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Note 12 - Investments in Non-consolidated Companies | 12 Months Ended
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Dec. 31, 2017
Statement Line Items [Line Items] |
Disclosure of interests in other entities [text block] |
12 |  | Investments in non-consolidated companies
|  | Year ended December 31, |
|  | 2017 |  |  | 2016 |
At the beginning of the year |  |  | 557,031 |  |  |  | 490,645 |
Translation differences |  |  | (9,548 | ) |  |  | 3,473 |
Equity in earnings of non-consolidated companies |  |  | 116,140 |  |  |  | 71,533 |
Dividends and distributions received (*) |  |  | (22,971 | ) |  |  | (20,674 | )
Additions |  |  | - |  |  |  | 17,108 |
Decrease / increase in equity reserves and others |  |  | (358 | ) |  |  | (5,054 | )
At the end of the year |  |  | 640,294 |  |  |  | 557,031 |
(*)Related to Ternium The principal non-consolidated companies are:
|  |  |  | % ownership at December 31, |  |  | Value at December 31, |
Company |  | Country of incorporation |  | 2017 |  |  | 2016 |  |  | 2017 |  |  | 2016 |
a) Ternium (*) |  | Luxembourg |  |  | 11.46 | % |  |  | 11.46 | % |  |  | 563,735 |  |  |  | 491,285 |
b) Usiminas (**) |  | Brazil |  |  | 3.08 | % |  |  | 3.08 | % |  |  | 70,642 |  |  |  | 61,904 |
Others |  | - |  |  | - |  |  |  | - |  |  |  | 5,917 |  |  |  | 3,842 |
|  |  |  |  |  |  |  |  |  |  |  |  | 640,294 |  |  |  | 557,031 |
(*) Including treasury shares. (**)At December 31, 2017 and 2016 the voting rights were 5.2 %. a) Ternium S.A. Ternium S.A. (“Ternium”), is a steel producer with production facilities in Mexico, Argentina, Brazil, Colombia, United States and Guatemala and is one of Tenaris’s main suppliers of round steel bars and flat steel products for its pipes business. At December 31, 2017, the closing price of Ternium’s ADSs as quoted on the New York Stock Exchange was $31.59 per ADS, giving Tenaris’s ownership stake a market value of approximately $725.7 million. At December 31, 2017, the carrying value of Tenaris’s ownership stake in Ternium, based on Ternium’s IFRS financial statements, was approximately $563.7 million. See Section II.B.2. The Company reviews periodically the recoverability of its investment in Ternium. To determine the recoverable value, the Company estimates the value in use of the investment by calculating the present value of the expected cash flows. The key assumptions used by the Company are based on external and internal sources of information, and on management’s judgment based on past experience and expectations of future changes in the market. Value-in-use was calculated by discounting the estimated cash flows over a five year period based on forecasts approved by management. For the subsequent years beyond the five -year period, a terminal value was calculated based on perpetuity. The discount rates used are based on the respective weighted average cost of capital (WACC), which is considered to be a good indicator of capital cost. The discount rate used to test the investment in Ternium for impairment was 11.5% Summarized selected financial information of Ternium, including the aggregated amounts of assets, liabilities, revenues and profit or loss is as follows:
|  | Ternium |
|  | 2017 |  |  | 2016 |
Non-current assets |  |  | 7,727,283 |  |  |  | 5,622,556 |
Current assets |  |  | 4,395,283 |  |  |  | 2,700,314 |
Total assets |  |  | 12,122,566 |  |  |  | 8,322,870 |
Non-current liabilities |  |  | 3,442,521 |  |  |  | 1,324,785 |
Current liabilities |  |  | 2,827,275 |  |  |  | 1,831,492 |
Total liabilities |  |  | 6,269,796 |  |  |  | 3,156,277 |
Non-controlling interests |  |  | 842,347 |  |  |  | 775,295 |
Revenues |  |  | 9,700,296 |  |  |  | 7,223,975 |
Gross profit |  |  | 2,297,271 |  |  |  | 1,839,585 |
Net income for the year attributable to owners of the parent |  |  | 886,219 |  |  |  | 595,644 |
Total comprehensive income for the year, net of tax, attributable to owners of the parent |  |  | 815,434 |  |  |  | 534,827 |
b) Usiminas S.A. Usiminas is a Brazilian producer of high quality flat steel products used in the energy, automotive and other industries and it is Tenaris’s principal supplier of flat steel in Brazil for its pipes and industrial equipment businesses. As of December 31, 2017 the closing price of the Usiminas’ ordinary and preferred shares, as quoted on the BM&FBovespa Stock Exchange, was BRL10.83 ( $3.27 ) and BRL9.1 ( $2.75 ), respectively, giving Tenaris’s ownership stake a market value of approximately $123.0 million. As of that date, the carrying value of Tenaris’s ownership stake in Usiminas was approximately $70.6 million. The Company reviews periodically the recoverability of its investment in Usiminas. To determine the recoverable value, the Company estimates the value in use of the investment by calculating the present value of the expected cash flows or its fair value less costs of disposal. Usiminas financial restructuring process (that started in April 2016 with the capital increase) was completed by the end of August 2017. The completion of this process together with the increase in the share price since June 2016 and the improvement in business conditions may lead to an increase in the value of the investment in Usiminas in future periods. During 2015 the Company recorded an impairment charge of $28.9 million. Summarized selected financial information of Usiminas, including the aggregated amounts of assets, liabilities, revenues and profit or loss is as follows:
|  | Usiminas |
|  | 2017 |  |  | 2016 |
Non-current assets |  |  | 5,661,947 |  |  |  | 6,085,811 |
Current assets |  |  | 2,193,096 |  |  |  | 1,970,015 |
Total assets |  |  | 7,855,043 |  |  |  | 8,055,826 |
Non-current liabilities |  |  | 2,344,042 |  |  |  | 2,856,883 |
Current liabilities |  |  | 920,924 |  |  |  | 537,646 |
Total liabilities |  |  | 3,264,966 |  |  |  | 3,394,529 |
Non-controlling interests |  |  | 425,988 |  |  |  | 508,083 |
Revenues |  |  | 3,367,937 |  |  |  | 2,442,596 |
Gross profit |  |  | 513,712 |  |  |  | 150,999 |
Net income (loss) for the year attributable to owners of the parent |  |  | 99,853 |  |  |  | (166,153 | )
c) Techgen, S.A. de C.V. (“Techgen”) Techgen is a Mexican natural gas-fired combined cycle electric power plant in the Pesquería area of the State of Nuevo León, Mexico. The company started producing energy on December 1, 2016 and is fully operational, power capacity of 900 megawatts. As of December 31, 2017, Tenaris held 22% of Techgen’s share capital, and its affiliates, Ternium and Tecpetrol International S.A. (a wholly-owned subsidiary of San Faustin S.A., the controlling shareholder of both Tenaris and Ternium), held 48% and 30% respectively. Techgen is a party to transportation capacity agreements for a purchasing capacity of 150,000 MMBtu/Gas per day starting on August 1, 2016 and ending on July 31, 2036, and a party to a contract for the purchase of power generation equipment and other services related to the equipment. As of December 31, 2017, Tenaris’s exposure under these agreements amounted to $58.2 million and $3.9 million respectively. Tenaris issued a corporate guarantee covering 22% of the obligations of Techgen under a syndicated loan agreement between Techgen and several banks. The loan agreement amounted to $720 million and has been used in the construction of the facility. The main covenants under the corporate guarantee are Tenaris’s commitment to maintain its participation in Techgen or the right to purchase at least 22% of Techgen’s firm energy, and compliance with a maximum permitted leverage ratio. As of December 31, 2017, the loan agreement had been fully disbursed and, as a result, the amount guaranteed by Tenaris was approximately $158.4 million. During 2017 the shareholders of Techgen made additional investments in Techgen, in form of subordinated loans, which in case of Tenaris amounted to $7 million. As of December 31, 2017, the aggregate outstanding principal amount under these loans was $93.2 million.

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