Etienne Bertrand - Head of IR Philippe Crouzet - CEO Olivier Mallet - CFO Didier Hornet - SVP Eastern Hemisphere Jean-Pierre Michel - COO

Raphael Veverka - Exane Amy Wong - UBS Alessandro Abate - Berenberg Robert Pulleyn - Morgan Stanley Maria-Laura Adurno - Goldman Sachs Nick Green - Bernstein Guillaume Delaby - Chez Societe Generale Corporate & Investment Banking Kevin Roger - Kepler Cheuvreux David Farrell - Macquarie

Thank you. And good evening and thank you for joining us tonight.

And with me today we’ve Philippe Crouzet, CEO; Olivier Mallet, CFO; Jean-Pierre Michel, COO; Didier Hornet, Senior Vice President Eastern Hemisphere. I would like to inform you that this conference will be available via our conference call website.

It’s going to be recorded and the replay will be available. I will comment, the management will comment the slide during the presentation and the slides will be available for download on our website which is on the homepage on the investor relations section in the financial results page.

Before I hand over to Philippe, I must now warn you that today’s conference contains the forward-looking statements and that future results may differ materially from statements or projections made on today’s call. For your convenience, the forward-looking statements and risk factors that could affect those statements are referenced at the beginning of our slide presentation and are included in our annual registration document filed with the AMF.

This presentation will be followed by Q&A session and I would like to leave the floor now to Philippe.

Thank you, Etienne. Good evening everyone.

I’ll now start by giving you an overview of the highlights for the Q1 period and then I leave the floor to Olivier for some more comments on the financials. Let me start on Page 4 with the volumes.

Our shipped volumes grew from 251,000 tonnes in Q12016 to 475,000 tonnes over the first quarter of 2017. This is mainly the results of two effects.

Firstly, the integration of Tianda and the full consideration of VSB and Brazil and second positive oil and gas momentum in the U.S. So the significant rebound is related to those two effects, the rebounding for the markets and regions still to be seen.

As shown in the next slide the financial performance improved significantly in Q1 compared to both Q1 of last year and Q4 of 2016 and this is due to positive combination of for first scope as I commented of volume growth enabling better absorption of fixed costs and of nice savings despite price deterioration. Our transformation plan is being executed as planned over this quarter.

We have disposed off our Saint-Saulve steel mill and would implemented our reorganization and we now keep overall focus on industrial optimization. Free cash-flow is mainly impacted by the working leads linked to the rebound in our activities especially in North America.

We let Olivier give further detail on the revenue growth. Let me just mention two things on the positive side of course we have scope and ForEx and it is illustrated in the chart on the page 6.

And you see as well very strong volume growth offset by negative price mix. I hand over now to Olivier.

Good afternoon to all, good morning to everyone. I would start on page 8 by via Q1 revenue breakdown.

No big change by market, oil and gas is still of course our largest segment by staff at 62 of all revenues in Q1 ’17. More interestingly we have also by region which reflects the good momentum in the U.S.

OCTG business at North America, there is solid rebound from 19% a year ago to close to 24% of Q1’17 in the whole year. South America’s contribution is up over six points to 20.8% and many thanks to higher OCTG deliveries the [indiscernible] than usual and which are quite concentrated over this quarter.

The significant increase for Asia and Middle East share mainly results from the scope impact [indiscernible]. And finally we traded the share [indiscernible] in Q1 ’16.

Moving to the part of the P&L from revenue to EBITDA. As already explained, the revenue was benefited from positive scope effect with the integration of Tianda and the full consolidation of the former VSB and as well from a positive products impacts.

Excluding these elements, the positive volume impacts in North America mostly and Brazil as well has been affected by negative price and mix effects in North America and EAMEA. In terms of industrial margin, it has improved significantly due to the higher revenue combined with the benefits of the transformation plan with good savings in Q1.It has also noticed that the unusually high level of deliveries [indiscernible] in Brazil in Q1 contributed as well to this positive volumes compared to last year.

The benefits of our transformation plan are also noticeable in the improvement of SG&A and all these [indiscernible] EBITDA improvement at -21 million. On the rest of the P&L, not a lot to comment.

Operating loss was significantly reduced compared to last year and the previous quarter, mostly thanks to EBITDA also through the absence of recycling and e-payment charges this quarter unlike Q1 ’16. As a result the net result group share is improving, still negative at -26 million compared to -284 million last year.

Moving to the free cash flow at -220 million slightly improved compared to Q1 ’16, this first improvement in the cash flow from operating activities mostly to linked to the improvement in the EBITDA that is partly offset by higher increase in working capital in Q1 this year compared to Q1 last year and this is due on top of the usual seasonality effect on working capital to the rebound in the activity in North America. And as you can see, CapEx are still very strictly monitored at €34 million, slightly below 2016.

What does it mean in terms of net debt, it terms that €1,533,000 at the end of Q1 with an increase in debt net due mostly to the negative free cash flow, arguing ratio is at 42%. On page 13, some comments on liquidity efforts, it does of course remain strong at the end of Q1, it was made of €1 billion of cash and €2.3 billion of long term committed bank facilities of which 673 million we have drown which has been done at the time we did reimburse of [indiscernible] bond and in February and the short term debt amounted to €1.5 billion.

The change of VAT, most of our bank facilities are maturing beyond 2019 and there is no bond repayment to be made until 2019 as well. Finally, we have gained some increased functional flexibility vis-a-vie arguing covenant that has been revised with the agreement with our banks from 75% to 100% for all our long-term committed bank facilities and for the annual test [indiscernible] at the end of 2018, ’19 and ’20.

This is clear sign of our bank’s confidence in your functions and liquidity profile. And now I will hand over to Philip who will tell you more about the outlook term.

Thank you, Olivier. So at the beginning of year confirms that the good dynamics in the U.S.

and this is expected to continue. Now the regions, the timing of the recovery is still uncertain and therefore we remain cautious on this front as Europe, Africa and Middle-East and Asia were still be impacted by low tendering activity and still low prices.

As far as Brazil is concerned, we still expect the drilling activity to remain stable all in all versus 2016 and we see no major changes in the other group of business. On the positive, of course, we shall continue to benefit from our transformation plan and benefits from our costs reduction initiatives.

Therefore the current volatile and uncertain global environment, we confirm our EBITDA improvement targets of between €50 million and €100 million versus the full year 2016 and now expect this to improve in the upper part of the tranche. Thank you for your attention.

Now it’s time for question and answers.

Good evening and thank you for taking my questions. The first one would be on your revise guidance which would still imply may be down rate for the rest of ’17 below what you have reported in Q1.

So, I'm wondering if you could give a little bit of color on that and perhaps but a bit on the expected Q2 versus H2 sequencing. Thank you.

Good afternoon, Raphael. So, what we can say about that is that it's likely I would say although likely that Q2 will be below Q1 as I mentioned during the presentation.

In Q1, we have unusually high business of tubes for pre-salt in Brazil, due mainly to the fact that in Q1 Petrobras had to drill some extra terrain wells for the Libra field. So, it happened in Q1, led to replace in Q1 that will replicated and this without some impact on the volumes between Q1 and Q2.

The other points I can mention is that we expect H2 to be above a 12 this '18 because mostly of the increase in prices and to some extent in volumes as well in the US. We've announced quite significant price increases on the US OCTG market.

They don’t apply for most of them to a H1 activity. In H1 to price or lead to what we call spot order to raise more customers.

We are negotiating them at these four months for H2 with our big so called per one customer. But the market situation in the US make us very comfortable in achieving this price increase which will contribute to a better H2 versus H1 and this should be the major point that will explain this better some part of the year.

Okay, thank you. And maybe just as a referral to I know you might not want to comment at this stage but for H2 do you see potentially a return to positive in that territory or would you is too early to comment?

I may not want to comment it at this stage.

Okay, thank you. And my last question would be on the international OCTG markets, do you see any positive signs that if you or are you may be a bit more conservative for H2 tendering activity taking to account the visibility you have at them all in?

Raphael, I think so far we perceive that the activity outside North America and outside onshore North America remains pretty subdued, most of the major oil companies are technically giving a priority to sort cycle investment buyback type of things, extending existing operations. We do not see major changes in the attitude regarding big projects.

So, we know this, there's a lot of work being done and there are engineering teams but really that some of them investment decisions are not being taken. So, so far the tendering activity is the normal one in the Middle East and not more not less and so we do not expect significant change for now, at least anything impacting the second half of 2017.

Okay, thank you very much.

Thank you, Raphael. We take the next question girl.

So, good evening. Question on your price mix, is at the aggregate impact was about 38%.

Can you just give a little bit more color in terms of how much of that was due to the mix of lower ASP volume versus the actual kind of realized pricing in your sales during the quarter, please?

I think basically the Sweden that contribute to that. While which is the largest one is AMEA or negative price impact that has taken place both in North America and in Middle East Africa.

In North America because you certainly remember that pricing is we are going down in the course of H1 '16 and has been then studied as in H2 '16 and not when improved yet in Q1 '17. So, that wheel the comparison between Q1 '16 and Q1 '17.

We see this negative price volumes for and also make OCTG bring that. So does the same story for the EA MEA region, where business is made in Q1 '16.

We are still based on orders and prices of mid '16 because what we are been deriving in early part of '17 is based as you're very low on orders taken somewhere around mid '16 at prices that were lower. Hourly as the lowest point.

So, this is the first every month. This one is a mix every month that is very strong in Q1 compared to Q1 '16.

We should go back to the press release of a year ago. We had flagged the fact that our did range in the EA MEA region was made with a very good mix in ever see deposit twice customer wise.

This was due to the timing of the employees. So, this is a very unfavorable basis when we compare that with the Q1 '17 where the mix was much more normal.

And the further element that plays some role as well is that the virtual rebound since Q1 last year has taken place mostly in the US where margins are not worse as any other part of the world that will be our same price is nowhere than the average in the group. So, that is a sort of a geographical mix effect that impacts in the volumes calculation this mix evolution.

And finally, for the volume for specialist, there is a so called conjugate volumes effect which tells you that in the way balances are usually built when you have price decrease taking place in parallel this volume increase as this is the case this time. This conjugate [indiscernible] is taken as a price effect which is sort of optically in place.

And you know everything.

Maybe we could add that this significant price mix negative price mix in Q1 will decrease quarter up to quarter all along the year.

Absolutely Philippe, you are right to adapt because as we the prices or with prices increase, mostly H2 in the US market. So, the basis for comprisal will get better and at the same time we will start inflating our prices, of course especially almost exceed here and in the US market as well so that quarter-after-quarter or half year after half year it will be more, H2 compared to H1's in a minimal.

This usually get you five flicks will be 3000 pure price part of it and for the mix you told event on the raise quarter-after-quarter.

Can you give any, thanks for that? Could you give any more color on your volume sold at Tianda and your volume sold to and if a sum, please on how what's the kind of impact it would have on the ASP for both?

I guess, we don’t give the ASP or these at by business or by plan specifically. It's all are certain to I guess that the production capacity or production in Tianda year-after-year is between 400,000 and 500,000 tons.

So, if you divide that by four, you will sort of get the impact on Q1 new volumes. There is as well some volume impact but to much less extent that is managed by, coming from the full confrontation of the VSB after the merger and I get you as well in mind here had a new price of Tianda that is way below, so I sense it open of course.

Alright, that’s helpful, thank you very much.

Thank you, Amy.

Thank you, Amy.

We take the next question.

Hi, good afternoon. Just basically my question's been answered.

Just a follow-up to Amy's one. On Tianda, just could you give me the bits, the steps on the planning to implement for the next 12 months and what kind of contribution we might be expecting.

And what the strategy is and now you think is going to develop throughout the next four maybe six quarter. Thank you.

Alessandro, I'm sure you are aware that Tianda is attractive for us basically because it has good equipment, good tools which we will potentially enable us to produce premium quality products from China. But so far that's not yet the situation.

Clearly Tianda is positioned as an API supplier and both to the Chinese domestic market and exporting especially to the Middle East and maybe to other regions as well. So, it means that as far as this year is concerned 2017, the contribution will be relatively limited based on domestic sales in China which are not profitable as everyone knows and only on the API exports or mostly largely API exports to the rest of the world.

So, our focus into '17 we'll definitely be to of course move the company up to our standards first in safety and second in quality and reliability because we have plans of course but more on minimum term perspective to use Tianda as a basis for our new roots to a variety of markets which we intend to supply including for premium products. But definitely, this will not be immediate, it’s a kind of like if we were kind of ramping up a new volume, except the fact that it is up and running but we want wh8ich to our standards and definitely this will take task.

But it's on going, we've already started of course supporting the company with our technical teams and technical experts and I'm pretty confident that we will develop according to our plan and contribute to improving the profitability of the group as planned in our transformation plan.

Okay. Sorry, just a follow-up.

Just excluding an albeit to develop in the market of per channel in China, when do you think the full efficiency of Tianda will be materializing on the P&L, excluding any kind of potential change improvement of this integration of the markets?

I think it's a matter of two to three years. That's what we said when we presented our transformation plan and I've only reasons to confirm that kind of roadmap.

Okay. Thank you, very much.

In other words, we've not found anything contrary to the full map is to be even clearer since we've been owner, full owner of that company. So, everything seems in line with our expectation.

Perfect, thank you.

Okay, very well then, thank you.

Alright, good evening gentlemen a few questions that I may. Firstly, in terms of the working capital investment in the first quarter.

Could you give a bit of a stir for the full year. I appreciate there's some seasonality in there and also US activities picking up some idea of whether we'll see inflows of working capital in the second half as usual would be encouraging.

Secondly, if I could just check a bit of a modeling question here but on the DNA and CapEx given, obviously we have the consolidation of Tianda and VSB. Is the DNA and CapEx we've seen in the first quarter sort of a good run rate for 2017 for us all to use?

And thirdly, again if may, you talked about Libra expiration well as benefitting the Brazil that was in 1Q, when do you expect the product for the development wells to come through as I imagine that will be posted mix? Thank you very much.

Okay. So I think most of these questions are for me.

So on the working capital side, there is an increase or renewals in Q1. There are two elements there, one is pure seasonality.

Each and every year expect of course when the activity is just folding, there is an increase in the working capital for many reasons and this 61 million Euros if I am not wrong last year. On top of that there is the impact of the rebounding activity [indiscernible] in terms of the impact of the working cap.

If we assume just as an assumption that the [CAT] is as same as last year it would be about 40 million Euros increase in working capital in the U.S. which is not that big compared to the rest increase in volumes.

And I remind you that is one of the many, many benefits of our distribution model in the USA. We sell to all distributors.

They carry inventories. They carry vis-à-vis to final customers we only carry the [indiscernible] with the usual payment terms in the U.S.

which has quite shocked and we don't carry inventories of finished goods. So that increase in activity in this part of the world does represent significance burden on our working capital.

The later part of your question on that is of course more difficult to answer. It's what do we see on the full-year basis.

The easy answer would be to tell you it will depend on the activity level at the end of the year and beginning of 2018 and this is certainly part of the answer. What I may add to that is that we are seeing the actual significant positive results of what we are doing in order to improve our performance in cutting or reduce, in reducing our inventories in terms of days of steel production we have already seen that at the end of last year.

It’s towards expending part of the very good Q4 performance and this is again the case in Q1. We are continuing this effort and we expect from this effort to mitigate probably to a large extent the effect on our working cap for this year due to the increasing activity on U.S.

market mostly. On your second question for SG&A and CapEx, yes the run rate you see for the SG&A is probably what you will see more or less for the remaining quarters and as a remainder we had from the additions and [indiscernible] on the other hand we’ve capacity in Europe as this has the positive impact.

But all in all SG&A are going up to some extent. On the CapEx side we are having the same envelope for the full year as the one we did communicate to you a year ago which is about 200 million Euros CapEx.

And finally, on [indiscernible] don't expect too much in even anything in 2017, the production will be drilled later on so on this drilling activity enough for Brazil we confirmed what was, as we said being sort of the stable activity in 2017 compared to 2016 and with this little peak in Q1 that would be a reverse in the next quarter.

Okay. Thank you very much.

And one quick follow-up if I could, on the last conference call you mentioned that your U.S. mills were running at quite a sporty utilization rate and you were looking to rehire workers in the U.S.

Could you just for the benefit of color for ourselves just tell us what the utilization of U.S. mills is to-date and how those assets to increase production through rehiring are actually progressing?

Thank you.

I think this one, it’s for Nicolas.

Yes, sure. Well, Rob we are currently still hiring in some of our plants.

We will probably reach the level of staffing that we want to reach around the month of May. And we will have by then our main plants probably running close to full capacity by the end of Q2.

Okay. Thank you.

Thanks very much.

Okay. Does that answer your question Rob?

Yes. I think so.

Yes. By the end of 2Q so moving into the second half you will be at effective capacity on what that three shifts of each mill where as today you are little bit lower.

Yes we will be running at full capacity in our main mills. Absolutely.

Okay. Thank you.

Thank you Rob. Next question please.

Yes. Hi!

Thank you very much. I just had a couple of questions.

So, the first one coming back to the utilization of your plants, I was wondering if you could maybe just that data with respect to where it stands in the U.S. but also for overall group.

So that would be my first question. The second question indeed we didn't see any impairments or restructuring charges.

Should we assume that this is likely to be the case for the rest of the year and then the final question is clearly you saw better EBITDA generation into the quarter, revenue was actually down quarter-on-quarter and I was just wondering if you could help us understand how we should think about revenue for the next three quarters.

Maybe a quick one on utilization rates, so you put the answer by Nicolas getting North America I would say that in Europe we have pretty loaded now since we have divided our capacity by two, so we have only two big running mills running plus specialty mills but the running mills are running close to full capacity as well. And lastly Brazil is the place where we still have room for expansion and of course to address potential recovery from other markets when it comes and in the meantime we are exporting so -- unload Brazil to export to the North American markets so to support of course the recovery taking place there.

So I can say that overall if you combine all this we’re well probably in Q1 around utilization rate globally off let’s say 60% - 65% and of course moving up along the year especially in North America.

For your two other questions first about [indiscernible] and impairment. So we don't plan as of today any, if you can impairment charge in 2017, [indiscernible] I think from the booking point of view we need to book a little bit for the requirement like it is in Germany where everything cannot be booked at the very beginning of the process but it will not be very significant loss.

About the revenues for the next quarters, given.

Yes. Hi!

Thank you very much. I just had a couple of questions.

So, the first one coming back to the utilization of your plants, I was wondering if you could maybe just that data with respect to where it stands in the U.S. but also for overall group.

So that would be my first question. The second question indeed we didn't see any impairments or restructuring charges.

Should we assume that this is likely to be the case for the rest of the year and then the final question is clearly you saw better EBITDA generation into the quarter, revenue was actually down quarter-on-quarter and I was just wondering if you could help us understand how we should think about revenue for the next three quarters.

Maybe a quick one on utilization rates, so you put the answer by Nicolas getting North America I would say that in Europe we have pretty loaded now since we have divided our capacity by two, so we have only two big running mills running plus specialty mills but the running mills are running close to full capacity as well. And lastly Brazil is the place where we still have room for expansion and of course to address potential recovery from other markets when it comes and in the meantime we are exporting so -- unload Brazil to export to the North American markets so to support of course the recovery taking place there.

So I can say that overall if you combine all this we’re well probably in Q1 around utilization rate globally off let’s say 60% - 65% and of course moving up along the year especially in North America.

For your two other questions first about [indiscernible] and impairment. So we don't plan as of today any, if you can impairment charge in 2017, [indiscernible] I think from the booking point of view we need to book a little bit for the requirement like it is in Germany where everything cannot be booked at the very beginning of the process but it will not be very significant loss.

About the revenues for the next quarters, given what has been said about the business environment, no big change to be expected with some pluses and minuses, the biggest plus should come probably from North America mostly driven by price but nothing very significant to comment on the other part of the business.

Okay. Thank you very much and just one last question given that you are within covenants what was the rational for actually increasing it?

The rational is that it when we count always better, when you afford to gain some initial headwind vis-à-vis your covenants of course as we have a strong liquidity and there is no need in the [leader] in the short term to change this covenant so it was more softer than opportunistic move and at the end of the day the main objective was to be able to pass message especially to the credit investors that none of them should fear anything in this regard for the coming years. So that we expect that to facilitate when we believe that there are some market opportunities all access to the debt market.

Thank you very much.

You are welcome Maria.

Yes. Hi gentlemen.

Thanks for taking my questions. Can you please give us some additional color on the market activity outside North America?

In particular if we would be talking about global offshore excluding Brazil how do you see your volumes developing in this segment do you see currently your book to be ratio around one or you are still working through existing backlog and also if you could comment on pricing in the middle East region and how has it developed in the past quarters and months?

Yes well naturally very simply. It's pretty quiet.

The last quarter Q1 has been very quiet season. I should say in the Middle East and other offshore areas like West Africa or South East Asia.

Not a lot of activity there. So yes, we are eating in our backlog there.

Not a lot of comments regarding prices precisely because tenders were pretty limited. So this is clearly offshore, it's clearly still very quiet area I would say.

Thanks for that. And if I may, quick housekeeping question on your balance sheet.

I know it is 87 million Euros of shareholder loan, can you give some color what this loan actually is about and what is the reason why you guys are not including this loan into net debt calculation and covenants calculation?

So this is a loan made by Nippon Steel in Brazil locally to the new USB and I think it's including the net debts in the covenant calculation.

Okay. Perfect thanks for that and if I may ask a quick question, will you be willing to disclose that EBITDA contribution of Tianda in this first quarter this year?

Typically we are not fully willing to disclose any EBITDA contribution from any business, but what I can tell you that it's more than positive.

Perfect. Thanks a lot so that’s all.

Okay. Next question please.

Good evening. Thank you for taking my question.

Firstly are you able to give the closing head count to the group as of the end of March yield for a reference point at the end of December it was 19242. Second point it was extremely helpful you giving the like-for-like sales Q1 2016 versus Q1 2017, the 1.5%, are you able to do the same for tonnage we have got 475 tonnage in Q1 2017 against 251 in Q1 2016.

It would be great to have that 475 number on a like-for-like basis please. And then the final point is on networking capital.

You have 141 days worth of working capital on a rolling 12 month basis as of this date of point. My model is telling me that that is the highest networking capital balance you ever had actually with the company, so I mean, you have since 2000 and it's quite a large reverse along the position Q4.

I know you mentioned that it was seasonality driven. But it is as days worth of sales it is a significantly higher number than you had in the past and it's a bit of a worrying changing of direction.

So I would just like to get a sense whether you think that is likely to come down in the next couple of quarters because of the management steps you put in place which you discussed in the previous quarter or whether in fact we can expect it to stay as those kind of levels until I guess you all the ramp up in the mills has finished. Thank you.

Maybe I can answer on the headcount. The permanent headcount is still going down month after month I think the order magnitude end of Q1 is probably down 2.5% compared to December ex-Tianda, of course examination- Tianda so it means that we keep on reducing our fixed cost as committed and as part of our transformation plan.

So this is for the headcount.

For the [indiscernible] your question basically what I -- that volume contribution of Tianda is somewhere slightly north of 100,000 tons rather few tens that much thousand tons coming from the conservation of [VHD] and you have it. And what surprise me is what you say about working capital because when I look at my payable or seeable inventories those are very strong improvements compared to a year ago especially as inventories and the dues are concerned.

So maybe this is linked through the consideration effect, payment effect it’s probably coming from that basically from it.

May I just confirm on the headcount then are you able to give, just you said, you gave a number excluding Tianda or direction are you able to give us just the groups closing the end of March on the volume point Oliver thank you, it's helpful with that broad guidance. I just wondered if you could give specifically the 475 tons for this quarter if you could just give that number on a like-for-like?

And then on the networking capital, I understand the absolute balance has gone down the thing that we find surprising is that relative to the amount of sales that number is going up a lot. But perhaps there is no further comment on that.

Just those first two questions if you are able to give any further that would be helpful?

In terms of the headcount the headcount, the permanent headcount which is basically what I follow because that’s the fixed cost related of course where we are done from 17600 end of 2016 to now 17200 so less, less 2.5%.

The other point, we’ll come to back to you on that, we don't have further...

Okay. Thank you for taking my questions.

Thank you Nick. We will take the next question please.

Yes, hi, a lot of my questions have been answered. But I will ask a couple if I may.

Just could you give a little bit more color on the market outside of the U.S. in terms of demand?

Is there any sign that still destocking going on, do you have any real visibility on inventory for example in the Middle East I know there haven't been many tenders recently as you said but for the tenders that had been where price is still falling or is there a sign of price stability? And I think if you could comment on the relative supply demand balance right now between the U.S.

and outside of the U.S. because one would normally imagine with the lag ex-U.S.

pricing to pick up after the U.S., but is there a risk the supply demand balance between the U.S. and ex-U.S.

is now so different that actually, either pricing doesn't pick up outside of the U.S. or it just takes a lot longer to do that.

That is the first part of my question. The second just on Tianda, can you give us a little bit more color on the technical ramp up that’s necessary in terms of improving actual tooling itself to get up to your premium standard versus the market or the client size which would I guess some form of approval process and how long that approval process if required would actually take?

Thanks a lot.

Well on the last point, my answer to the I think Michael's question or no Alessandro’s question regarding Tianda was when do we expect Tianda to completely or fully contribute. But of course, we do not wait two or three years before using Tianda on a case per case basis to answer some of our customers enquiries and some of them are eager to get qualification and those who are moving forward we will obviously supply.

So it's not that much matter of technical equipment. It's partly matter of implementing our own standard especially in terms of quality and reliability and partly question of our customers willing to qualify the mill according to their procurement policy.

In terms of the situation in, especially in the Middle East as you mentioned, no I do expect the pricing trends that we are experiencing in North America to step by step to develop as well in the Middle East. We had some first signs of that trends up in the course of last year, the end of last year, but again Q1 has been very quiet so it's hard to say that the trend is continuing, but I do think it will continue as always our pricings are developing the same way globally.

It goes faster up and down by the way in North America than elsewhere but logically it should develop as well in North America as you well know outside North America most of the sales are done through tenders so of course, the predictability is not the same way the market works is different from North America. But so far we confirm that we have hit trust in terms of pricing in those regions last year especially in the middle of last year and since then the few tenders which we gone through have shown price increases.

And is there any visibility, I know it was a bit of a tricky problem but is there any visibility on inventory levels outside of the U.S.?

Not really to be honest, not really. Those are regions where the numbers of players are not as focused on inventory management, as say North America and there are almost no statistics to factory state where what the situation is.

So no I have no visibility to be honest on that particular part.

Okay. Thanks.

Yes. Thank you.

Two housekeeping questions if I may. Just could you give us a flavor about in Q1 about the contribution of the Brazilian mine, I would guess it is something between 5 million Euros to 10 million Euros.

Second, thank you for having provided the headcount at the end of Q1, could you give us some flavor regarding what you expect for the total headcount of the group by the end of 2017? Thank you.

So on the first point, Guillaume, we don't give this reason, the full year EBITDA from the [indiscernible] few tens or million of Euros and it has of course benefited in Q1 compared to year ago from the increase in the high volume prices that we are still at the high level in Q2. We expect, but it’s difficult to predict of course some decline in the prices in Q3 and Q4.

And regarding headcounts, I won't provide you with the figure of year end because obviously if anyone needed we use flexible workforce interim workers, agency workers when needed in order to. So leverage the market situation so this part is depending of course on the market activity.

The permanent, we of course, will keep on diminishing I remind you that this part of our workforce is going down by approximately one fourth 25% over the last two years so basically it will keep on going down.

Okay. Thank you very much.

Hi, good evening. Two questions on the U.S.

if I may please. At the end of Q4 2015, you said the Q1 will be negatively impacted by some mobilization and reactivation cost means could you [indiscernible] at the end of Q4 you are around 80% that was made on the client program and then 20% on the spot market how did it evolve in Q1 at the end of the quarter what is the speed between the spot and the decline program in the U.S.

please?

So the first point, the actual cost of point was very meaningful in Q1 leading to this reactivation. On the second one I think Nicolas will answer.

Yes. I will Kevin the mix between spot and program doesn't change that much quarter-over-quarter so the 80:20 remains valid.

And should we expect it to remain stable for the year or are you trying to shorter the time of the entire program after pricing is increasing?

Well, not really actually lot of the commitments we took with some of our program customers were valid until Q2, so we are currently as Oliver was mentioning earlier in process of discussing those prices and increases of course for [HQ], so we definitely expect to keep those customers and negotiations are ongoing.

Okay. Thanks.

David are you connected?

Hi. Yes can you hear me?

Yes sure. Go ahead.

Yes, couple of question from me. First kind of North America revenues were down quarter-on-quarter previously you have really outperformed in terms of revenue growth relative to the rig count growth.

So was there an element of restocking in the fourth quarter which was replicated in the first quarter this time or is it Canada or is it Gulf of Mexico. So that's my first question.

My second question again related to North America. Obviously pricing is going very favorably for you but we think other service companies start to pursue price increases as well.

Do you have any concerns as we got into the back end of this year the clients are going to rethink their drilling plants because of perhaps impact up on profitability of the higher service costs?

Well Kevin I think that that's something we hear from time to time. I think that it is part of the messages which are being sent to the market and to the supply chain.

When we talk to our customers face to face and on a one to one basis my feeling is that a number of them are projects to go further down in that cost reduction and increasing efficiencies. This is the key element which has completely changed at the face of the market in North America it's all about efficiencies, it's all about how many wells can be drilled per rig over a period of time and how many are along the laterals are and we know and our customers know and they say that there is still room for improvement there.

So I think there is we are in a situation when both our customers and the suppliers or partners can win together and that's the situation where we are and this is why we think that the price increases are not only necessary because I remind you that the parts of the raw material the scrap metal has gone up steeply as well. But it's acceptable by our customers.

Each of them we are working a lot on finding additional efficiencies service wise in terms of the supply chain etcetera. So we do think that we are at the point in time throughout the North American market is concerned where both of those both our customers and the suppliers can win without putting at risk of course the development of the North American market.

To answer the first one, for the sales in North America in Q1 compared to Q4 so sequentially if I go to your question actually for the mainstream of our search in the U.S. which are OCTG related they have almost no change between Q4 and Q1 high level of [indiscernible] and sales with both these can change in pricing over this period of time.

So as the changes have occurred in other much smaller segments that have a more of elected behavior in terms of quarterly sales, that on top of OCTG we ship to the U.S. some products, mechanical, line pipes, joining products things like that which are the one that have moved to some extend but it's not meaningful for us at this point of view.

Okay, great. Just one follow-up thinking about kind of raw material costs.

What is the [indiscernible] kind of today’s steel scrap price and when that's going to flow through your P&L?

It's very short actually. We don't carry a lot of inventories of home material.

So depending as [indiscernible] maybe two months at most.

Okay. Thank you very much.

I think we’ve no other – yes.

Okay. So maybe let me conclude.

I think Q1 reflects significant progress in implementation of our transformation plan behind improvement of our interest on margins as mentioned by Oliver, there are some top line special positive deliveries but there is as well more deeply the benefit of the cost saving initiative that we are rolling out all over the world. So this will continue to bring additional benefit to our P&L along the year.

The rest as you have seen is very, very contrasted between North America where we got volume and some prices and the rest of the world which remains very subdued. So not yet a global growing word, but as far as we are concerned as far as our self help initiatives are concerned pretty positive situation I guess.

Thank you. Well, this is concluding our discussion.

Good evening or good afternoon and we will be happy to answer your questions individually if you have any, thank you. Bye.

Bye.