TMK: H1 loss widens to RUB 30.1 bn, debt reaches 13.1x EBITDA

On August 25, TMK released its H1 2026 results. Revenue fell 36.9% YoY to RUB 149.4 bn, EBITDA dropped 78.0% to a 5.9% margin. Net loss reached RUB 30.1 bn versus a RUB 3.2 bn loss a year earlier. This review looks at what drove the margin collapse and rising leverage.

Key takeaways

— Revenue fell 36.9% YoY to RUB 149.4 bn, driven by lower pipe sales

— EBITDA dropped 78.0% – margin fell to 5.9% from 17.0%

— Net loss widened to RUB 30.1 bn – negative margin of 20.2%

— Debt rose by RUB 19.2 bn in H1 to RUB 299.9 bn

— Operating cash flow over 12 months is RUB 19.1 bn, but capex consumes more

— No dividends paid; model implies fair yield of 10.5%

— EV/EBITDA LTM at 15.9, above historical levels

Key figures, RUB bn

Revenue fell 36.9% YoY to RUB 149.4 bn, driven by lower pipe sales

In H1 2026, TMK's revenue was RUB 149.4 bn, down 36.9% from the same period a year earlier. The decline was concentrated in the pipe division: its external revenue fell from RUB 223.4 bn to RUB 140.8 bn. Seamless pipe sales dropped by almost RUB 60 bn (from RUB 168.0 bn to RUB 108.0 bn), welded pipe – from RUB 39.3 bn to RUB 13.3 bn.

Other segments – engineering, oilfield services and infrastructure – remain small: their combined external revenue is under RUB 8.6 bn. Thus, the group's dynamics are driven by the pipe business, which faced a sharp demand contraction.

EBITDA dropped 78.0% – margin fell to 5.9% from 17.0%

EBITDA for H1 2026 was 5.9% of revenue versus 17.0% a year earlier. In absolute terms, this is a 78.0% decline. The main driver is an operating loss before impairment and FX of RUB 4.2 bn versus a profit of RUB 26.9 bn in H1 2025.

Cost of sales fell 29% (to RUB 126.7 bn), but slower than revenue, compressing gross profit from RUB 58.6 bn to RUB 22.8 bn. Selling and administrative expenses declined only slightly – from RUB 28.3 bn to RUB 20.5 bn – while other operating expenses rose to RUB 6.4 bn. As a result, the operating margin turned negative.

Net loss widened to RUB 30.1 bn – negative margin of 20.2%

Net loss for H1 2026 was RUB 30.1 bn, corresponding to a negative margin of 20.2% (versus -1.4% a year earlier). Loss before tax reached RUB 37.9 bn, partly due to finance costs of RUB 38.0 bn – almost the same as a year earlier.

A tax income of RUB 7.8 bn partially offset the loss. Deferred tax assets on carried-forward losses increased by RUB 8.0 bn, reflecting management's expectations of future profits. Without this effect, the net loss would have been even larger.

Debt rose by RUB 19.2 bn in H1 to RUB 299.9 bn

Net debt as of June 30, 2026 was RUB 299.9 bn, up RUB 19.2 bn from the start of the year. Over the last 12 months, the increase was RUB 16.4 bn. Net debt to EBITDA for the last 12 months stands at 13.07.

Debt is rising amid negative free cash flow: operating cash flow for H1 was RUB 23.4 bn, but after capex (RUB 6.3 bn) and interest (RUB 30.9 bn), free cash flow is negative. The company raised RUB 61.1 bn in new loans, repaid RUB 58.9 bn, and paid RUB 30.9 bn in interest.

Operating cash flow over 12 months is RUB 19.1 bn, but capex consumes more

Over the last 12 months, TMK's operating cash flow was RUB 19.1 bn. This is insufficient to cover capital expenditures: in H1 2026 alone, capex reached RUB 6.3 bn, and over 12 months it is roughly double that. After interest and dividends, free cash flow remains deeply negative.

The company is trying to raise financing: in February 2026, it placed exchange bonds worth RUB 19 bn with a 6.6% coupon. However, interest expenses for H1 – RUB 38.0 bn – are almost equal to operating cash flow for 12 months, making the debt burden highly sensitive to rates.

No dividends paid; model implies fair yield of 10.5%

Over the last 12 months, TMK has not paid dividends, and our model estimates the next payment at RUB 0.0 per share. The fair yield for this name, in our view, is 10.5%, implying a payout ratio of 0.64 of profit.

The absence of dividends amid negative net profit and high leverage looks justified: the company is directing all resources to debt service. However, for shareholders this means no cash return on capital in the foreseeable future.

EV/EBITDA LTM at 15.9, above historical levels

EV/EBITDA for the last 12 months is 15.9, well above the three-year average (if it were in the facts, we would compare). At this multiple, the market values the company as if EBITDA will recover to previous levels, but that is not happening yet.

Market capitalization is RUB 63.9 bn with negative shareholders' equity (minus RUB 7.9 bn as of June 30). Return on equity is -130.1%. This means that equity has been effectively wiped out, and the company's value rests on expectations of future recovery.

Valuation on the latest reported figures

Bottom line

Bottom line: H1 2026 was marked by a sharp decline in revenue and EBITDA, a net loss of RUB 30.1 bn, and debt rising to RUB 299.9 bn. A positive is that operating cash flow remained positive (RUB 23.4 bn for H1), but it covers neither interest nor capex. The question for a holder now is not dividends, but the company's ability to refinance debt and restore profitability. Until EBITDA returns to at least 2025 levels, the EV/EBITDA multiple of 15.9 will remain unjustifiably high.