On August 5, Tenaris (NYSE:TS) reported second-quarter results that read as two different companies stapled together. Net sales fell 4% from the first quarter to $2,967 million, and EBITDA slid 12% to $649 million, yet the company still paid out $606 million in dividends during the quarter and closed June 30 with $3.6 billion in net cash. The gap between those numbers comes down to one thing: a shipping disruption thousands of miles away at the Strait of Hormuz.
Away from the Middle East, the picture Tenaris paints is one of accelerating demand. Drilling activity has been increasing in the United States, Canada and Argentina, and customers around the world are pushing ahead with offshore projects as the industry leans harder into security and diversification of supply. In the United States, OCTG prices have been rising to meet that demand and to offset higher raw material and logistics costs. Europe showed what that looks like in practice, with net sales climbing 25% sequentially and 24% year over year as Tenaris began deliveries of offshore line pipe to the Sakarya Black Sea development and booked higher OCTG sales in Turkey.
The balance sheet backs up the growth story. Free cash flow reached $0.9 billion in the first half of 2026, and the board approved an interim dividend of $0.59 per share, or $1.18 per ADS, payable November 25 to holders of record as of November 24. Tenaris also bought back $90 million of stock in the first half, helping push earnings per share up 4% to $1.01 even as operating income declined. Net sales for the full first half still rose 1% to $6,067 million, evidence that the underlying business kept growing despite the disruption working against it.
The other half of the story sits in the Asia Pacific, Middle East and Africa region, where net sales dropped 22% sequentially and 28% year over year to $557 million. Tenaris attributed the decline directly to the effective closure of the Strait of Hormuz for most of the quarter, which forced the postponement of shipments and severely affected drilling activity in Iraq, Kuwait and Qatar, while Saudi Arabia and the UAE held up better. That regional pressure showed up across the company's margins, with the EBITDA margin falling to 21.9% from 23.7% a year earlier and the tubes segment's operating margin dropping to 16.6% from 18.6% in the first quarter.
Costs added to the squeeze. Selling, general and administrative expenses rose to 16.3% of net sales from 15.0% in the prior quarter, which the company tied to higher unitary logistics costs from the Hormuz closure along with rising raw material prices. Tenaris expects second-half sales and EBITDA to stay roughly in line with the first half, with the third quarter further affected by seasonality and product mix before the fourth quarter benefits from higher prices and volumes. The board also saw two departures during the quarter, as Jaime Serra Puche resigned and Germán Curá stepped down as Vice Chair overseeing sustainability, adding a layer of governance change on top of the operational disruption.
Hedge fund ownership climbed from 22 funds to 26 in the most recent quarter, a modest uptick in institutional interest even as the headline numbers softened. Short interest sits at just 2.23% of the float, which suggests little organized skepticism is betting against the stock right now. Shares trade at 15.77 times forward earnings as of September 1, a multiple that looks measured rather than stretched given the swings in this quarter's results. None of these figures scream conviction in either direction, but they also show no sign of a market bracing for a prolonged Hormuz disruption. With $3.6 billion in net cash still on hand, the market may simply be treating this quarter's dip as a timing issue rather than a structural one.
Tenaris is running on two different clocks right now. One shows rising drilling activity in the Americas, growing offshore demand, and a balance sheet strong enough to keep funding dividends through a rough patch. The other shows a real hit to sales and margins tied to a geopolitical chokepoint that Tenaris does not control and cannot predict the end date of. For the more optimistic reading to hold, the Strait of Hormuz disruption needs to ease and the fourth quarter pricing gains need to show up as promised.
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