Tenaris S.A. (Tenaris) reported y-o-y declines across the board in 1Q 09. Although revenues were below our estimates, Tenaris bottom line exceeded our expectations. Going forward, we remain concerned about the decline in Exploration and Production (E&P;) activity in the oil and gas industry, and the decline in demand for the company's Oil Country Tubular Goods (OCTG) products. However, a steep decline in raw material prices is likely to benefit the…

Going forward, following a sharp decline in global E&P;activities, we expect the company to run at lower utilization capacity, resulting in a y-o-y decline in production volumes over our investment horizon. Furthermore, with the worldwide fall in steel prices driving down the company’s product prices, we expect revenues to decline y-o-y in FY 2009 and FY 2010. Although our estimate for FY 2009 revenues show a sharp decline y-o-y, based on the better-than-expected…

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Tenaris S.A.’s (Tenaris) ADR price has increased significantly since our previous update report dated 02 December 2008, as demand for steel pipes and tubes from oil and gas companies is expected to rebound given a rise in global energy prices. As our fundamental outlook is unchanged, we maintain our BUY rating for the Tenaris ADR. We will reassess our ADR rating for Tenaris after the company releases…