Tenaris S.A. (TS) Q4 2022 Earnings Call Transcript

Tenaris S.A. (NYSE:TS) Q4 2022 Earnings Conference Call February 16, 2023 9:00 AM ET

Company Participants

Giovanni Sardagna - IR, Director

Paolo Rocca - Chairman & CEO

Gabriel Podskubka - President of Eastern Hemisphere

Luca Zanotti - President of United States Operations

Conference Call Participants

Marc Bianchi - Cowen

Alessandro Pozzi - Mediobanca

Stephen Gengaro - Stifel Nicolaus

Frank McGann - Bank of America

Luke Lemoine - Piper Sandler

Luigi De Bellis - Equita

Operator

Good day, and convey you for opinionated by. Welcome to nan Q4 Tenaris S.A. net convention call. At this time, each participants are successful a listen-only mode. After nan speakers’ presentation, location will beryllium a question-and-answer session. [Operator Instructions] Please beryllium advised that today's convention is being recorded.

I would now for illustration to manus nan convention complete to your speaker today, Giovanni Sardagna. Please spell ahead.

Giovanni Sardagna

Thank you, Gigi, and invited to Tenaris 2022 4th fourth and yearly results convention call. Before we start, I would for illustration to punctual you that we will beryllium discussing forward-looking accusation successful nan telephone and that our existent results whitethorn alteration from those expressed aliases implied during this call.

With maine connected nan telephone coming are Paolo Rocca, our Chairman and CEO; Alicia Mondolo, our Chief Financial Officer; Guillermo Vogel, Vice Chairman and Member of our Board of Directors; Gabriel Podskubka, President of our Eastern Hemisphere Operations; and Luca Zanotti, President of our U.S. Operations.

Before passing complete nan telephone to Paolo for his opening remarks, I would for illustration to concisely remark our quarterly results. During nan 4th fourth of 2022, income reached $3.6 billion, up 76% compared pinch those of nan corresponding 4th of nan erstwhile twelvemonth and 22% sequentially, chiefly driven by further increases successful shipments and realized prices.

Our EBITDA for nan 4th was up 34% sequentially, adjacent to $1.3 billion, reflecting higher volumes, amended pricing and a bully business capacity pinch accrued levels of activity and utilization of accumulation capacity. Our EBITDA separator for nan 4th roseate supra 35% contempt higher earthy worldly and power costs.

Average trading prices successful our Tubes operating conception accrued 50% compared to nan corresponding 4th of 2021 and 9% sequentially. During nan quarter, rate travel from cognition was $524 million, our nett rate position astatine nan extremity of nan twelvemonth accrued to $921 million, pursuing nan costs of an interim dividend of $201 cardinal successful November past year, and superior expenditures of $108 cardinal during nan quarter.

Now I will inquire Paolo to opportunity a fewer words earlier we unfastened nan telephone to questions.

Paolo Rocca

Thank you, Giovanni, and bully greeting to each of you. We closed 2022 pinch a quarterly grounds of nett sales, EBITDA and nett income to kept a twelvemonth successful which we were capable to return advantage of nan favorable marketplace conditions, peculiarly successful North America to make beardown increases successful income and separator done nan year.

Taking woody arsenic a whole, our income grew 80% to $11.8 billion. Our EBITDA roseate to $3.6 billion, and our nett income roseate to an yearly grounds of $2.5 cardinal aliases 22% of nett sales. With a coagulated equilibrium expanse and bully imaginable for an expanding rate travel successful nan twelvemonth ahead, we are proposing to raise our dividend for nan 2022 twelvemonth by 24% to $0.51 per share.

These results were made imaginable done nan businesslike deployment of our world business system, wherever we produced a grounds measurement of complete 3.1 cardinal tons of seamless tube worldwide, prolong an ongoing ramp-up of our installation successful nan U.S. Despite nan usage of longer and much analyzable accumulation successful logistic routes, we were capable to support precocious standards for safety, quality, and depletion of materials.

During nan year, we hired 6,500 caller employees. And successful our induction successful training routines, we payed adjacent attraction to nan value of having a information mindset pinch consciousness and behaviour suitable for nan business situation of our shop floor. We empower each our labor to beryllium proactive successful taking preventive information action astatine each times. With this action, we were capable to trim our mislaid clip wounded wave complaint for nan twelvemonth by 10% to 0.9 per cardinal manhours work. We are grateful to our group moving successful nan works for their publication to this result.

As we summation accumulation and sales, our logistics cognition person reached a important magnitude. To springiness you an thought of nan efforts progressive betwixt interment proscription and transportation to customer, we moved astir 10 cardinal tons of worldly complete astir nan world. We are strengthening nan reliability of our proviso concatenation done nan digitalization of our worldly flows and made bully advancement complete nan twelvemonth successful this respect.

We accrued nan deployment of our Rig Direct services. We are now serving adjacent to 600 rigs worldwide. Our unsocial work level let america to merge our operations much intimately pinch our customers and supply integer and method services that tin further differentiate america from our competitors. 2022 marked a turning constituent successful our deployment successful nan United States. The state accounted for much than 40% of our full sales, astir of which are now produced locally.

We brought nan Bay City mill to afloat accumulation capacity and ramped up accumulation successful nan remainder of our U.S. successful information system, including nan restart of accumulation of upwind pipes and of power curen and finishing astatine our Baytown successful Koppel facilities. We hired much than 1,500 caller labor during nan twelvemonth successful nan U.S. and now employment 3,600 group successful nan cloud.

With nan $460 million, we will debar spending connected nan Benteler acquisition. We will reorient our finance scheme successful nan United States to execute done integrated growth, nan nonsubjective of strengthening our section business and logistics strategy that we had planned pinch nan acquisition.

As we look ahead, we position nan tightness successful lipid marketplace and precocious request for LNG will support lipid and state value rate flows and finance successful nan lipid and state sector. We expect that nan number of lipid and state good drilled astir nan world successful 2023 will increase, and this will thrust world OCTG request to transcend 16 cardinal tons and reached its highest level since [indiscernible]. This situation will support further income maturation successful 2023, erstwhile we expect an summation successful income for nan offshore improvement successful nan Middle East and successful nan pipeline infrastructure buildup.

Our accomplishment complete nan past twelvemonth that will support this maturation see our multiyear statement pinch ExxonMobil to proviso their offshore cognition successful Guyana, our statement pinch Petrobras to proviso their Pre-salt operation. The renewal of our semipermanent worldwide statement pinch NAI, nan renewal of our semipermanent statement pinch Qatargas, nan consolidation of our semipermanent statement pinch Vietnam.

We besides extended our semipermanent statement pinch YPF and pinch Pemex. Pipelines will thrust a applicable summation successful our income of welded pipes. In Argentina, we are supplying a number of pipelines that will stimulate further finance successful nan Vaca Muerta shale by expanding capacity to carrier nan state and liquid to home and export market. We will present a awesome offshore pipeline for nan North Field description successful Qatar, and we are seeing accrued request for offshore pipelines to bring state to Europe.

Our rate travel successful 2023 will use from nan stabilization of our moving superior requirement. Our CapEx will summation to astir $650 million. A applicable portion of this CapEx will beryllium directed to task that will lend to our 2030 target for reducing nan c emanation strength of our operations. In summation to our upwind workplace successful Argentina, we will make investments, which will lend to improving power ratio successful Italy and Argentina.

Over nan past year, Tenaris has made bully advancement connected galore fronts and produced grounds financial results. We person been capable to execute this only acknowledgment to nan assurance our customer has placed successful america and nan changeless effort and nan outstanding capacity of our divers and United squad each astir nan world successful a volatile and fast-moving environment.

We are now unfastened for immoderate questions you whitethorn have.

Question-and-Answer Session

Operator

Thank you. [Operator Instructions] Our first mobility comes from nan statement of Marc Bianchi from Cowen.

Marc Bianchi

Hi. Thank you. I'm funny astir nan separator progression from here. It seems for illustration there's immoderate transverse currents North America pricing connected nan starring separator is starting to rotation over. Raw materials are increasing. I understand that your business would lag that. So possibly that's what's benignant of keeping things successful bully style present successful nan first half. But I'm funny really that looks arsenic you spell to nan 2nd half? And past is nan world betterment capable to possibly offset that?

Paolo Rocca

Thank you, Marc. The -- arsenic acold arsenic -- let's say, nan wide situation that you tin expect pinch a imagination to 2023. First of all, I deliberation that location is tightness successful nan lipid and state market. And location are reasons to warrant anticipation of a value of lipid that whitethorn enactment unchangeable aliases higher wherever it is today. The economical expectation, nan position of nan system pinch immoderate betterment successful China is astir apt much affirmative coming than a fewer months ago. The U.S. production, successful my view, will stay supra 12 cardinal tube a day. In immoderate moments, besides nan strategical reserves will person to commencement to build backmost its position.

So connected nan broadside of demand, location could beryllium immoderate traction successful this area. The simplification of nan exports from Russia will hold into this. So I deliberation location is simply a reasonable anticipation of sustained value of oil. In nan lawsuit of state also, beyond nan short-term rumor for illustration immoderate closure of nan LNG mill, LNG works successful nan U.S. nan state value successful nan U.S. besides successful my view, we'll person immoderate support for nan task that will travel successful gradually complete nan year. And so, besides successful nan gas, I deliberation location are reasonable anticipation of, let's see, immoderate betterment from nan coming level and a reasonable value of gas.

In these conditions, if you look astatine nan rate travel of nan lipid companies, we tin expect an summation successful investment, an summation successful finance successful CapEx drilling successful North America. This should beryllium supporting accrued demand, arsenic we were saying successful our property release, accrued request of OCTG worldwide and peculiarly successful North America. The level of drilled and completed wells is very low, astir apt is astatine nan minimum successful nan past 3 years successful position of narration pinch nan wells drill.

This also, to immoderate extent, will lend successful supporting drilling activity successful nan U.S. On nan broadside of nan supply, arsenic we're saying, prices of immoderate of nan facet of nan costs are expanding successful nan hot-rolled coils commencement to recover, robust ore went up since nan past quarter. So location is besides -- location will beryllium immoderate support, this 4th only partially affecting us, but are affecting nan production, nan costs ratio of our competitor.

So successful my view, nan level of pricing whitethorn person adjusted somewhat now. But successful nan end, we person nary logic to deliberation that nan value of types, particularly for analyzable power treated exertion seamless successful nan United States should set substantially. There will beryllium comparatively tight equilibrium for a while if nan drilling activity increase, and we are expecting complete nan agelong run.

Marc Bianchi

Okay. That's helpful, Paolo. I conjecture my different mobility relates to Benteler and you alluded to this successful your commentary. I deliberation location was going to beryllium immoderate beautiful important CapEx successful possibly '24 and '25 for a alloy shop. With that now not happening, what should we beryllium looking for spending from you for your North America operations to possibly switch what was going to travel from Benteler?

Paolo Rocca

Well, I deliberation we request to set and redefine our strategy successful North America. We request to fortify our business system, debottleneck immoderate of nan value-added process and besides summation our capacity of welded merchandise of differentiated welded products. So we will nonstop our finance successful this direction. There will beryllium an summation overall, arsenic I remark connected nan wide finance during 2023 compared worldwide to nan level of 2022. And portion of this finance will beryllium focused connected nan debottlenecking and strengthening our accumulation and logistic capacity successful nan United States.

Marc Bianchi

Okay. Thank you for nan answers. I’ll move it back.

Operator

Thank you. One infinitesimal for adjacent question. Our adjacent mobility comes from nan statement of Alessandro Pozzi from Mediobanca.

Alessandro Pozzi

Hi, there. Thank you for taking my questions. I deliberation successful nan outlook, you mentioned a further summation successful revenues and EBITDA pinch unchangeable margins. I was wondering, if you tin possibly springiness america a spot of a position of wherever do you spot income going up possibly successful Q1. And also, I deliberation successful your opening remarks, you mentioned a number of pipeline projects and I was wondering, if location is possibly immoderate lumpiness successful nan volumes passim nan year, perchance large pipeline projects coming in, successful immoderate circumstantial quarters. But also, I deliberation successful nan Middle East, if you tin springiness america a position of wherever income mightiness spell successful nan Middle East passim nan year.

Paolo Rocca

Thank you, Alessandro. In fact, you're saying, we expect successful nan first 4th of 2023, further summation successful income successful nan scope of 10%, pinch still comparatively unchangeable margin. Then I mean for nan remainder of nan year, this is -- location are uncertainty connected galore issues. There is volatility successful nan world connected galore aspects. We will person besides to see, if nan presumption that I was mentioning earlier connected nan level of economical activity successful nan U.S. successful betterment of China truthful are going and wherever nan value of oil, if it remains unchangeable aliases moreover higher aliases what it is. This will person an power successful nan 2nd portion of nan year. But for nan first portion of nan year, this is what fundamentally we tin anticipate.

Now, erstwhile we spell to nan pipelines, I would disagreement successful 2 large different areas. One is nan improvement of infrastructure for nan state successful South America, improvement of Vaca Muerta integration to immoderate grade of nan infrastructure web that is taking spot now successful Argentina for lipid and gas. These are chiefly welded product. Welded merchandise will summation successful its stock connected our income overall. For nan pipeline successful nan offshore and Middle East, I will inquire Gabriel to springiness an outline of what we tin expect successful 2023.

Gabriel Podskubka

Sure. Thank you, Paolo. Good morning, Alessandro. Indeed, nan business successful Middle East, we expect to proceed to grow. The drilling activity is increasing steadily astatine nan astir applicable NOCs person announced description of capacity, and they are pursuing through. And we are seeing them pursuing a multi-year finance cycles. And Tenaris is good positioned to capitalize connected that.

For example, successful nan UAE, past month, we achieved a grounds of delivering OCTG to 65 rigs of ADNOC pursuing our rig nonstop model. This is simply a caller level of activity that we are seeing successful nan Emirates aft galore months of ramping up nan operation. We are besides location moving afloat velocity up pinch nan building of nan state-of-the-art trading facility.

In Qatar, we are besides consistently supporting drilling needs of Qatargas arsenic they want to grow their state accumulation capacity. And this month, going backmost to your constituent of pipelines, we are starting nan first transportation of this monolithic North Field pipeline bid that we have. We will astir apt return nan full year, but this is happening this month, nan first shipment. So we will expect income of Qatar to ramp up arsenic good powerfully during nan year.

Saudi Aramco (ph) is besides increasing steadily successful nan drilling activity. We person booked respective orders successful each business segments successful nan 4th pinch a beardown backlog already going good into 2024. So overall, we expect a increasing trajectory successful Middle East that we person seen already successful nan 2nd half of 2022, but this will powerfully accelerate, particularly successful nan first of '23 and proceed into nan 2nd half of nan year.

Touching connected offshore very quickly. This is simply a conception that is besides very move demanding pipelines and OCTG, rig counting offshore already worldwide has recovered to pre-pandemic levels, and we expect nan number of FIDs successful 2023 to beryllium nan champion successful nan past 10 years. And this is thing that will support caller projects. So this is thing that we are seeing successful respective basins. We talked astir nan Middle East. We spot North Sea very active. There are projects being developed looking for further capacity to beryllium connected to Europe.

We spot besides Sub-Saharan Africa moving very, very strongly. Angola, Ivory Coast are 2 peculiar areas wherever we're booking projects successful OCTG and successful statement tube arsenic well. And besides nan Mediterranean, North Africa, nan Black Sea are areas wherever caller projects are being sanctioned and immoderate others are successful nan making, but that besides will springiness immoderate important prospects of pipeline activity arsenic well.

So overall, we spot offshore expanding into 2023 and astir apt beyond that. So this would beryllium a increasing conception successful Tenaris contributing to a richer operation of nan institution into 2023 and beyond.

Alessandro Pozzi

Thank you. Just going backmost to nan statement pipes. If you conscionable look astatine nan large projects that you person already been awarded, what is nan measurement that you're readying to vessel during 2023 for those large statement tube projects already successful nan backlog?

Paolo Rocca

Well, successful -- fto maine show you, successful Argentina, successful 2023, we should beryllium delivering successful nan scope of 200 -- astir 220,000, 250,000 tons world only nan North Field description is simply a task successful nan scope of 200,000 tons of welded pipes (ph), each of this are fundamentally welded pipelines. And past location is simply a sizable number of projects successful nan world area. There are much seamless pipeline for offshore cognition for illustration nan 1 that will provender state for Europe from different sources.

Alessandro Pozzi

Okay. That’s very clear. Thank you.

Operator

Thank you. [Operator Instructions] Our adjacent mobility comes from nan statement of Stephen Gengaro from Stifel.

Stephen Gengaro

Thanks and bully morning, everybody. Two things for me. I wanted to travel up first on, I deliberation a mobility Marc asked to commencement disconnected nan Q&A. When we deliberation astir nan world and offshore markets strengthening passim nan twelvemonth and successful 2024, is that accretive to nan existent EBITDA separator level?

Paolo Rocca

Well, location are immoderate task that has been acquired almost much than six months aliases 1 twelvemonth ago, successful which we still person a comparatively constricted separator because of nan value and nan costs summation that we suffered during this year. The caller task aliases acquired a separator that are, let's say, substantially, I would say, affirmative separator and comparatively precocious margin, but nan mix, you person to support successful mind is besides considering immoderate of nan merchandise that has been acquired immoderate clip ago. One illustration is, North Field description is simply a large task that has very constricted margin.

Stephen Gengaro

Okay. And is that -- those are intelligibly contemplated successful your anticipation that margins are astir these levels complete nan adjacent mates of quarters?

Paolo Rocca

Yes. We are considering this arsenic I was mentioning for nan adjacent quarter, we expect to person separator successful this level. And besides I deliberation this will beryllium sustainable successful nan first half. Now past volatility is there, and we person to return this into consideration. But nan information that we made astatine nan opening are supporting, let's say, a comparatively bully level of separator for nan 2023.

Stephen Gengaro

Great. Thank you. And past nan different mobility I person for you was erstwhile we deliberation astir nan equilibrium expanse and nan rate generation, I mean, moreover pinch your $650 cardinal of CapEx, you're going to generate, it looks for illustration a important free rate travel this twelvemonth successful 2023, and I don't cognize if it's springiness aliases take, $2 billion, I think, you bumped nan dividend somewhat. How do you deliberation astir accelerating nan magnitude of rate coming backmost to investors. I mean that's a large taxable successful lipid services these days is acceleration of superior returns. Investors intelligibly want that, you don't person nan acquisition now that you're spending $400 cardinal positive on. How do we deliberation astir your willingness to moreover summation nan magnitude of superior coming backmost to shareholders fixed nan free rate flow?

Paolo Rocca

Well, nan -- what we will beryllium proposing successful position of dividend, we thin to travel established way and keeping successful mind nan rate travel generation, nan results, nan semipermanent position for nan company. We will instrumentality to this argumentation is besides existent that we are expanding dividend by 24% this year, moreover if nan rate travel has been an influencer affected by beardown summation successful nan moving superior this year.

We will return a determination successful information adjacent year, and we will propose a dividend according to nan argumentation we are pursuing besides successful nan past. That is besides taken into consideration, nan results and nan rate travel generation.

Stephen Gengaro

Okay. Great. Thank you for nan details.

Operator

Thank you. [Operator Instructions] Our adjacent mobility comes from nan statement of Frank McGann from Bank of America.

Frank McGann

Okay. Thank you much. A mates of questions, if I might. The first 1 it would beryllium conscionable successful position of nan outlook, you look beautiful assured successful nan first 4th you person evidently little visibility for nan later quarters. But nan 2nd quarter, 3rd quarter, arsenic you're looking astatine them, do you person immoderate denotation of nan level of spot that you person and related to that, erstwhile you're -- arsenic you're rolling things guardant now, are you seeing nan pricing astatine which you're being capable to rotation complete contracts starting to spell down successful nan U.S.

Paolo Rocca

Yeah. As I was saying, we spot that 2023 nan measurement successful position of volume, successful position of invoicing, we will person a twelvemonth higher than 2022. As we expressed successful nan opening remark successful nan property release. I besides made a remark connected pricing. I mean nan driver that successful my position should support pricing successful nan different script successful nan U.S. and internationally. But it's clear that for nan 2nd portion of nan year, location are galore factors that are creating a certainty connected nan dynamics, portion of this is besides fundamentally short. But connected nan move of pricing for nan U.S., I will inquire Luca to springiness america his position connected nan cognition for adjacent 4th and this quarter.

Giovanni Sardagna

Hi, Frank, possibly you are not connected mute.

Paolo Rocca

Frank, location is immoderate sound coming from your side. Maybe you're still not mute.

Frank McGann

Okay. I apologize.

Luca Zanotti

All right. Thank you, Frank. Good morning. Look, I request to spell backmost to what Paolo expressed astatine nan beginning. When you look astatine nan different factors, you spot that nan marketplace absent to a alteration successful rig activity should stay beautiful balanced. Now location are factors for illustration Paolo was mentioning before, for illustration immoderate imports that we're seeing coming successful lately. But we do judge that these are going to beryllium dissipating complete clip because if you look astatine nan origins of these imports and nan proviso concatenation that is down it, you really spot that possibly they are not that sustainable going forward.

But again, absent a alteration -- a important alteration successful rig activity, which astatine this stage, we don't see. You look astatine different factors for illustration [indiscernible] nan minimum. If you return XTO, for example, large usability successful Permian, they are saying that they're going to rebuild nan inventory. Then you commencement looking astatine nan home production. When you spot a home accumulation and you divided it seamless successful adjacent value. You spot that nan seamless is capped. Maybe location tin beryllium immoderate capacity creeping present and there, but there's not overmuch they tin spell -- we tin go.

And nan seamless is constricted and constrained by labour shortages. So overall, I judge that, again, absent a alteration successful rig activity that we don't see. There are reasons to judge that nan marketplace is going to beryllium balanced going into 2023. Obviously, nan backmost half pinch immoderate more, let's say, volatility that we request to contemplate going forward, and we're going to person clip to do that. But overall, I instrumentality to what Paolo said astatine nan beginning.

Frank McGann

Okay. Thank you. That's really helpful. If I could travel up conscionable pinch a mobility connected nan pipeline activity. The pipelines successful Argentina that you mentioned, nan state pipeline has a number of phases and nan first shape evidently seems to beryllium nan 1 that you're talking about, nan 200,000 to 250,000 tons this year. Well Phase 2 and past nan 3rd of nan last large extension, erstwhile would you expect to spot volumes from that?

And secondly, successful position of nan lipid pipeline activity successful Argentina, nan description s of nan main pipeline that goes to nan Atlantic Coast, are you progressive successful that astatine all? Is it very significant? And I cognize location are immoderate early discussions astir a awesome further pipeline that could beryllium built 250,000 barrels a time complete nan adjacent three, 4 years. Is that thing that looks for illustration it could happen? And erstwhile mightiness that impact your volumes?

Paolo Rocca

Thank you, Frank. But for -- I would opportunity that, for sure, Argentina will create a important infrastructure. To bring state and lipid to nan coast, but this will hap complete nan years. Now nan timing will beryllium affected by nan governmental volatility and nan expertise to finance immoderate of these pipelines. It is imaginable that nan 2nd shape of nan pipeline from Vaca Muerta to Buenos Aires would beryllium started wrong 2023.

It's possible, but will require financing for nan full project. This is not sure. I mean, location is activity connected this side, but it's not judge that nan financing will beryllium organized wrong nan coming fewer months. For sure, it's a task that makes consciousness considering nan declination of nan state proviso from Bolivia and this is 1 project. Then location are projects of bringing lipid and state to nan coast. Again, these are ample projects. YPF is, let's say, a awesome subordinate successful this.

Also, this task made a batch of sense, but they will request financing and will not beryllium easy successful an electoral twelvemonth pinch a business successful which Argentina will beryllium facing difficult economical environment, nan financing of this task is not easy. Some of nan projects for illustration woody Oldival, location is besides an lipid pipeline are underway, and we are supplying it. Within this year, we expect to proviso 60,000 tons for this.

These are things that are moving on, for illustration nan first shape of nan pipeline from Neuquen to Buenos Aires. So immoderate is successful accumulation and will beryllium nan lever during 2023. But nan hold and nan 2nd shape and nan different awesome pipeline whitethorn beryllium delayed successful 2024, depending connected nan financial information of nan country.

Frank McGann

Okay. Great. Thank you very much.

Operator

Thank you. One infinitesimal for adjacent question. Our adjacent mobility comes from nan statement of Luke Lemoine from Piper Sandler.

Luke Lemoine

Hey. Good morning. Paolo, I conscionable wanted to explain nan guidance a small bit. 1Q was beautiful clear pinch revenues up 10% and unchangeable margins from 4Q levels. It sounds for illustration nan 2Q visibility is good. EBITDA margins stay adjacent nan existent level, but wanted to spot if you could benignant of springiness america a gross outlook from 1Q aliases 2Q -- and past connected 2nd half, I admit nan uncertainty, but arsenic you spot it now, it seems for illustration possibly margins touched down a bit, but are you still expecting these to stay supra 30% successful nan 2nd half.

Paolo Rocca

Well, we whitethorn guideline pinch immoderate much precise denotation for nan first quarter. And I was saying we tin besides person a comparatively bully thought of what is happening successful nan 2nd successful statement pinch what we are saying. The separator should stay beautiful stable. In nan 2nd portion of nan year, I mean, it's difficult to make a clear and sound prediction. What we tin opportunity is to look astatine nan fundamentals. The fundamentals is that successful my view, value of lipid remains stable. Gas besides will person a affirmative improvement from wherever it is now.

Drilling and level of nan wells and that will beryllium drilled will summation compared to 2022. And nan proviso and request successful nan tube business, it whitethorn good beryllium differentiated betwixt nan heat-treated much analyzable merchandise or, let's say, value-added merchandise that will stay beautiful tight and possibly location could beryllium immoderate much soft marketplace for non-heat treated low-end products. But successful this environment, besides nan costs will -- nan costs we are paying now will get into our profit and nonaccomplishment done nan 3rd and nan 4th Q. So we will person immoderate unit connected separator from this. But still, I'm beautiful affirmative connected it.

Luke Lemoine

Okay. All right. Thank you very much.

Operator

Thank you. One infinitesimal for our adjacent question. Our adjacent mobility comes from nan statement of Alessandro Pozzi from Mediobanca.

Alessandro Pozzi

Hi, there. Thank you. I person conscionable a follow-up connected CapEx. If you tin springiness america possibly nan breakdown of wherever you're spending CapEx and besides if you tin talk astir your ESG initiatives because arsenic you astir apt are aware, I mean, particularly connected this broadside of nan pond, nan ESG perspective is very felt and strong. So -- but astatine nan aforesaid time, I guess, you are expanding income and therefore, CO2 emissions would astir apt spell up, but I was wondering successful position of c intensity, what is nan inclination and possibly this year, complete nan adjacent fewer years, really overmuch you tin -- really accelerated you tin decarbonize your business footprint?

Paolo Rocca

Thank you, for this convey you, Alessandro. If I should opportunity wherever our CapEx is going, I will stress. First of all, this year, we will -- successful 2023, we will complete our upwind workplace successful Argentina and immoderate different task for decarbonization. This will require finance successful nan scope of $200-plus million. Then we will put successful our installation to besides trim c by improving nan process, caller power curen successful our installation successful Italy is nan case, finance successful nan alloy shop successful Italy -- successful Argentina.

Investment also, nan guidance of scrap to support nan decarbonization successful nan different mill. This will correspond besides different important portion of our finance and past strengthening pinch that cognition successful nan U.S. because successful nan U.S., we need, arsenic I was saying, to debottleneck immoderate of nan value-add process successful which we will request further capacity to grow done integrated growth, our expertise to service our clients successful this. This will beryllium fundamentally nan building of it.

The decarbonization will return 35%, 40% of our finance will have, let's say, astatine slightest contributing to our decarbonization. In nan inclination of decarbonization, we started pinch 1.43 tons (ph) per tons of alloy of pipes produced. In 2018, this is accounted pinch greenhouse state methodology. In scope 1, 2 and 3 connected nan 3 scope. Today, we are successful nan scope of 1.17. So we did a very bully beforehand successful our decarbonization.

In 2023, we will consciousness nan summation successful welded product. It implies that we are acquiring alloy from 3rd party. And this steel, successful immoderate cases, has let's say, higher contented CO2 emission. So nan scope 3 will bespeak this, but we scheme to compensate pinch a simplification successful scope 1 and successful scope 2 of our methods. So we are advancing, arsenic you know, our target is 0.98 tons per ton of tube successful 2030. We person done a very large advance.

One of nan finance that will not beryllium strictly related to nan carbonization, but very overmuch related pinch NG is nan finance successful nan exhausting fumes of our copper alloy shop is simply a awesome finance that will toggle shape nan alloy shop and trim emanation peculiar magnitude successful this -- we will besides summation capacity of steel. At nan aforesaid time, today, we are constricted precisely by nan capacity of managing nan fumes from nan steel.

Alessandro Pozzi

Okay. That was very clear. Thank you very much.

Operator

Thank you. One infinitesimal for our adjacent question. Our adjacent mobility comes from nan statement of Luigi De Bellis from Equita.

Luigi De Bellis

Yes. Good morning. Thank you for taking my question. I person 1 connected nan pricing trend. So that is 2 prices successful U.S. are down now adjacent to 5% from nan highest level. You are seeing a coagulated outlook for request supply, but really overmuch do you expect prices to germinate successful nan coming months aliases quarters for nan market? And what do you expect for Tenaris mean prices see it's besides nan operation effect and really nan work supplied now connected Maersk Argentina are affecting this move and if it could alteration during nan year. Thank you.

Paolo Rocca

Thank you, Luigi. Well, connected nan first constituent is nan improvement of prices successful nan U.S. As I was saying before, I deliberation location are 2 different area of pricing. One is nan area of nan value-added merchandise seamless, heat-treated worldly pinch semi premium aliases premium thread. This is simply a marketplace successful which business will stay comparatively tight. I don't expect successful an situation successful which nan number of wells drilled increase, I don't expect, let's say, to softening each these price. There could beryllium a softening of value successful nan low-end merchandise successful nan United States, wells successful particular. But let's say, if nan value of lipid support and nan level of good drilled and drilling continue, this will fundamentally dangle from import level. Remember, import is besides penalized by nan 232 successful galore cases.

So moreover successful this case, I deliberation nan softening should beryllium contained. Cost effect I mean, nan summation successful hot-rolled coils, I don't cognize -- I mean, contributed to, successful my view, incorporate April. Now nan level of banal successful nan crushed is still within, let's say, a normal ratio, we don't spot banal overhang connected nan ground. So successful this condition, that's nan logic that are suggesting that we shouldn't beryllium softening beyond a definite level. By nan way, our strategy is little exposed to nan low-end merchandise successful nan United States. And truthful to immoderate extent, successful our accounting, I deliberation we are comparatively defended from softening of prices.

Luigi De Bellis

Thank you.

Operator

Thank you. I would now for illustration to move nan convention backmost to Giovanni Sardagna for closing remarks.

Giovanni Sardagna

Thank you, Gigi. And well, if location are nary different questions, I would for illustration to convey everybody who joined america for nan quarterly convention call, and we dream to spot you soon. Thank you.

Operator

This concludes today's convention call. Thank you for participating. You whitethorn now disconnect.