Results of Operations

TMK’s operating results for 2010 have considerably improved as compared to 2009 reflecting the recovery in worldwide economy. The following table provides TMK’s consolidated operating results for the twelve-month periods ended 31 December:

  2010 2009
  in millions of U.S. dollars % of revenue in millions of U.S. dollars % of revenue
10Net income/(loss) adjusted for loss on changes in fair value of derivative financial instrument is presented in the table because TMK consider the measure as an important supplemental measure of TMK’s performance. Net income/(loss) adjusted for loss on changes in fair value of derivative financial instrument is not a measurement of TMK’s performance under IFRS and should not be considered as an alternative to net profit or any other performance measures derived in accordance with IFRS.
Revenue 5,578 100% 3,461 100%
Cost of sales (4,285) (77)% (2,905) (84)%
GROSS PROFIT 1,293 23% 556 16%
Selling and distribution expenses (403) (7)% (313) (9)%
General and administrative expenses (232) (4)% (204) (6)%
Advertising and promotion expenses (11) (0)% (5) (0)%
Research and development expenses (13) (0)% (10) (0)%
Other operating (expenses)/income, net (35) (1)% (14) (0)%
Impairment of assets - - (47) (1)%
Foreign exchange gain/(loss), net 10 0% 14 0%
Loss on changes in fair value of derivative financial instrument (12) (0)% - -
Finance (costs)/income, net (412) (7)% (404) (12)%
INCOME/(LOSS) BEFORE TAX 185 3% (427) (12)%
Income tax (expense)/benefit (81) (1)% 103 3%
NET INCOME/(LOSS) 104 2% (324) (9)%
ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT 104 2% (316) (9)%
NET INCOME/(LOSS) ADJUSTED FOR LOSS ON CHANGES IN FAIR VALUE OF DERIVATIVE INSTRUMENT10 116 2% (316) (9)%

Net income for the twelve months ended 31 December 2010 has been adjusted for loss on changes in fair value of derivative financial instrument in the amount of U.S.$12 million to reflect TMK’s management’s position in respect of the treatment of the conversion option. See “Issuance of Convertible Eurobonds”.

As a consequence of its international expansion and associated changes to TMK’s management reporting methods and approach to segments, TMK presents its operations in three reporting segments:

  • Russia: manufacturing facilities located in the Russian Federation and Kazakhstan, an oil and gas services division and trading companies in Russia, Kazakhstan, Switzerland, the United Arab Emirates and South Africa;
  • America: manufacturing facilities and trading companies located in Northern America;
  • Europe: manufacturing facilities located in Romania and trading companies located in Italy and Germany.

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