiumthreadinTRPT-JFEthreads
▪ Installationofdegassinginsteelworks
▪ InductionHeatTreatmentLine
▪ NewTRPTpremiumthreadplant
▪ AcquisitionofRotaryDrillingToolsinUnitedStates
▪ Productdevelopment
38
Promotemargin-orientedcommercialmanagementbyleveragingtheproductioncapacityofhigh-endproducts(2/3)
2
▪ Installationofdegassinginsteelworks
▪ Adaptationoflinesforspeciallengths
▪ Newpilgertrainforlargedimensions
▪ Newkinematicchaininthedrill
▪ Productdevelopment/processengineering
▪ Highalloysteelswithmorecomplexchemicalcompositions
▪ Proprietarysteel– Moreresistanttohighpressuresandtemperatures
▪ High-ODandthicktubinginhighalloyandstainlesssteels
▪ Outerdiameter(OD)upto26”– Allowsgreaterefficiencyandperformanceinrefining,
petrochemicalandultra-supercriticalandnuclearpowergenerationfacilities
– Resistancetohightemperaturesandpressures
▪ Lengthsupto28metresandOD<16mm:Forexchangersinsolarthermalplantsandsteamgeneratingequipment
▪ Tubesupto26metresforHRSG’sinCombinedCyclePlants
▪ Colddrawntubeswithspeciallengths
12%ofTRcapacityishigh-endpipelineforpowergeneration,refiningandpetrochemicals
PRODUCTS
Energygeneration,refining,petrochemicals
DIFFERENTIATIONINVESTMENTS
39
Promotemargin-orientedcommercialmanagementbyleveragingtheproductioncapacityofhigh-endproducts(3/3)
2
Average:16.5%
TRobtainedanEBITDAof8.8%between2010-2015 Reach~17-20%
24.5
13.8
8.8
5
12.2
64
14.817.3
321
~17%-20%
“Creating3600Value”
GRUPOTUBOS REUNIDOS
GRUPOTUBOS REUNIDOS
40
Reachlevelsofprofitability(EBITDA)of~17-20%6
ROCE, %
-8
-3
34
8
2
201320122011
+5-8p.p.
2015 360º2014
~7-10%
2016
WACC=7.0%
MethodofcalculationofROCE▪ ROCE:NOPLAT/InvestedCapital▪ WACC:Strategicplan▪ NOPLAT:EBITx(1-Taxrate);Rate:28%▪ Cost(exD&A):Sales- EBIT+D&A
▪ Investedcapital:FixedAssets+WorkingCapital▪ FixedAssets:Non-CurrentAssets,excludingFinancialAssetsandDeferredTaxAssets▪ WorkingCapital:Inventory+AccountsReceivable- AccountsPayabletoSuppliers.ExcludesConfirmingandFactoring
41
AttainaROCEof~7-10%afterthetransformationcomparedto~2%in2014
8
Preservingsustainableresults
StrategicPlanningandBusinessDevelopment,S&OP
DevelopmentofHumanResources
Economic-financial
TransformationTeam
CreateandGetResults
SupporttotheOrganizationatthelowestcost
GoalSettingandLeadershipoftheTransformation
CustomerValueCreationPlatform
Downstream UpstreamCUSTOMER
TUBOSREUNIDOS:UNIQUEBRAND
42
Wehavedefinedanewmanagementmodel...
Improvingcostcompetitiveness
Differentiationinhigheraddedvalueproducts
Increaseofservices
Digitalizethecompany
Manageculturalchange
Achieveefficienciesbymanagingsocialchallenges
UniqueBrandTubosReunidos
“Letusseekmoretobeparentsofourfuturethanchildrenofourpast”MigueldeUnamuno
43
Seizingtheopportunityrequiresovercomingsomesignificantchallenges
GeneralMeetingofShareholdersJune2017
5.Proposalofagreements
44
First§ Toapprovetheannualaccounts(individualandconsolidated)for
the2016financialyear,andthesocialmanagementoftheboardofdirectors.
Second§ Applythelossesforthe2016financialyear,amountingto
332,652.36Euros,to"Negativeresultsfrompreviousyears".Third§ AppointmentandRenewalofDirectors
3.1Mr. GuillermoUlaciaArnaiz(Executive)(Ratification,co-optationandappointment).
3.2Mr. PedroAbásoloAlbóniga(OtherExternal)3.3Mr. AlfonsoBarandiaránOlleros(Proprietary)3.4Mr. FranciscoEsteveRomero(Proprietary)
45
Proposedagreements
3.5Mr. JorgeGabiolaMendieta(Independent)3.6Mr. EmilioYbarraAznar(Proprietary)3.7Ms. LeticiaZorrilladeLequerica(Proprietary)3.8Mr. JuanMaríaRománGoncalves(Independent)
(Newappointment)3.9MaintainvacancyofMs. MaríaLuisaJordáCastro.
§ Thosepresentacceptthepost;withoutconflictofinterest.§ Compositionoftheboard:12memberswithintheminimum(5)
andmaximum(14)accordingtostatute.
46
Proposedagreements
Fourth§ Re-electPriceWaterhouseCoopersasauditorforoneyear.Fifth§ Authorizetheacquisitionofownshares.SixthMODIFICATIONOFART.26ο SOCIALSTATUTES(CompensationoftheBoard).§ Includethepossibilityofremunerationthroughthedeliveryof
shares,options,referencetotheirprerequisitevalueàintheseventhagreement.
§ Civilliabilityinsurance(technicalimprovement).
47
Proposedagreements
SeventhRemunerationplanlinkedtoshares:Executivevice-president.§ NumberofPlanshares:2,000,000.§ Referenceprice:averageprice30sessionsfrom07-02-2017=0.997
Eur/share– Term:50%:March2019- bydifference(topayinMarch2021).– 50%:March2021- bydifference,sharesorboth.
§ Requirements:linkedtoTubosReunidosuntilMarch2021.Eighth§ Powersandauthorityinrelationtothepreviousagreements.Ninth§ Toapprovethe“AnnualReportonCompensationoftheBoard”ona
“consultative”basis.
48
Proposedagreements
GeneralMeetingofShareholders
June2017
49
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