Assisted Breathing for Tubos Reunidos | Business

The trail that the pandemic is leaving in the business world is worrying. Above all, it is felt in sectors that are already delicate, very cyclical, for which the stoppage of activity in the world has exacerbated their problems. This is the case of the centennial company Tubos Reunidos (1892), which on January 7 asked the Administration for 115 million in participative loans under the Support Fund for the Solvency of Strategic Companies, created by the Government last July and which manages the State Society for Industrial Participations (SEPI). A request that is still under study. In May of last year, Tubos Reunidos already benefited from another 15 million euros through the guarantee lines of the Official Credit Institute (ICO).

It is not a unique case. The tourism firm Globalia with the airline Air Europa at the helm, the steelmaker Celsa, Duro Felguera or Navieras Armas have also presented their viability plan to receive loans from SEPI. These make up the bulk of money requested together with many smaller companies for a fund that starts with 10,000 million euros to lend and with the time limit of March, although it is likely to be postponed, at least, until September of this year. according to sources from the Administration.

In the presentation of results for the third quarter of 2020, Tubos Reunidos attributed its crisis to the 50% drop in its orders during covid-19, which also forced it to close factories to avoid contagion among its workers. A circumstance that precipitated its losses to 59.3 million euros, more than double those registered in the same period of the previous year.

But the bad figures of this Basque multinational specialized in the manufacture of seamless tubes come from further afield. The falls in the price of oil, an industry to which it supplies a large part of its products, and the tariffs imposed by Donald Trump on steel, promoted by his trade tensions with China, have taken a toll on their accounts. Since 2014, Tubos Reunidos has not been able to earn money and, logically, that was the last year in which it was able to distribute a dividend. And the market has hit value harshly. The steel firm capitalized on the stock market 131 million euros five years ago and is now worth 41 million, although its lowest price was recorded in 2018 with 25 million. Figures that, as with other listed companies, contrast with its high debt, which in 2019 closed at 235 million euros.

There are three main activities of Tubos Reunidos, according to the different businesses. The call upstream, where the company supplies pipes for oil and gas drilling. A sector that has suffered a lot from the economic paralysis and the fall in the price of crude oil, which makes profitability disappear in new projects. According to the company, in May 2020 it reached its lowest historical point of activity. The midstream or industrial refers to products for the transportation and commercialization of crude oil or natural gas. Finally, the downstream, where its products are used for the generation of electrical energy, petrochemicals and refining and which, according to the company, after a good year of orders in 2019, in 2020 was paralyzed, although they have not suffered cancellations.

Tubos Reunidos production is concentrated in three facilities. One in Amurrio (Álava), another in Valle de Trápaga (Bizkaia) and the third located in Beasley (United States), after acquiring the assets of Rotary Drilling Tools in 2016. For this it has a manufacturing agreement with the Japanese Marubeni-Itochu Steel. The multinational is present in 100 countries through a network of 10 of its own commercial offices and 25 commercial agents in Europe, North America, the Middle East, Africa, the Far East, Latin America and Oceania.

The steelmaker employs more than 1,300 workers. The fall in orders has made it necessary to carry out temporary employment regulation files (ERTE) that until June 2021 may affect a maximum of 66% of the workforce at the Álava factory and 44% of those located in Bizkaia, although, As sources close to the company point out, the situation is changing according to the progress of the activity. The main shareholders are BBVA, which has 14.8% of the capital, followed by Concerted Action with 10.22%, a company that brings together historical partners of the company.

Strategic plan

Tubos Reunidos must convince the Fund Management Council of the viability of the company. In principle, it has had to put the brakes on its 2021-2024 strategic plan, harassed by the fall in its turnover which in the first nine months of last year reached 190 million euros, a decline of 10%. The objective of both last year and the current one is to strengthen liquidity. Something that the company has baptized as “focus on cash”, where the refinancing agreement reached in December 2019 with its creditors is added to the public support and whose main achievement was the extension in 12 months of the repayment of the principal of its debt . For this year, to the financial measures that seek to reinforce liquidity, the containment of expenses with salary reductions and the ERTE in force until June is added.

But the most attractive part corresponds to the future plans of the steelmaker for the period 2022-2024, the one baptized as “focus on value”. The company, without abandoning its products linked to fossil energies, sees an opportunity in the advancement of renewable energies such as nuclear, wind, geothermal, green hydrogen, biomass, solar thermal …, which, as they describe, will drive the demand for higher-capacity pipes. added value and, therefore, with higher margins. Along the same lines, at Tubos Reunidos they want to reduce their exposure to the United States, which has accounted for 25% of sales until September of last year compared to 39% in 2019. According to company data, there has been growth in sales 53% in the Middle East and Africa and 10% in Europe (excluding Spain). Its commercial activity will be focused on the new Asian markets with greater activity during this period. They also expect better behavior with the arrival of Joe Biden to the presidency of the United States, both due to a reduction or disappearance of tariffs and a possible end to sanctions and economic embargoes on countries like Iran.

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