FORM 6 - K

SECURITIES AND EXCHANGE COMMISSION

Report of Foreign Private Issuer
Pursuant to Rule 13a - 16 or 15d - 16 of
the Securities Exchange Act of 1934

As of April 15, 2004

TENARIS, S.A.

TENARIS, S.A.

     Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or 40-F.

Form 20-F [ü]  Form 40-F [   ]

     Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12G3-2(b) under the Securities Exchange Act of 1934.

Yes [   ] No [ ü]

     If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-        .

April 13, 2004

Dear Shareholder

We invite you to attend the Annual General Meeting of Shareholders of Tenaris S.A. Société Anonyme Holding to be held on Wednesday, May 26, 2004, at Banque Générale du Luxembourg at 50, av. J.F. Kennedy L-2951 Luxembourg. The meeting will begin promptly at 11:00 a.m.

At the meeting, you will hear a report on our business and have a chance to meet the Chairman and Chief Executive Officer.

Enclosed please find the notice and agenda for the meeting, the proxy statement, the 2003 annual report, which includes the consolidated financial statements prepared under International Financial Reporting Standards and the Company’s (unconsolidated) annual accounts, prepared under Luxembourg legal requirements and accounting standards. All of these documents, and various other information, are available on our website at www.tenaris.com/investors.

Even if you only own a few shares, we want your shares to be represented at the meeting. If you are shareholder of Common Shares, you can vote your shares personally or by proxy. For the latter you may use the enclosed dedicated proxy form.

I look forward to welcoming you on May 26, 2004.
Sincerely yours

Paolo Rocca
Chairman and Chief Executive Officer

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JPMORGAN CHASE BANK
4 New York Plaza, Floor 13
New York, NY 10004

Re: TENARIS, S.A.

The Company has announced that the Company’s Annual General Meeting of Shareholders (the “Meeting”) will be held on May 26, 2004, at 11:00 a.m., at Banque Générale du Luxembourg at 50, av. J.F. Kennedy L-2951 Luxembourg. A copy of the Notice of Annual General Meeting of Shareholders from the Company, which includes the agenda for such Meeting, is enclosed.

The enclosed materials are provided to allow the shares represented by your ADRs to be voted at the Meeting. They include the Notice of Annual General Meeting of Shareholders and a proxy statement as well as the 2003 annual accounts (in their consolidated and unconsolidated form). Each holder of American Depositary Receipts (“ADRs”) as of April 19, 2004 is entitled to instruct JPMorgan Chase Bank, as Depositary, as to the exercise of voting rights pertaining to the Company’s shares of Common Stock represented by such holder’s ADRs. Holders of ADRs as of April 19, 2004 who desire to vote at the Meeting must complete, date and sign a proxy form and return it to JPMorgan Chase Bank, P.O. Box 43062, Providence, RI 02940-5115. If the Depositary receives properly completed instructions by 3:30 p.m., New York City time, on May 19, 2004, then it shall vote or cause to be voted the shares underlying such ADRs in the manner prescribed by the instructions. However, if no instructions are received, or if they are improperly received, by the Depositary from any holder of ADRs by 3:30 p.m., New York time on May 19, 2004, then the Depositary shall deem such holder to have instructed the Depositary to vote the underlying shares of Common Stock of any such ADRs in favor of any proposals or recommendations of the Company, for which purposes the Depositary, shall issue a discretionary proxy to a person appointed by the Company to vote such shares in favor of any proposals or recommendations of the Company (including any recommendation by the Company to vote such shares on any given issue in accordance with the majority shareholder vote on that issue); provided, however, that no instruction shall be deemed given and no discretionary proxy shall be given with respect to any matter as to which the Company informs the Depositary it does not wish such proxy given or if the proposal has, in the discretion of the Depositary, a materially adverse effect on the rights of the holders of American Depositary Shares.

Any holder of ADRs is entitled to revoke any instructions which it has previously given to the Depositary by filing with the Depositary a written revocation or duly executed instructions bearing a later date at any time prior to 3:30 p.m., New York time, on May 19, 2004; however no instructions, revocations or revisions thereof shall be accepted by the Depositary after that time.

TO BE COUNTED, YOUR VOTING INSTRUCTIONS MUST BE RECEIVED BY THE DEPOSITARY PRIOR
TO 3:30 P.M. (New York City Time) ON MAY 19, 2004.

JPMORGAN CHASE BANK
Depositary

April 13, 2004
New York, New York

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Tenaris S.A.
Société Anonyme Holding
13 rue Beaumont
L-1219, Luxembourg
RCS Luxembourg B 85 203

Notice of the Annual General Meeting of Shareholders to be held on May 26, 2004

Notice is hereby given to holders of shares of common stock of Tenaris S.A. Société Anonyme Holding (the “Company”) that the Annual General Meeting of Shareholders (the “Meeting”) will be held on May 26, 2004, at 11:00 a.m., at Banque Générale du Luxembourg at 50, av. J.F. Kennedy L-2951 Luxembourg.

AGENDA

     Pursuant to the Company’s Articles of Association, resolutions at the Meeting will be passed by majority vote, irrespective of the number of shares present or represented.

     In order to attend the Meeting, holders of shares must obtain an admission ticket by depositing their certificates representing their common stock, not later than 4:00 p.m. (Luxembourg, Buenos Aires, Mexico City or Rome time, as the case may be) on May 21, 2004 at the Company’s offices in Luxembourg (13, rue Beaumont, L-1219 Luxembourg) (the “Head Office”), or at any of the following Tenaris offices: (i) Argentina: Leandro N. Alem 1067, 15°, Buenos Aires, Attn: Horacio de las Carreras and/or Eleonora Cimino; (ii) Italy: c/o Dalmine S.p.A., Piazza Caduti 6 luglio 1944 n. 1 24044 Dalmine (BG), Attn: Teresa Gaini and/or Massimo Angeli; and (iii) Mexico: c/o Tubos de Acero de México S.A., Campos Eliseos 400-17 Col. Chapultepec Polanco, Mexico D.F., Attn: Félix Todd and/or Andrés Félix (the “National Offices”).

     Holders of shares through fungible securities accounts that wish to attend the Meeting must present a certificate (issued by the financial institution or professional depositary holding such shares) evidencing such deposit and certifying the number of shares recorded in the relevant account as of May 21, 2004. Such certificate must be filed no later than 4:00 p.m. (Luxembourg, Buenos Aires, Mexico City or Rome time, as the case may be), on May 21, 2004 with any of (1) the Head Office or the National Offices or (2) in the case of Mexico, the Head Office, the National Offices or S.D. Indeval, S.A. de C.V. (Paseo de la Reforma #255, 2o. y 3er piso Col. Cuauhtémoc), in Mexico City.

     Holder of shares as of May 21, 2004, may also vote by proxy. To vote by proxy, holders must file the required certificate and a completed proxy form not later than 4:00 p.m. (Luxembourg, Buenos Aires, Mexico City or Rome time, as the case may be), on May 21, 2004 with any of (1) the Head Office, the National Offices or (2) in the case of Mexico, the Head Office, the National Offices or S.D. Indeval, S.A. de C.V. in Mexico City.

     Holders of American Depositary Receipts (the “ADRs”) as of April 19, 2004 who desire to vote at the Meeting must complete, date and sign a proxy form and return it to JPMorgan Chase Bank (the “Depositary”) P.O. Box 43062, Providence, RI 02940-5115 by 3:30 p.m., New York City time, on May 19, 2004.

     The Meeting Brochure, which contains reports on each item of the agenda for the Meeting, further details on voting procedures and the annual financial statements and consolidated annual financial statements for the year ending December 31, 2003, and the proxy statement and forms furnished by the Company in connection with the Meeting may be obtained as of April 13, 2004 from of the Head Office, any of the

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National Offices, the Depositary, Borsa Italiana SpA (Piazza degli Affari 6, 20123, Milan, Italy ) or S.D. Indeval S.A. de C.V., between 10:00 a.m. and 5:00 p.m. local time of each respective country.

     Copies of the Meeting Brochure and Proxy Statement and forms are also available at www.tenaris.com/investors.

Cecilia Bilesio
Secretary of the Board of Directors

April 13, 2004
Luxembourg

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TENARIS S.A.
Société Anonyme Holding
13 rue Beaumont
L-1219, Luxembourg
RCS Luxembourg B 85 203

SHAREHOLDER MEETING BROCHURE AND PROXY STATEMENT

Annual General Meeting of Shareholders
to be held on May 26, 2004

This Shareholder Meeting Brochure and Proxy Statement is furnished by Tenaris, S.A. Société Anonyme Holding (the “Company”) in connection with the Annual General Meeting of Shareholders (the “Meeting”) to be held on May 26, 2004, for the purposes set forth in the accompanying Notice of Meeting at Banque Générale du Luxembourg at 50, av. J.F. Kennedy L-2951 Luxembourg.

As of March 30, 2004, there were issued and outstanding 1,180,536,830 shares of common stock (US$1 par value) (the “Common Stock”) of the Company, including shares of Common Stock (the “Deposited Shares”) deposited with Banque Générale du Luxembourg, as agent for JPMorgan Chase Bank, (the “Depositary”), under the Deposit Agreement, dated as of November 11, 2002 (the “Deposit Agreement”), among the Company, the Depositary and all holders from time to time of American Depositary Receipts (the “ADRs”) issued thereunder. The Deposited Shares are represented by American Depositary Shares ), which are evidenced by the ADRs (one ADR equals ten Deposited Shares).

Each holder of shares of Common Stock is entitled to one vote per share. Holders of shares that hold shares through fungible securities accounts and wish to attend the Meeting must present a certificate (issued by the financial institution or professional depositary holding such shares) evidencing such deposit and certifying the number of shares recorded in the relevant account on May 21, 2004. Such certificate must be filed no later than 4:00 p.m. (Luxembourg, Buenos Aires, Mexico City or Rome time, as the case may be), on May 21, 2004 with any of (1) the Head Office, the National Offices, as defined in the notice to the Meeting, or (2) in the case of Mexico, the Head Office, the National Offices or S.D. Indeval, S.A. de C.V., in Mexico City.

Holders of shares as of May 21, 2004 may also vote by proxy. To vote by proxy, such holders must file the required certificate and a completed proxy form not later than 4:00 p.m. (Luxembourg, Buenos Aires, Mexico City or Rome time, as the case may be), on May 21, 2004 with any of (1) the Head Office, the National Offices or (2) in the case of Mexico, the Head Office, the National Offices or S.D. Indeval, S.A. de C.V. in Mexico City.

Each holder of American Depositary Receipts (“ADRs”) as of April 19, 2004 is entitled to instruct JPMorgan Chase Bank, as Depositary, as to the exercise of voting rights pertaining to the Company’s shares of Common Stock represented by such holder’s ADRs. Holders of ADRs as of April 19, 2004 who desire to vote at the Meeting must complete, date and sign a proxy form and return it to JPMorgan Chase Bank, P.O. Box 43062, Providence, RI 02940-5115. If the Depositary receives properly completed instructions by 3:30 p.m., New York City time, on May 19, 2004, then it shall vote or cause to be voted the shares underlying such ADRs in the manner prescribed by the instructions. However, if no instructions are received, or if they are improperly received, by the Depositary from any holder of ADRs by 3:30 p.m., New York time on May 19, 2004, then the Depositary shall deem such holder to have instructed the Depositary to vote the underlying shares of Common Stock of any such ADRs in favor of any proposals or recommendations of the Company, for which purposes the Depositary, shall issue a discretionary proxy to a person appointed by the Company to vote such shares in favor of any proposals or recommendations of the Company (including any recommendation by the Company to vote such shares on any given issue in accordance with the majority shareholder vote on that issue); provided, however, that no instruction shall be deemed given and no discretionary proxy shall be given with respect to any matter as to which the Company informs the Depositary it does not wish such proxy given or if the proposal has, in the discretion of the Depositary, a materially adverse effect on the rights of the holders of shares of Common Stock. Any holder of ADRs is entitled to revoke any instructions which it has previously given by filing with the Depositary a written revocation or duly executed instructions bearing a later date at any time prior to 3:30 p.m., New York time, on May 19, 2004. No instructions or revocations or revisions thereof shall be accepted by the Depositary after 3:30 p.m., New York time, on May 19, 2004. In order to avoid the possibility of double vote, the Tenaris S.A. ADRs books will be closed for cancellations from April 19, 2004 until May 21, 2004.

Due to regulatory differences and market practices in each country where the Company’s shares are listed, the holders of shares traded on the Argentine and Italian stock exchanges who have requested admission to the Meeting or who have issued a voting proxy must have their shares blocked for trading until the date of the Meeting, while holders of shares traded in the Mexican stock exchange and holders of ADRs

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traded in the New York stock exchange need not have their shares or ADRs, as the case may be, blocked for trading. However, the votes of holders of shares traded in the Mexican stock exchange who sell their shares between May 21, 2004 and May 25, 2004, shall be disregarded.

The Meeting will appoint a chairman pro tempore to preside over the Meeting. The chairman pro tempore will have broad authority to conduct the Meeting in an orderly and timely manner; and will have authority to establish rules for shareholders who wish to address the Meeting and may exercise broad discretion in recognizing shareholders who wish to speak and in determining the extent of discussion on each item of the agenda.

Pursuant to the Company’s Articles of Association, resolutions at the Meeting will be passed by majority vote, irrespective of the number of shares present or represented.

The Meeting is called to address and vote on the following items:

1. APPROVAL OF THE COMPANY’S CONSOLIDATED FINANCIAL STATEMENTS AS OF, AND FOR THE FISCAL YEAR ENDED, DECEMBER 31, 2003. APPROVAL OF THE REPORT FROM THE BOARD OF DIRECTORS AND FROM THE INDEPENDENT AUDITOR OF THE FINANCIAL STATEMENTS.

The Board of Directors recommends a vote FOR approval of the Company’s consolidated financial statements for the fiscal year ended December 31, 2003, and FOR the approval of the report by the Board of Directors and by the independent auditor on such financial statements. The consolidated balance sheet of the Company and its subsidiaries at December 31, 2003 and, the related consolidated statement of income, consolidated statement of changes in shareholder’s equity, consolidated cash flow statement and notes to the consolidated financial statements, the auditors’ report on such consolidated financial statements and management’s discussion and analysis of results of operations and financial condition are included in the report mentioned above, a copy of which is enclosed herewith.

2. APPROVAL OF THE COMPANY’S ANNUAL ACCOUNTS AS OF, AND FOR THE FISCAL YEAR ENDED, DECEMBER 31, 2003. APPROVAL OF THE REPORT FROM THE BOARD OF DIRECTORS AND FROM THE INDEPENDENT AUDITOR OF THE ANNUAL ACCOUNTS.

The Board of Directors recommends a vote FOR approval of the Company’s annual accounts as of, and for the fiscal year ended, December 31, 2003, and FOR the approval of the report by the Board of Directors and by the independent auditor on such annual accounts. A copy of such documents is enclosed herewith.

3. APPROVAL OF DIVIDEND PAYMENT.

The Board of Directors recommends a vote FOR approval of a cash dividend payable in U.S. dollars on June 14, 2004 in the amount of US$0.1144 per share of Common Stock currently issued and outstanding and US$1.144 per ADR currently issued and outstanding, which US$38,497,876 shall be paid from profit for the period and US$96,555,537 from the Company’s other distributable reserve account. The balance of the profit of the period of US$162,982,327 will be allocated to the Company’s retained earnings account.

Upon approval of this resolution, the Board of Directors shall determine, in its discretion, the terms and conditions of the dividend payment, including the applicable record date.

4. DISCHARGE OF DIRECTORS’ RESPONSIBILITIES.

In accordance with Luxembourg’s Law of Commercial Corporations, it is proposed that, upon approval of the Company’s accounts for the year ended December 31, 2003 the members of Board of Directors be discharged of any responsibilities in connection with the management of the Company’s affairs during such year.

5. ELECTION OF THE MEMBERS OF THE BOARD OF DIRECTORS.

The Company’s Articles of Association provide, in the case where shares of the Company are listed on a regulated market, for the annual election by the holders of Common Stock of a Board of Directors, of not less than five and a maximum of fifteen members. Members of the Board of Directors have a term of office of one year, but may be reappointed.

At the General Meeting of Shareholders on May 28, 2003, ten directors were elected. The present Board of Directors of the Company consists of nine Directors. Until his death on June 10, 2003, Mr. Roberto Rocca served as Chairman and a member of our board of directors. On September 1, 2003, Mr. Lucio Bastianini was temporarily elected by the remaining members of the Board to fill the vacancy left by Mr. Rocca. On February 17, 2004, Mr. Pedro Pablo Kuczynski resigned his position as a result of being appointed Minister of Finance of the Government of Peru.

It is proposed to ratify Mr. Bastianini’s appointment and further proposed that the current members of the Board of Directors listed below be re-elected:

1) Mr. Lucio Bastianini

2) Mr. Roberto Bonatti

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3) Mr. Carlos Manuel Franck

4) Mr. Bruno Marchettini

5) Mr. Gianfelice Mario Rocca

6) Mr. Paolo Rocca

7) Mr. Jaime Serra Puche*

8) Mr. Amadeo Vázquez*

9) Mr. Guillermo F. Vogel

* Independent directors

Each elected director will hold office until the next annual shareholders’ meeting, to be held in May 2005.

The Board of Directors of the Company met nine times during 2003. On January 31, 2003, the Board of Directors created an Audit Committee pursuant to Article 11 of the Articles of Association. The Board of Directors has no executive, nominating or compensation committee, or any committees exercising similar functions.

6. AUTHORIZATION TO THE BOARD OF DIRECTORS TO DELEGATE THE DAY-TO-DAY MANAGEMENT OF THE BUSINESS TO ONE OR MORE OF ITS MEMBERS.

It is proposed that the day-to-day business be delegated to Mr. Paolo Rocca, Chairman and Chief Executive Officer of the Company.

7. DETERMINATION OF COMPENSATION TO THE BOARD OF DIRECTORS.

It is proposed that each of the members of the Board of Directors in office be compensated US$50,000 for the fiscal year 2004. An additional fee of US$30,000 is also proposed for the Chairman of the Audit Committee and US$20,000 for the other Directors who are members of such Committee.

8. APPOINTMENT OF INDEPENDENT AUDITORS AND APPROVAL OF THEIR FEES.

The Board of Directors of the Company recommends a vote FOR the reappointment of PricewaterhouseCoopers S.à.r.l. as independent auditors of the Company for the fiscal year ending December 31, 2004.

In addition, the Board of Directors recommends a vote FOR approval of the fees of US$95,000.00 to be paid for audit services rendered during the fiscal year ending December 31, 2004.

9. MISCELLANEOUS.

Management is not aware of any matters that may properly come before the Meeting other than those set forth in the agenda for the Meeting or relating thereto. Should any additional matter may properly come before the Meeting, the holders who voted through proxy forms provided by the Company will vote “abstain” on such matters.

The Company anticipates that the next Annual General Meeting of Shareholders will be held on May 25, 2005. A holder of shares who intends to present a proposal at the next Annual General Meeting must submit the proposal in writing to the Company at any of the Head Office or the National Offices not later than 4:00 P.M. (Luxembourg, Buenos Aires, Mexico City or Rome time, as the case may be) on March 31, 2005, in order for such proposal to be considered for inclusion on the agenda for the 2005 annual general meeting of shareholders.

PricewaterhouseCoopers S.à.r.l. are the independent auditors of the Company. A representative of the independent auditors will be present at the Meeting to respond to questions.

Cecilia Bilesio
Secretary of the Board of Directors

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Annual Report 2003

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Company profile

We are a leading global manufacturer of seamless steel pipe products and provider of pipe handling, stocking and distribution services to the oil and gas, energy and mechanical industries. Our customers include most of the world’s major oil and gas companies as well as a large number of engineering and industrial companies. We are also a leading regional supplier of welded steel pipes for oil and gas pipelines in South America.

Domiciled in Luxembourg, we have manufacturing facilities in Argentina, Brazil, Canada, Italy, Japan, Mexico and Venezuela and a network of customer service centers present in over 20 countries worldwide. Our annual manufacturing capacity is three million tons of seamless and 850 thousand tons of welded pipes. With this infrastructure and our 14,500 employees, we offer customers a service that integrates manufacturing, procurement, distribution and on-time delivery of high quality products throughout the world.

We aim for long-term sustainable growth to reward our shareholders and to give opportunities for our employees. And since we recognize that much of our success results from the contribution of our local communities, we work hard to help them share in the opportunities that such success makes possible and to minimize the environmental impact of our activities on them.

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Leading indicators

(1) Defined as net cash from operations (USD 276 million) less net capital expenditure and investment in intangible assets (USD 157 million).

(2) As of December 31.

(3) Defined as net income divided by the number of shares outstanding as of December 31 and taking, for 2002, net income before minority interest attributable to participations acquired in the exchange offer completed in December 2002. See Note 8 (II) of the consolidated financial statements.

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In memoriam

Roberto Rocca, Chairman of Tenaris and Honorary Chairman of the Techint Group, passed away on June 10, 2003, aged 81, after a lifetime of work dedicated to the growth of Techint and to furthering industrial activity, which he saw as the foundation of economic prosperity and growth.

Roberto Rocca was born in Milan in 1922. He graduated from the Politecnico di Milano (1945) with a degree in mechanical engineering. He continued his studies at the Massachusetts Institute of Technology where he became a Doctor in Science (PhD) in 1950.

In 1945, he joined his father Agostino in the foundation of Techint and in 1978 he succeeded him at the head of what had become an important group operating in the steel, engineering and construction industries.

In the 1980s, Roberto Rocca fostered the growth of the Group’s industrial activities through a series of investments in the steel mills, and in research and development. This program culminated in the expansion of the Siderca seamless pipe mill in Campana (Argentina), in a move which allowed Techint to play a key role in the international market for seamless tubes.

Under his guidance, the Group’s steel pipe activities expanded in the nineties with the incorporation of Tamsa in Mexico and Dalmine in Italy. The incorporation of further activities in Brazil, Canada, Japan and Venezuela was the foundation leading to the creation of Tenaris, which consolidated all Techint’s activities in the steel tubes business. Roberto Rocca was elected Chairman of the company upon its listing in 2002 on the New York Stock Exchange (NYSE) and the stock exchanges in Buenos Aires, Milan and Mexico.

The investments in the Group’s mills, the attention paid to developing professional human resources educated in the best universities, the establishment of transparent relations with investors, personnel and communities, the search for quality and excellence: all these facets of his management have been transferred as values to those who continue his work in Tenaris and the rest of the Techint Group, and to the communities where they are present.

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Chairman’s letter

Dear Shareholders,

Tenaris has now completed a full year since it became a public company. Even if 2003 was a good year for stock markets in general, the increase in our market capitalization from USD 2 billion to around USD 4 billion reflects the value that has been created through the consolidation of Tenaris as a single company serving the energy and mechanical industries worldwide. In pursuing our goals as a global company, we are acutely aware of the added responsibility which comes with greater visibility and heightened public interest in our performance.

We duly completed the delisting of our Dalmine, Siderca and Tamsa subsidiaries and have been working to forge a new, unified organization capable of responding to the opportunities for future growth and maintaining long-term competitiveness. New management structures, systems and processes are being put into place as Tenaris transforms itself and cements its position as a global leader in its industry.

At its most visible level, the transformation is from that of a worldwide network of mills and commercial offices, each with its own autonomous organization, into a multi-cultural unity serving customers around the world with a common level of quality, service and technological excellence. Particular care is being taken to retain local strengths and deepen the relationship with our local communities when introducing the new, centralized management structures due to the competitive advantages we derive as a local producer in those markets.

But the changes go much deeper: Tenaris is adding new capabilities in service and technology to its traditional manufacturing excellence as it seeks to deliver more value to its customers. We are convinced that, with our expertise in pipe management and just-in-time delivery systems, as well as our global network of service centers, we can develop a strong competitive advantage by reducing risks and costs in, and the complexity of, the tubular supply chain for our customers worldwide. To do so, we have set up a separate management unit whose responsibility is the supervision of all aspects of the supply chain process from production planning and assembly of pipes and accessories through to final on-time delivery. As we work more closely with our customers around the world, we must assure them that we can provide an integrated service with the same precision, quality and reliability that they have come to expect in our products.

Those products need to perform in increasingly complex environments meeting ever more stringent requirements. We are increasing the amounts we allocate to product development and fostering innovation through sharing knowledge across multi-cultural teams. Product specialization is encouraged at our plants and breakthroughs in product technology are helping us to set new industry standards as well as gaining recognition from our customers.

Globally integrated information systems, which will provide the means for seamless communication between our operations and those of our customers and suppliers, are gradually being put into place but the complexity of the task inevitably implies that this is a long-term project. Additionally, the need to introduce new skills and to adapt to new processes and systems, while preserving a working environment that rewards innovation, initiative and teamwork, in the multi-cultural reality that is Tenaris, has increased the importance of effective communications within the company. Although much remains to be done, we have made significant progress this year in developing the Intranet as a central communications and management platform and in implementing supplier extranets as well as introducing new administrative systems, which will help us to ensure the transparency and accuracy of reported information.

Under the new management organization, we are confident that Tenaris has consolidated the value created through its global growth over the past decade and that the company is well placed to extend that growth as well as to adapt to changes in the economic environment. We will continue to seek opportunities for expansion and to enhance our competitive advantages while creating long-term value for our shareholders.

The emergence of China as a massive importer of raw materials and energy has led to substantial increases in the costs of the steelmaking raw materials we use in our operations but is also helping to support current levels of oil and gas prices. Our flexible operational structure and local presence in key markets has helped us to limit the immediate impact of these cost increases on our margins and, with oil and gas prices continuing to remain strong, we can expect that the market will accept a compensatory increase in seamless pipe prices.

Our financial condition remains strong and, out of a net income for the year of USD 210.3 million, or USD 0.178 per share (USD 1.78 per ADS), we are proposing a dividend of USD 0.114 per share (USD 1.14 per ADS), an increase of 15% over last year. This result includes the full impact of the settlement we reached with a consortium led by BHP Billiton Petroleum Ltd. in respect of a lawsuit brought against our Italian subsidiary Dalmine. The pipes that gave rise to the lawsuit were manufactured and sold prior to the privatization of Dalmine and we are seeking to recover a substantial amount of the settlement from the successor to the government-owned seller.

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During the year, we said our final farewells to my father, Roberto Rocca. It was his decision back in the 1980s to invest some USD 600 million to build a new mill at Siderca to serve export markets that laid the foundations for the ensuing growth of what is now Tenaris. His leadership and humanity has been a constant source of strength and inspiration to all of us over the years and the values he transmitted remain firmly imbued in Tenaris.

I would also like to express my thanks to Pedro Pablo Kuczynski for his valuable advice and contribution to our board prior to his resignation in February, when he was appointed as Minister of Economy and Finance for the Government of Peru. We wish him all the best in his new role. As we look forward with confidence to the coming year, I would like to thank our customers, shareholders and employees for their continuing support.

March 2, 2004

Paolo Rocca

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Financial and business review

Market background and outlook

During 2003, capital discipline on the part of the oil and gas majors and production discipline on the part of the OPEC nationals, as well as specific factors affecting exploration and production activity in Iraq, Venezuela and Nigeria, resulted in overall drilling activity outside North America remaining flat in spite of the relatively high level of oil prices sustained throughout the year. The increase in drilling activity in North America was driven by high natural gas prices in USA and Canada and an increase in exploration and production spending by Pemex in Mexico. At the same time, industrial production in Europe remained stagnant throughout the year. Demand for seamless pipes increased in Tenaris’s Mexican and Argentine local markets driven mainly by increased investment in oil exploration and production activity but demand in Venezuela and Canada remained at levels similar to 2002.

As we move into 2004, global demand for oil is increasing as economic growth picks up, which should help to sustain a limited increase in exploration and production activity at current oil price levels. Even if capital discipline on the part of the majors and production discipline on the part of OPEC nationals continue to be maintained, global drilling activity and demand for seamless pipe products from the oil and gas sector should show a limited increase over the levels of 2003. In Tenaris’s local markets, demand forseamless pipes is expected to increase in Canada, Mexico and Venezuela, where rig counts have been rising, and to remain stable in Argentina. Industrial production activity in North America and Japan has been recovering but recovery in Europe remains fragile and could be affected by the appreciation of the Euro. Increased global demand for Tenaris’s seamless pipes should support significant price increases following the substantial increases in steelmaking raw material costs and in the cost of steel used for the production of welded pipes experienced during 2003. These costs are continuing to appreciate rapidly due to supply constraints in the wake of the strong growth of China’s consumption and production of steel products.

Demand for Tenaris’s welded pipes is to a large extent driven by projects to construct oil and gas pipelines in South America. In 2002, overall demand was high with deliveries made to large pipeline projects in Ecuador, Peru and Bolivia. In 2003, demand in the local Brazilian market increased significantly but overall demand remained well below the levels recorded in 2002 due to a lack of projects in other South American markets. It was further affected in the second half of the year by the postponement of deliveries to ongoing projects. For 2004, demand for Tenaris’s welded pipes will depend primarily on the completion of postponed deliveries and the realization of further oil and gas pipeline projects previously announced in the Brazilian market.

Summary of results

Net sales for the year were marginally lower than in 2002 following a 40% drop in sales in our welded pipe business and the discontinuation of trading in non-pipe steel products not produced by Tenaris. Net sales in our seamless pipes business rose 6% on stable volume helped by a more favorable market and product mix and higher US dollar-denominated prices in Europe following the appreciation of the Euro.

Operating and net income results were affected by losses incurred in relation to a longstanding lawsuit brought against Dalmine, our principal Italian subsidiary, by a consortium led by BHP Billiton Petroleum Ltd., which was finally settled in December 2003. The lawsuit, for which provisions had previously been made in 2001 and 2002, related to pipes produced and delivered by Dalmine prior to its privatization in 1996. The pipes were used in the construction of an underwater pipeline which failed in the Bay of Liverpool. Tenaris has brought arbitration proceedings against Fintecna S.p.A., an entity owned by the Italian government and successor to the government-owned seller, to compel Fintecna to indemnify it for the amounts paid and payable by Dalmine to the consortium. In respect of the lawsuit and its settlement, Tenaris recorded a loss in other operating expenses for the year of USD 114.2 million and a positive deferred income tax impact of USD 39.6 million, making for a net loss of USD 74.6 million.

Excluding such loss, operating income would have been USD 402.4 million, or 12.7% of net sales, and net income would have been USD 284.9 million, or 9.0% of net sales. Operating income, excluding the loss recorded in respect of the BHP lawsuit, plus depreciation and amortization was USD 602.2 million, or 18.9% of net sales.

Excluding the loss relating to the BHP lawsuit, the contribution of our seamless business to operating income rose marginally over that of 2002 and the reduction in operating income was due to reduced sales in our welded pipe business. Strong demand in our local markets of Mexico and Argentina, where sales include a higher component of services and logistics costs are lower, our focus on higher value products and synergies resulting from a more cost-efficient allocation of orders among our worldwide production facilities helped to minimize the effect of substantial increases in steelmaking raw material and energy costs during the year. Our seamless gross margin remained in line with that recorded in the previous year during the first nine months of 2003 before declining two percentage points in the fourth quarter as steelmaking raw material costs continued to rise.

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Net income on a comparable basis –excluding losses relating to the BHP lawsuit and taken before minority interest attributable to participations acquired in the exchange offer following which Tenaris became a public company– rose 39% to USD 284.9 million compared to USD 205.5 million in 2002. Substantially lower tax provisions, which had been particularly affected by the large devaluation of the Argentine peso in 2002, partially reversed in 2003, and a positive result on Tenaris’s indirect investment in Sidor, following a financial restructuring completed in 2003 and a turnaround in market conditions for its products, outweighed the reduction in operating income. Free cash flow (net cash provided by operations less net expenditure on plant, property and equipment and intangible assets) decreased 64% to USD 119.0 million from USD 328.3 million in 2002. In addition to lower income from operations, cash flow from operations decreased due to higher income taxes paid in 2003 in respect of the results of the previous year, which exceeded by USD 138.6 million income taxes accrued in 2003. Working capital increased by USD 107.2 million principally reflecting an increase in inventories, much of which occurred in the fourth quarter. Capital expenditure on plant, property and equipment and intangibles rose 10% to USD 162.6 million from USD 147.6 million reflecting increased expenditure on information systems and a small increase in expenditure on plant, property and equipment.

As of December 31, 2003, Tenaris had cash and cash equivalents of USD 247.8 million and a further USD 138.3 million invested in trust funds to support its Argentine and Brazilian activities and whose term expires during 2004. Total financial debt, excluding amounts payable in respect of the settlement of the BHP lawsuit, as of the same date was USD 833.7 million, up from USD 715.9 million as of December 31, 2002. Net debt increased by USD 174.5 million over the year, reflecting the use of USD 96.4 million in acquisitions and the Sidor refinancing and restructuring, the payment of USD 129.1 million in dividends, USD 14.1 million of which was paid to minority interests, and increases in the recorded value of non-US dollar denominated debt, principally debt in Euros held at our principal Italian subsidiary.

Oilfield Services

Tenaris continues to develop its range of high quality products and its supply chain management capabilities. During 2003, we expanded our on-site presence by opening a new office in Cairo to serve the North African market and we opened new service centers in China and Ecuador. From our new center at Tanggu in China we are providing supply chain management services to Kerr McGee in Bohai Bay working in accordance with Chinese government guidelines concerning the use of local contractors. Our new center in the east of Ecuador will allow us to work more closely and provide more supply chain services to our long-term customers such as Encana and Repsol YPF in a market with attractive growth prospects.

We have made progress in developing the necessary infrastructure and procedures to provide running services where the tubular column is installed down the well. This service, which is an extension of our current range of supply chain management services, is now fully operational in the North Sea, China, Argentina, Bolivia, Mexico and Venezuela although, with our materials expertise, we are also providing running assistance in many other countries. The dopeless version of our TenarisBlue™ premium connection is gaining acceptance among customers following its successful running in the North Sea, where the dopeless feature is establishing itself as a new standard for regional offshore drilling operations.

In July, we concluded a strategic alliance with Sandvik, a leading producer of stainless and specialist steels, under which we have become the exclusive distributor for their OCTG products. We are now able to offer our customers Sandvik’s specialty stainless products in addition to the rest of our extensive product range and to develop new products sharing our respective know-how. In December, we concluded an agreement with Tianjin Pipe Corporation of China under which we have agreed to study joint ventures to establish a pipe threading facility and a plant manufacturing accessories used in oil extraction at Tianjin.

Pipeline Services

In this market segment, Tenaris’s focus is on the deepwater market, where it is a product technology leader and has a strong market presence for projects in the Gulf of Mexico, West Africa, North Sea and North Africa. We have developed high strength, heavy wall line pipe which responds to the stringent technical requirements and proprietary specifications of our customers and the move towards new project development in ultra-deep water environments. In addition, Tenaris has expanded the range of services and accessories it supplies with its products. By providing products complete with Anode Pads, J-Lay Collars, Bends, Buckle Arrestors, Coating, Compression Joints, Internal Blasting and Double Jointing, we have managed to reduce substantially the welding and installation time necessary for our customers’ projects. In November, we concluded a strategic alliance with Socotherm, a leading global supplier of pipe coating services, which will help us to provide specialist coating solutions and further simplify the supply chain. We also established a new welding research and development center at our plant in Veracruz where we will concentrate on investigating the weldability of new products and developing welding techniques. Already our comprehensive welding database is available to customers.

During the year, Tenaris delivered Top Tension Risers for Murphy Oil’s Medusa and Dominion Exploration’s Devil’s Tower projects. Deliveries were also made to projects such as Pioneer’s Harrier and Shell’s Llano and Magnolia in the Gulf of Mexico, to Exxon Mobil’s ERHA and Kizomba in West Africa and to Statoil’s Kristen in Norway. The new office in Cairo has strengthened our presence in North Africa where deliveries were made to Burullus’s Simian/Siena project in Egypt.

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Process & Power Plant Services

2003 was a better year for this sector. Petrochemical project activity increased with most of the new activity centered on the Middle East and China. We won orders for several important projects in these active regions and we were the main piping supplier to the Nanhai petrochemical project owned by CSPC, a joint venture between Shell and CNOOC, which is the largest such complex in China. The frame agreements made the previous year with Snamprogetti and Technip, under which we provide project management services, are working well and we expect to renew them in 2004.

The LNG market continues to grow strongly. Our emphasis on working closely with engineering companies from the early stages of a project by providing a project management package involving material planning and expediting services, mill load scheduling and guaranteed ontime delivery of pipes, fittings and flanges, is enabling us to become the main piping supplier for several important projects in this area. We worked with Kellogg Brown & Root in the expansion of the Bonny Island LNG plant in Nigeria and with Bechtel on the new Idku LNG plant in Egypt.

The power generation market was weak through most of the year but demand began to increase at the end of the year particularly in China. Boiler makers in Shanghai and other parts of China are showing strong interest in our ability to offer a complete pipe package including our newly-developed T91 and T23 highalloy pipes.

Industrial & Automotive Services

Sales to this market segment are concentrated in Europe, where Italy is our most important market, and, to a lesser extent, North America and Japan. Industrial production activity in the European market remained weak during the year with sluggish domestic consumption and difficulties in the export sector associated with a strengthening currency. Apparent consumption of seamless tubes declined 2% in the European Union but remained stable in Italy where there was an increase in demand for structural steel tubes used in construction activities. A strategy of providing services to larger end user customers and serving small lot customers through exclusive regional distributors, implemented initially in Italy, is helping Tenaris to maintain its market share in the European market in spite of competition from low-cost producers in East Europe. Elsewhere, sales in the North American market rose slightly and increased in Korea where we opened a new commercial office while sales to the industrial sector in Japan remained stable.

Although sales to the automotive market represent a small proportion of Tenaris’s overall sales of seamless pipes, it is an area which has grown over the past three years, largely in North America, where we are well positioned due to the competitive costs of our Mexican mill and the knowhow we have transferred from our Italian and Argentine mills. Given this growth we are relocating the auto components facility we established in the Veracruz plant to a new and larger site. We focus on sales of precision pipes and value added products, such as tubular parts and components, to end users (OEMs and Tier 1 & 2 suppliers) and on specific applications where there is a clear benefit in using high quality seamless tubes (such as transmission components, drive shafts, constant velocity joints and airbags).

During the year, all our mills involved in the manufacturing of automotive products completed the upgrading of their quality systems from QS to the brand new ISO/TS, specifically oriented to the automotive industry. Tenaris is one of the first companies in its sector to obtain this quality certification. Our research and development for the sector has focused on specific activities to improve formability and machinability of materials and on developing our knowledge of engineering properties such as toughness and fatigue resistance.

Local markets (Argentina, Canada, Mexico and Venezuela)

In Argentina, investment in oil drilling activity was strong throughout the year in spite of the continued application of a 20% tax on oil exports. However, investment in gas wells remained minimal due to low gas prices. New oil and gas wells drilled during the year increased 8% over 2002 but still remains some 20% lower than the level shown in 2001.

Industrial activity is recovering after four years of recession led by the agricultural sector and import substitution. Demand for compressed natural gas cylinders has also been increasing as the cost of natural gas remains substantially lower than alternative fuels. In this context, sales of seamless pipes rose 18% over the previous year.

In Canada, high gas prices in the North American market stimulated increased investment in oil and gas drilling activity and the rig count showed an average 40% year-on-year increase. However, Tenaris’s sales of seamless pipes rose only marginally during the year as a substantial proportion of the increase in OCTG consumption was supplied by welded pipe producers in accordance with the characteristics of the wells being drilled. In February 2004, Tenaris completed the purchase of the AlgomaTubes mill, which was being leased from Algoma Steel.

In Mexico, sales of seamless pipes increased by 52% over the levels of the previous year, reflecting a substantial increase in oil and gas drilling activity –the average number of active rigs was up 42% over the previous year. Pemex has increased its expenditure on exploration and production activities in accordance with its plans to increase oil production to four million barrels a day and natural gas production to 7,000 million cubic feet a day by 2006. Pemex has also begun to let out contracts (Contratos de Servicios Múltiples) to develop gas reserves to private-sector operators.

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In Venezuela, politically-motivated strike action caused an almost complete stoppage of oil and gas drilling activity in the first two months of the year. Since then, drilling activity has been gradually recovering but remains substantially below the level recorded in 2001 with the active rig count rising from a low of 17 in January 2003 to 52 in January 2004. The national oil company, PDVSA, continued to reduce its stocks of seamless pipes during the year and Tenaris’s sales of seamless pipes were marginally down on the levels of 2002.

Welded pipes

2003 was a disappointing year for our welded pipe business following on as it did from one in which we supplied pipes for several large South American oil and gas pipeline projects, including OCP in Ecuador, Camisea in Peru and Gasyrg in Bolivia. Expectations in Brazil, where we had orders for the Campinas-Rio (Malha Sudeste) and Garoupa-Barra do Furado (PDEG Offshore) pipeline projects, were frustrated in the second half of the year when many deliveries were suspended due to delays in issuing necessary environmental clearances. A dispute between Petrobras and the Rio de Janeiro state government, which wants Petrobras to build a refinery in the state, also caused Petrobras to suspend bids in respect of a project to build an oil pipeline connecting its Campos basin production activities to a petrochemical complex in neighboring São Paulo state.

Sales to Petrobras’s drilling activities were also affected in the second half by a marked slowdown in these activities. In Argentina, low and regulated gas transportation tariffs have brought new investment in this sector to a halt.

Outside South America, deliveries were made to Burullus’s Simian/Siena project in Egypt, where Tenaris was able to provide a package of both welded and seamless pipes and a significant order was won to supply pipes to the National Gas Company of Trinidad and Tobago.

A new heat treatment facility at the Confab plant was inaugurated in June, which will help Tenaris to expand the range of welded OCTG products it supplies to Petrobras’s drilling activities.

Energy

Tenaris’s new Italian energy supply business continued to grow strongly during 2003. After starting operations in the beginning of 2000, following the partial deregulation of the Italian energy industry, our subsidiary, Dalmine Energie, now supplies energy to more than 1,000 customers with an annual consumption of around 3.0 TWh of electricity and 0.5 billion cubic meters of natural gas. Excluding sales to Tenaris’s seamless pipe operations at Dalmine, revenues grew 32% in local currency to EUR 294 million (USD 333 million) over the year.

The business has progressively extended its presence throughout Italy and has established energy supply partnerships with various multinational companies, including Coca Cola, McDonald’s, Bayer, Brembo and Holcim. It offers these and other customers tailor-made packages combining the supply of electricity, natural gas and a range of value-added services such as energy optimisation advice, on-site maintenance, telecom reselling and risk management.

In a market which until recently was a public monopoly, Dalmine Energie has been quick to offer flexible energy supply options and has played a key role in shaping and defining the evolution of interruptible power contracts. It has developed a thriving energy appliance and networks maintenance service and is starting to provide operating and maintenance services for on-site power and cogeneration plants. Its website, which acts as a user-friendly, interactive, transparent online customer interface, is a key focus and is highly appreciated by customers.

The business is also focused on risk management and does not engage in energy trading activities for its own account. Hedging and similar risk management techniques are employed solely in relation to managing risks in its main supply and service activities.

Communities and environment review

Tenaris’s history is deeply entwined with that of the communities where it has its roots. As a long-term industrial project, the essential framework governing its relations with its communities was established many years ago. It departs from the deeply-held conviction of Tenaris’s founding family that the continuing strength of the company depends on an active participation that links its own development to that of its suppliers, customers, employees, and the communities in which it resides.

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This framework encompasses continuous commitments to promoting health and safety among employees, to minimizing the impact of operations on the environment, to maintaining transparent relations with suppliers, customers, employees and the local communities, and to working with local authorities and non-governmental organizations to promote education and foster self-reliance.

Tenaris applies a Code of Conduct that establishes the ethical principles forming the basis for relations between the company, its employees, suppliers and other stakeholders. All employees in positions of responsibility are required to sign a conflict of interests declaration and communication channels have been established so that employees can register any concerns on a confidential basis.

Human resources policies are designed to select and promote individuals based on their professional abilities, interpersonal skills and commitment. A work environment that rewards innovation, initiative and teamwork reinforces those policies. During 2003, a uniform performance evaluation process designed to reinforce these policies was introduced across our many subsidiaries.

Our rich cultural diversity, as represented in the varied nationalities of our employees, is one of our key assets. To capitalize on it, we organize regular employee exchanges that allow staff to travel to ourplants and offices around the world to see how colleagues deal with common challenges in research, engineering, production, sales and marketing, communications and all aspects of our business. Cross-organizational work groups are formed taking this cultural diversity into account. And respect for cultural, gender and language differences is a guiding principle for relations among employees at all levels of the company.

Tenaris also works to extend the benefits of its multi-cultural diversity to its local communities through cultural programs. Working through the Fundación PROA, housed in the La Boca district of Buenos Aires, and the Associazione per la Galleria d’Arte Moderna e Contemporanea of Bergamo as well as agreements with Mexican, Brazilian and Japanese cultural institutions, Tenaris promotes cultural exchanges in its local communities through art exhibits, seminars and other initiatives.

Tenaris spent USD 4.4 million on contributions to community programs during 2003. These were directed principally to social, educational and cultural activities involving an active participation on the part of our employees.

In Campana, Tenaris focused on fostering employment opportunities through training people to take advantage of self-employment initiatives and providing food aid for indigent families and schoolchildren, in addition to its traditional activities in supporting educational, community infrastructure and environmental initiatives. An important initiative involved helping local small and medium businesses to obtain ISO 9000 certification.

In Veracruz, the Tamsa A.C. foundation focused on supporting educational and cultural initiatives for children and disabled persons in the local community and its workforce in addition to its ongoing support for the Puentes de Esperanza program.

In Pindamonhangaba, the focus was on organizing sport and educational activities for local children during the summer recess. By making participation in these activities dependent on a good school record including regular attendance, the objective is to encourage children to go to school and participate more actively in class.

In Bergamo, the focus was on supporting cultural activities including sponsorship of the International Piano Festival at the Teatro Donizetti di Bergamo, a Dalmine Council Library festival to promote reading among children and a number of innovative exhibitions at Galleria d’Arte Moderna e Contemporanea of Bergamo. The Fondazione Dalmine published a history of the town and the close relationship between the company and the surrounding district.

Health, safety and environment

As part of our efforts to unify policies and procedures throughout the company, we introduced in 2003 a common Health, Safety and Environment (HSE) policy, together with specific procedures for implementation, applicable to all its operations worldwide. With this policy in place, we are applying procedures in accordance with best HSE management practices established in ISO 14000 and BS 8800.

Tenaris works constantly to improve its safety performance concentrating on two levels. On one, we upgrade the physical conditions of the workplace by continuously investing in new technologies, infrastructure and maintenance. On another, we work on attitudes and behavior relative to safety. We do this through innovative programs that reward safe behavior and by holding weekly meetings with managers, safety staff and workers at each of our plants to discuss accidents and share ideas for improving safety.

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We also put in place a unified safety performance measurement system, as well as a system of indices which allows comparison of indicators and results between diverse operations. This system allows comparison of safety performance of dissimilar activities such as those found in production facilities and service centers, independently of locally-required compliance procedures. Safety indicators continued to show improvements over the year with the number of accidents with working days lost dropping by 12% over the level of 2002.

Environmental policy at Tenaris is based on the principles of sustainable development. Our plants are located in densely populated areas with an industrial tradition, like Tokyo, Dalmine or Ontario, or in more recent centers of development like Veracruz, Campana, Pindamonhangaba and Puerto Ordaz.

At all of these sites rigorous standards for environmental and natural resources protection are followed. A significant portion of new investment is destined to reduce the environmental impact of manufacturing, introducing innovations in technology and processes. In 2003, USD 2.5 million was invested in specific programs to collect and treat gas emissions, enhance treatment of wastewater and improve residue storage areas.

Tenaris constantly reviews its operations to maximize the efficiency of its use of energy resources and the re-use, both in its own operations and by third parties, of by-products and waste. This is a contribution that combines the need to reduce the environmental impact of energy generation and use of resources with the demand to optimize these critical factors for competitiveness in its operations. Tenaris also has programs through which it collaborates with local institutions in the communities where it operates for the purpose of identifying, reducing and eliminating possible risks. In 2003, 84% of the residues generated by Tenaris were recycled or re-used.

Our efforts to minimize the environmental impact of our industrial operations drew particular recognition this year when our Tamsa mill in Mexico was awarded the “Industria Limpia” certificate from the Mexican authorities.

Our concern for environmental protection does not stop at the factory gates. Supplying customers –especially those that operate in the oil and gas industry– products and services that limit environmental impact and reduce potential risks has become as much a part of the Tenaris mission as supplying tubes that guarantee absolute safety in the most extreme conditions, in drilling as well as in transportation; special joints that reduce or eliminate the use of chemical additives; and transportation, assistance and installation services employed in sensitive areas that require rigorous respect for environmental protection standards.

A particular service that Tenaris is developing for its oilfield customers is the handling, cleaning and removal of pipe protectors from the oilfield. These protectors, made of metal and plastic and usually applied with “dope”, a chemical lubricant, need to be handled and disposed of carefully to avoid health and environmental risks. Under the service provided by Tenaris, currently operating in Argentina, Canada, Indonesia and Norway, the protectors are either cleaned and re-used or shredded and recycled into new protectors, and the “dope” is treated to dispose of any hazardous materials it may contain. To expand the service, we are currently building a new protector cleaning and recycling facility in Mexico to add to our one in Argentina.

Corporate governance

Tenaris has one class of share, with each share having equal rights including the entitlement to one vote at our shareholders’ meetings. Our articles of association provide that the annual ordinary shareholders’ meeting, which approves the annual financial statements and appoints the board of directors, shall occur each year on the fourth Wednesday during the month of May.

Board of directors

Management of the company is vested in a board of directors. Our articles of association provide for a board of directors consisting of at least three and at most fifteen directors. The board of directors is required to meet as often as required by the interests of Tenaris and at least four times per year. A majority of the members of the board constitutes a quorum, and resolutions may be adopted by the vote of a majority of the directors present. In the case of a tie, the chairman is entitled to cast the deciding vote. Directors are elected at the annual ordinary shareholders’ meeting to serve one-year renewable terms, as decided by the shareholders. The board of directors met nine times for the 2003 fiscal period.

The annual shareholders’ meeting held on May 28, 2003 approved the appointment of ten directors, including three independent directors. Until June 10, 2003, Roberto Rocca served as our chairman and a member of our board of directors. On September 1, 2003, Lucio Bastianini was provisionally elected by the remaining members of the board as a director. On February 17, 2004, Pedro Pablo Kuczynski, one of our independent directors, resigned upon being appointed Minister of Economy and Finance of the Government of Peru. Our current board of directors therefore is comprised of nine directors, two of whom are independent directors.

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Audit committee

Tenaris has an audit committee composed of three members, two of whom are independent directors. The independent members of the audit committee are not eligible to participate in any incentive compensation plan for employees of the company or any of its subsidiaries. The audit committee has the duty to:

(I) assist the board of directors in fulfilling its oversight responsibilities relating to the integrity of the financial statements of the company, the company’s system of internal controls and the independence and performance of the company’s independent auditors;

(II) review material transactions between the company and its subsidiaries with related parties to determine whether their terms are consistent with market conditions or are otherwise fair to the company and its subsidiaries and

(III) perform the other duties entrusted to it by the board of directors, particularly as regards relations with the independent auditor.

The audit committee has the authority to conduct any investigation appropriate to fulfilling its responsibilities, and it shall have direct access to the independent auditors as well as anyone in the company and, subject to applicable laws, its subsidiaries. The audit committee has to report to the board of directors on its activities and the adequacy of the internal control system at least every six months, at the time the annual and semi-annual accounts are approved.

For the 2003 fiscal year, the audit committee met nine times and on each occasion presented its report to the board of directors.

Auditors

The annual accounts are audited by independent auditors, appointed by the annual ordinary shareholders’ meeting from among the members of the Institute of Independent Auditors (Institut des réviseurs d’entreprises) in Luxembourg. The ordinary shareholders’ meeting shall determine their number and the term of their office, which shall not exceed one year. They may be reappointed and dismissed at any time. PricewaterhouseCoopers S.à.r.l. served as our auditors during the 2003 fiscal year and are proposed for reappointment. As part of their duties, they report directly to the audit committee.

Compensation

The compensation of the directors is determined at the annual ordinary shareholders’ meeting. The aggregate compensation of the directors and executive officers earned during 2003 amounted to USD 4.9 million.

Board of directors

(*) Members of the Audit Committee

(**) Resigned on February 17, 2004

Executive officers

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Inserts

Technology for a safer environment

Our pipes have to perform in stressful and challenging environments and our customers are seeking to reduce costs as well as the environmental impact of their operations. Increasingly, our metallurgical expertise is being called upon to assure performance, design new solutions and define product specifications. This is driving us to be more innovative and pro-active in technology development.

The dopeless version of our TenarisBlue™ premium connection is gaining rapid acceptance because, in addition to delivering outstanding performance, it offers customers the opportunity to reduce costs and environmental risks and improve safety at the rig. With no dope, rig preparation time is reduced and there are no costs relating to the removal and disposal of storage compounds and dope, which traditionally contain harmful heavy metals. Casing preparation and running operations are simplified and made much safer to the extent that they can be done without the need for crew to be present on the drill floor.

This breakthrough technology was developed by our multi-cultural R&D team, which made extensive use of the finite element analysis and full-scale testing facilities of specialized research laboratories. Working around the world, our R&D team is dedicated to using its extensive knowledge of tubular design and technology to develop cost-effective and environmentally-friendly solutions for our customers. To foster innovation, we conduct programs with leading universities in Europe and North America as well as encouraging a constant exchange of ideas.

Managing the tubular supply chain

This is an increasingly important part of what we do and it is an area where we can add substantial value for our customers as well as find opportunities for growth. Advances in information processing systems and interconnectivity provide enormous scope to reduce risks and save costs in industries where the costs of not having the right material at the right place and time can be more than the cost of the material itself.

This is particularly so in the oilfield sector where the costs of keeping a rig idle can be substantial and a sub-optimal selection of pipes, connections and accessories, along with any mishandling can have severe consequences including ecological problems, accidents and leakages. The risks and costs increase when exploration and production activities take place at greater depths and in more complex environments.

Extensive expertise in tubular materials and accessories, a global network of production and service centers, ample experience of managing just-in-time delivery, specialist industrial procurement know-how, allow us to offer a complete tubular supply chain management package including timely delivery and assembly of high quality tubular string components, surplus inventory management, personnel on location and safety control expertise, which help our customers to reduce substantially their risks and total costs. We tailor the supply chain management package for each of our main customer segments so that we bring our mills as close as possible to our customers through efficient management of information and dedicated expertise.

Building bridges to link communities

For those of us who are used to seeing them every day, a bridge is just a work of engineering that takes us over an obstacle from one point to another, but, for those who live in isolated areas or places affected by natural disasters, a bridge can also be a symbol of hope and progress.

When Toni Ruttiman and Walter Yañez, selfstyled citizens of the world who have dedicated the last 16 years to building bridges for poor people in various countries, appeared on our doorstep requesting support to extend their program to Mexico, it did not take long to convince Tenaris that it should respond in full. Here was an initiative which chimed precisely with Tenaris’s philosophy of helping its local communities to help themselves and was using pipes to accomplish it. Tamsa A.C., Tenaris’s Mexican foundation, decided to launch the initiative in its home state of Veracruz, where there are many communities in which members are isolated from each other, as well as from schools, hospitals,

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transport and markets, for the lack of bridges. Thus the “Bridges of Hope” project was born under which some 30 bridges have been built benefiting some 300,000 people in rural communities in Veracruz.

The objective of the project is to build safe, solid bridges quickly, efficiently and economically with the participation of the beneficiaries. Tamsa A.C. organizes materials, logistics and transportation, including the contribution of Tenaris pipes, while the residents of the communities do the work of excavating, gathering sand and stone, cutting wood, laying foundations, erecting steel pipe, extending cables and completing the assembly high above the river, thus becoming the engineers of their own bridge under the expert eye of Toni and Walter.

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Consolidated financial statements

As of December 31, 2003 and 2002 and for the years ended December 31, 2003, 2002 and 2001

Management discussion and analysis

The following discussion and analysis of Tenaris’s financial condition and results of operations are based on, and should be read in conjunction with, the audited consolidated financial statements of Tenaris and the related notes included elsewhere in this annual report. This discussion and analysis present Tenaris’s financial condition and results of operations on a consolidated basis and compare its results and condition for the fiscal year ended December 31, 2003, with the fiscal year ended December 31, 2002. Tenaris prepares its consolidated financial statements in conformity with IFRS, which differ in certain significant respects from US GAAP, and other national accounting standards.

Results of operations

The following table sets forth, for the periods indicated, selected financial data from Tenaris’s consolidated income statement and expresses Tenaris’s operating and other costs and expenses as a percentage of net sales.

Numbers in tables may not add due to rounding.

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Sales volumes

The following table shows Tenaris’s sales volumes of seamless and welded pipe products by geographical region for the periods indicated.

Seamless pipes

Sales volume of seamless pipes remained stable at 2,278,000 tons in 2003, compared to 2,283,000 tons in 2002. The key drivers of this outcome were a significant increase in sales volume in North America, offset by decreases in sales volume in the Middle East and Africa and in the Far East and Oceania.

South America. Sales volume declined marginally by 1%, with demand in Argentina increasing due to strong activity in the oil sector, demand in Venezuela remaining low but on an upward trend following a national strike centered on the state-owned oil industry at the beginning of 2003, and demand from oil and gas sector in the rest of the region showing a slight decline.

North America. Sales volume increased by 52% due to a sustained increase in demand from the oil and gas sector in Mexico and higher demand for Tenaris’s products in the United States.

Europe. Sales volume in Europe decreased by 3% as demand from the industrial sector remained stagnant and sales to pipeline projects in the North Sea area declined. Any recovery in industrial production activity in Europe remains fragile and could be affected by the appreciation of the Euro.

Middle East and Africa. Sales volume decreased by 31% as demand was affected by increased security and other risks surrounding the US — led military invasion of Iraq and political and security risks affecting oil and gas activities in Nigeria. In addition, Tenaris’s sales efforts in the region were concentrated on higher value products.

Far East and Oceania. Sales volume fell by 7% as sales to China remained firm but demand from the oil and gas sector in South East Asia was lower than in 2002.

Welded pipes

Sales volumes decreased by 39% to 355,000 tons in 2003 from 585,000 tons in 2002, reflecting a period of low demand for welded pipes in all South American markets outside of Brazil. In 2002, overall demand for welded products was high as a result of the deliveries made to large pipeline projects in Ecuador, Peru and Bolivia. In 2003, although there was an increase in demand as a result of pipeline construction activity in Brazil, overall demand remained well below the levels recorded in 2002 due to a lack of projects in other South American markets and, in the second half of the year, the postponement of deliveries to ongoing construction projects in Brazil following delays in the granting of requisite environmental permits.

Energy

Sales of electric energy (all in Italy to unaffiliated parties) increased by 43% to 3.0 TWh in 2003 from 2.1 TWh in 2002, while sales of natural gas (all in Italy) increased by 10% to 503 million scm in 2003 from 456 million scm in 2002. These increases reflect the continuing expansion of Dalmine Energie’s customer base in 2003. We expect the rate of the growth of the energy business to slow down in 2004.

Net sales

The following table shows Tenaris’s net sales by business segment in US dollars for the periods indicated.

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The following table indicates the distribution of Tenaris’s net sales by business segment for the periods indicated.

Seamless pipes

With sales volumes remaining relatively stable, the 6% increase was primarily attributable to higher average selling prices resulting from a more favorable market and product mix and higher prices in Europe following the appreciation of the Euro against the US dollar.

Welded pipes

The 40% decrease was primarily due to lower sales volumes of welded pipes, as well as lower sales of metal structures made by Confab included in this business segment (USD 63.0 million in 2003, compared to USD 93.7 million in 2002).

Energy

Net sales of electricity and natural gas by Dalmine Energie increased by 58% in 2003 reflecting the continuing expansion of the business and the appreciation of the Euro against the US dollar. We expect the rate of the growth of the energy business to slow down in 2004.

Other products and services

Net sales of other products and services declined by 35% as a result of the discontinuation of sales of non-pipe steel products not produced by Tenaris. Excluding sales of discontinued products, net sales of other goods and services rose 73% to USD 71.0 million in 2003, compared to USD 41.0 million in 2002, due primarily to increased sales of sucker rods and the commencement of sales of steam and excess electric power to third parties from an Argentine power generation facility acquired in February 2003 to supply Tenaris’s electric power requirements for its seamless pipe operations in Argentina.

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The following table shows Tenaris’s net sales by region in terms of US dollars for the periods indicated.

The following table indicates the percentage market distribution of Tenaris’s net sales by region for the periods indicated.

South America. The 21% decrease was primarily due to a significant reduction in sales volumes of welded pipes.

North America. The 31% increase was primarily attributable to a significant increase in sales volumes of seamless pipes, partially offset by a reduction in sales of other steel products that were discontinued during the year.

Europe. The 16% increase reflected increased sales volumes of electricity and natural gas in Italy and the effect of the appreciation of the Euro against the US dollar, which were partially offset by a reduction in sales of other steel products that were discontinued during the year.

Middle East and Africa. The 23% decrease was primarily due to a significant reduction in sales volumes of seamless pipes, which was partially offset by an increase in average selling prices.

Far East and Oceania. The 7% decrease was mainly the result of a reduction in sales volumes of seamless pipes.

Cost of sales

Cost of sales, expressed as a percentage of net sales, rose to 69.4% in 2003, compared to 67.4% in the same period of 2002. This increase resulted from lower gross margins in the welded business, higher sales of low margin energy products and higher cost of sales for seamless pipe products.

The following table shows Tenaris’s cost of sales, expressed as a percentage of net sales, by business segment for the periods indicated:

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Seamless pipes

Cost of sales of seamless pipes remained relatively stable as increased sales in Tenaris’s local markets of Mexico and Argentina, where sales include a higher component of services, together with a more cost-efficient allocation of orders among Tenaris’s main production facilities, offset the impact of rising raw material and increased energy and labor costs for most of 2003. Towards the end of 2003, however, further increases in steelmaking raw material costs led to an overall increase in cost of sales. Costs are expected to continue to appreciate in 2004 due to supply constraints in the wake of the rapid growth of China’s consumption and production of steel products.

Welded pipes

The significant increase was primarily due to a substantial reduction in export sales (whose higher selling expenses are recorded in selling, general and administrative expenses, rather than in cost of sales) and negative margins on sales of metal structures following a contraction in sales and provisions relating to contractual claims.

Energy

Costs of sales for energy products, expressed as a percentage of net sales, remained relatively stable in spite of increased competition in the market.

Other products and services

The significant decrease was the result of lower sales of other steel products with low margin, which were discontinued during the year, and increased sales of products with higher margins (such as sucker rods).

Selling, general and administrative expenses

Selling, general and administrative expenses, or SG&A, remained stable at USD 566.8 million, or 17.8% of net sales in 2003, compared to USD 567.5 million, or 17.6% of net sales, during 2002, with a decrease in selling expenses being offset by an increase in general and administration expenses. The decrease in selling expenses was primarily due to substantially lower sales of welded pipe products and the reduction in sales commissions following our corporate reorganization. In addition, towards the end of 2003, there was an increase in freight costs registered in selling expenses and it is expected that these costs will increase further in 2004. The increase in general and administrative expenses in 2003 was primarily the result of increased costs in Italy and Argentina following the strengthening of the Euro and the Argentine peso against the US dollar, additional taxes in Argentina and non-recurring costs relating to the delisting of Siderca, Tamsa and Dalmine and other corporate reorganization activities.

Other operating income and expenses

Other operating income and expenses showed a net loss of USD 116.8 million in 2003, compared to a net loss of USD 10.8 million in 2002. This significant increase in other operating expenses was primarily attributable to the recording in 2003 of a USD 114.2 million loss relating to the final settlement in December 2003 of the BHP litigation. Other operating expenses in 2002 included provisions of USD 18.9 million in respect of the BHP litigation. Tenaris does not expect to incur any further losses in connection with the BHP litigation and has brought arbitration proceedings against Fintecna to compel Fintecna to indemnify Tenaris for the amounts paid and payable by Dalmine in respect of the BHP litigation.

Net financial expenses

Net financial expenses totaled USD 29.4 million in 2003, compared to USD 20.6 million in 2002. The increase was primarily attributable to the recording of a net loss on foreign exchange translations of USD 16.2 million, compared to a net gain on foreign exchangetranslations of USD 11.6 million in 2002, reflecting principally the effects of the devaluation of the Argentine peso against the US dollar in 2002, and its subsequent revaluation in 2003.

Equity in earnings (losses) of associated companies

Tenaris’s share in the results of associated companies generated a gain of USD 27.6 million in 2003, compared to a loss of USD 6.8 million in 2002. This significant improvement was primarily attributable to the positive impact on Tenaris’s results of Sidor’s improved results due to the completion in 2003 of the Sidor and Amazonia’s debt restructuring and the more favorable market conditions for Sidor’s products in the period. We expect to continue to derive gains from our indirect investment in Sidor in 2004.

Income tax

Tenaris recorded an income tax provision of USD 63.9 million in 2003, compared to an income tax provision of USD 207.8 million (net of a tax refund of USD 36.8 million in Mexico) in 2002. The decrease in Tenaris’s income tax provisions principally reflected the effects on the income tax provisions recorded by Tenaris’s subsidiaries in Argentina of the devaluation of the Argentine peso against the US dollar in 2002 and its subsequent revaluation in 2003. In 2002, Tenaris recorded significant income tax provisions relating to gains in terms of Argentine pesos on foreign currency denominated monetary assets at its subsidiaries in Argentina and to the tax bases of their non monetary assets. In 2003, Tenaris’s income tax provisions were lower than those recorded in 2002 as a result of the registration of a deferred tax

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asset of USD 39.6 million in respect of the loss incurred from the BHP lawsuit, a reduction in the income tax amounts actually paid from those provisioned and a partial reversal of deferred taxes.

Minority interest

Minority interest showed a loss of USD 12.1 million in 2003, compared to a loss of USD 142.4 million in 2002. This significant change was primarily attributable to the recording in 2002 of a loss of USD 99.5 million in respect of the minority participations in Siderca, Tamsa and Dalmine which Tenaris acquired pursuant to the exchange offer completed in December 2002. On a comparable basis, Tenaris’s reduced loss in 2003 was primarily due to:

Liquidity and capital resources

In 2003, as in 2002 and 2001, we managed our liquidity using funds from operations and external borrowings. We used these funds primarily to finance our working capital and capital expenditure requirements, to make acquisitions, including further acquisitions of minority interests in consolidated subsidiaries, a further indirect investment in Sidor in relation to its financial restructuring and the acquisition of an Argentine power generation facility, and to distribute dividends to our shareholders.

Liquidity refers to the liquid financial assets available to fund our business operations and pay for near term future obligations. These liquid financial assets consist of cash and cash equivalents, which include highly liquid short-term investments.

We hold our cash and cash equivalents primarily in US dollars, and minimize our holdings of other currencies to the minimum required to fund our cash operating needs. In addition to cash and cash equivalents, we hold other current investments for USD 138.3 million, which are financial resources placed by Siderca, Siat and Confab within offshore trusts. These trusts were established in 2001 and 2002 with three year terms solely to ensure that the financial needs for the normal development of the operations of these Argentine and Brazilian subsidiaries were met.

As of December 31, 2003, US dollardenominated liquid assets represented 75.3% of total liquid financial assets. Liquid financial assets as a whole (excluding current investments) were 5.75% of total assets compared to 7.46% at the end of 2002. For further information on our liquidity, please see Note 18 to the consolidated financial statements included elsewhere in this annual report.

In recent years, funds from operations and funds raised in the banking sector were our primary sources of liquidity. We believe the funds available from these and other sources will be sufficient to satisfy our working capital needs and to service our debt in the foreseeable future. We also believe that our liquidity and capital resources give us adequate flexibility to manage our planned capital spending programs as appropriate to address short-term changes in business conditions.

The following table shows the evolution of our liquid financial assets as of the end of each of the last three years:

Cash and cash equivalents decreased by USD 56.7 million to USD 247.8 million from USD 304.5 million at December 31, 2002. In addition, Tenaris had other current investments for USD 138.3 million in trust funds established to support the operations of its subsidiaries in Argentina and Brazil. As of December 31, 2002, these trust funds were classified as non-current other investments and amounted to USD 135.8 million.

Net cash provided by operations

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Net cash provided by operations was USD 275.6 million in 2003, compared to USD 461.4 million in 2002. This significant decrease is mainly explained by an increase of USD 132.4 million in income taxes paid and a decrease of USD 78.3 million in gross profit due to significantly lower sales of welded pipes.

Net cash used in investing activities

Net cash used in investing activities was USD 252.2 million in 2003, compared to USD 180.6 million in 2002. The increase is primarily due to acquisitions, including acquisitions of minority interests in consolidated subsidiaries, an indirect investment in Sidor in relation to its financial restructuring and the acquisition of an Argentine power generation facility. Net capital expenditure (inclusive of investment in intangible assets) was USD 156.6 million, compared to a net capital expenditure of USD 133.2 million in 2002. This increase was due to increased investments in information systems and a small increase in investment in property, plant and equipment.

Net cash used in financing activities

Net cash used in financing activities was USD 83.2 million in 2003, compared to USD 184.4 million in 2002. The decrease was mainly attributable to increase in borrowings (USD 45.9 million) whereas in 2002 borrowings were reduced by USD 103.6 million, partially offset by higher dividend payments.

Net working capital, as shown in Note 30 to the consolidated financial statements, increased by USD 107.2 million primarily reflecting an increase in inventories (USD 151.8 million). Tenaris’s total liabilities to total assets ratio remained stable at 0.54.

Principal sources of funding

Our policy is to maintain a high degree of flexibility in operating and investment activities by maintaining adequate liquidity levels and assuring our access to readily available sources of financing. Depending on our cash needs and market conditions, we may issue debt in various currencies and with fixed or floating interest rates.

We have a conservative approach to liquidity management and concentrate our cash in major financial centers (New York, London). We hold money market investments and variable-rate or fixed-rate securities from investment grade issuers. In order to satisfy local liquidity needs for our operations, we maintain minimum balances in local overnight instruments. We believe our exposure to market risks resulting from our liquidity management activities does not have the potential to materially affect our operations. In accordance with sound management and control principles, we separate our corporate treasury function organizationally, physically –front and back office– and in its technical systems from the administrative functions of accounting and controlling and apply a comprehensive set of formalized policies for its administration.

Financial liabilities

Our financial liabilities consist of bank loans, overdrafts, debentures and financial leases. These facilities are mainly denominated in US dollars and Euros. As of December 31, 2003, US dollar denominated financial liabilities and Euro-denominated financial liabilities represented 40% and 46%, respectively, of total financial liabilities. We base our financing decisions, including the election of type, currency, rate and term of the facility, on prevailing market conditions and the intended use of proceeds.

The following table shows our financial liabilities as of the end of each of the last two years:

The weighted average interest rates –which incorporate instruments denominated in various currencies– as of December 31 of each year were as follows:

Tenaris’s current debt to total debt ratio increased to 0.57 as of December 31, 2003, compared to 0.55 as of December 31, 2002.

Credit lines

In December 2003, Tamsa entered into a three-year syndicated loan agreement in an aggregate principal amount of USD 150 million. The proceeds of the loan agreement were used to refinance a facility of approximately USD 100 million that matured in December 2003.

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The most significant financial covenants under the Tamsa loan agreement are the maintenance at Tamsa of minimum levels of working capital, the commitment not to incur additional indebtedness above agreed limits or pledges on certain assets and the compliance with debt service ratios calculated on Tamsa’s financial statements.

In June 2003, Dalmine entered into a four-year Euro-denominated loan in an aggregate principal amount of approximately USD 33 million. Dalmine’s obligations under the loan are secured by a pledge on land and buildings.

Borrowings include loans secured over certain of the properties of Tenaris’s subsidiaries for a total of USD 308.9 million. Some of these loans included covenants, the most significant of which relate to maintenance of limited total indebtedness and compliance with debt service ratios.

At December 31, 2003, Tenaris and all of its subsidiaries were in compliance with all of their financial covenants. We believe that current covenants do not impair Tenaris’s ability to obtain additional financing at competitive rates, given current leverage ratios.

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		PricewaterhouseCoopers Société à responsabilité limitée Réviseur d’entreprises 400, route d’Esch B.P. 1443 L-1014 Luxembourg Téléphone +352 494848-1 Facsimile +352 494848-2900

Report of independent auditors

To the Board of Directors and Shareholders of Tenaris S.A.

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income, of cash flows and of changes in shareholders’ equity present fairly, in all material respects, the financial position of Tenaris S.A. and its subsidiaries at December 31, 2003 and 2002, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2003, in conformity with International Financial Reporting Standards. These financial statements are the responsibility of the Company’s management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

International Financial Reporting Standards vary in certain important respects from accounting principles generally accepted in the United States of America. The application of the latter would have affected the determination of the consolidated net income for each of the three years in the period ended December 31, 2003, and the determination of consolidated shareholders’ equity at December 31, 2003 and 2002, to the extent summarized in Note 33 to the consolidated financial statements.

Mervyn R. Martins

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TENARIS S.A.

CONSOLIDATED
FINANCIAL STATEMENTS

As of December 31, 2003 and 2002
and
For the years ended December 31, 2003, 2002 and 2001

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CONSOLIDATED INCOME STATEMENT

The accompanying notes are an integral part of these consolidated financial statements.

27

CONSOLIDATED BALANCE SHEET

Contingencies, commitments and restrictions on the distribution of profits are disclosed in Note 24.

The accompanying notes are an integral part of these consolidated financial statement

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CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

(all amounts in USD thousands)

[Continued from above table, first column(s) repeated]

The distributable reserve and retained earnings calculated according to Luxembourg law are disclosed in Note 24 (vi)

The accompanying notes are an integral part of these consolidated financial statements.

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CONSOLIDATED CASH FLOW STATEMENT

(1) Includes the effect of the fair value of net assets and liabilities acquired in the 2002 Exchange Offer.

The accompanying notes are an integral part of these consolidated financial statements.

30

ACCOUNTING POLICIES

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ACCOUNTING POLICIES

The following is a summary of the principal accounting policies followed in the preparation of these consolidated financial statements:

A     BUSINESS OF THE COMPANY AND BASIS OF PRESENTATION

Tenaris S.A. (the “Company” or “Tenaris”), a Luxembourg corporation, was incorporated on December 17, 2001, to hold investments in steel pipe manufacturing and distributing companies, as discussed in Note 27. The Company holds, either directly or indirectly, controlling interests in various subsidiaries. A list of these holdings is included in Note 31.

At December 31, 2003 and 2002, the financial statements of Tenaris and its subsidiaries have been consolidated. For comparative purposes, and because Siderca S.A.I.C. (“Siderca”), Dalmine S.p.A. (“Dalmine”), Tubos de Acero de México S.A. de C.V. (“Tamsa”) and Tenaris Global Services S.A. (“Tenaris Global Services”) were under the common control of Sidertubes S.A. (“Sidertubes”) until October 18, 2002 , their consolidated financial statements have been retroactively combined with those of the Company –until October 18, 2002- and presented as one company (“Tenaris”) in the consolidated financial statements for the years ended December 31, 2002 and 2001. As a result, references to Tenaris’ Consolidated Financial Statements for the years ended December 31, 2002 and 2001 refer to the Consolidated Combined Financial Statements of Tenaris’ predecessors. The percentages of ownership and voting rights considered in the preparation of such consolidated combined financial statements correspond to those of the parent company at such dates.

In 2001, Dalmine and Tamsa were consolidated, despite the fact that the Company did not own more than 50% of the voting rights. This was due to the control exercised by Tenaris’ controlling shareholder, Sidertubes, through the appointment of the majority of the directors and key management.

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) adopted by the International Accounting Standards Board (“IASB”) and interpretations issued by the Standing Interpretations Committee (“SIC”) of the IASB. The consolidated financial statements are presented in thousands of U.S. dollars (“USD”).

Certain comparative amounts have been reclassified to conform to changes in presentation in the current year. All material intercompany transactions and balances have been eliminated.

The preparation of financial statements requires management to make estimates and assumptions that might affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the balance sheet dates, and the reported amounts of revenues and expenses during the reporting periods. Actual results may differ from these estimates.

The consolidated financial statements were approved by Tenaris’ Board of Directors on March 2, 2004.

B     GROUP ACCOUNTING

(1)    Subsidiary companies

The consolidated financial statements include the financial statements of Tenaris’ subsidiary companies. Subsidiary companies are entities in which Tenaris has an interest of more than 50% of the voting rights or otherwise has the power to exercise control over their operations. Subsidiaries are consolidated from the date on which control is transferred to the Company and are no longer consolidated from the date that the Company ceases to have control. The purchase method of accounting is used to account for the acquisition of subsidiaries.

All material intercompany transactions and balances between Tenaris’ subsidiaries have been eliminated. Where necessary, accounting policies for subsidiaries have been changed to ensure consistency with the policies adopted by Tenaris.

See Note 31 for the list of the consolidated subsidiaries.

(2)    Associated companies

Investments in associated companies are accounted for by the equity method of accounting. Associated companies are companies in which Tenaris owns between 20% and 50% of the voting rights or over which Tenaris has

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significant influence, but does not have control (see Note B (1)). Unrealized results on transactions between Tenaris and its associated companies are eliminated to the extent of Tenaris’ interest in the associated companies.

Tenaris’ investments in Consorcio Siderurgia Amazonia Ltd. (“Amazonia”) (14.5% since the 2003 Restructuring described in Note 24 (ii) and 14.1% during the years ended December 31, 2002 and 2001) and in Siderar S.A.I.C. (10.71% until November 27, 2001) were accounted for under the equity method.

Management periodically evaluates the carrying value of its investments in associated companies for impairment. The carrying value of these investments is considered impaired when an other than temporary decrease in the value of the investments has occurred.

See Note 11 for a list of principal associated companies.

C     FOREIGN CURRENCY TRANSLATION

(1)    Translation of financial statements in currencies other than the U.S. Dollar; measurement currencies

International Accounting Standards Board’s Standing Interpretation Committee’s interpretation number 19 (“SIC-19”) states that the measurement currency should provide information about the enterprise that is useful and reflects the economic substance of the underlying events and circumstances relevant to the enterprise.

The measurement currency of Tenaris is the U.S. dollar. Although the Company is domiciled in Luxembourg, Tenaris operates in several countries with different currencies. The U.S. dollar is the currency that best reflects the economic substance of the underlying events and circumstances relevant to Tenaris as a whole. Generally, the measurement currency of the main subsidiaries in these financial statements is the respective local currency. In the case of Siderca and its argentine subsidiaries, however, the measurement currency is the U.S. dollar, because:

Income statements of subsidiary companies stated in currencies other than the U.S. dollar are translated into U.S. dollars at the weighted average exchange rates for the year, while balance sheets are translated at the exchange rates at December 31. Translation differences are recognized in shareholders’ equity. Income statement information relating to the comparative year was translated using average exchange rates for the year. In the case of a sale or other disposition of any such subsidiary, any accumulated translation differences are recognized in the income statement as part of the gain or loss on sale.

In the case of Tamsa, which reported in the currency of a hyperinflationary economy (Mexico) –as defined by IFRS- until December 31, 1998, the financial statements up to that date were restated in constant local currency in accordance with International Accounting Standard (“IAS”) 29.

Transactions in currencies other than the measurement currency are accounted for at the exchange rates prevailing at the date of the transactions. Gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in currencies other than the measurement currency are recognized in the income statement.

D     PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are recognized at historical acquisition or construction cost. Land and buildings comprise mainly factories and offices and are shown at historical cost less depreciation. In the case of business acquisitions proper consideration to the fair value of the assets has been given as explained in Note B(1).

Major overhaul and rebuilding expenditures that improve the condition of an asset beyond its original condition is capitalized as property, plant and equipment and depreciated over the remaining useful life of the related assets.

Ordinary maintenance expenses on manufacturing properties are recorded as cost of products sold in the period in which they are incurred.

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Interest costs from the financing of relevant construction in progress is capitalized during the period of time that is required to complete and prepare the asset for its intended use.

Depreciation is calculated using the straight-line method to amortize the cost of each asset to its residual values over its estimated useful life as follows:

Restricted tangible assets in Dalmine with a net book value at December 31, 2003 of USD 5.1 million are assets that will be returned to the Italian government authorities upon expiration of the underlying contract. These assets are depreciated over their estimated useful economic lives.

In all cases where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down to its recoverable amount. However, management considers that there has been no impairment in the carrying value of property, plant and equipment.

E     IMPAIRMENT

Circumstances affecting the recoverability of tangible and intangible assets and investments in other companies may change. If this happens, the recoverable amount of the relevant asset is estimated. The recoverable amount is determined as the higher of the asset’s net selling price and the present value of the estimated future cash flows. If the recoverable amount of the asset has dropped below its carrying amount the asset is written down immediately to its recoverable amount.

No impairment provisions were recorded, other than the investment in Amazonia (see Note 11).

F     INTANGIBLE ASSETS

(1)    Goodwill

Goodwill represents the excess of the acquisition cost over the fair value of Tenaris’ participation in an acquired companies’ net assets at the acquisition date. Goodwill is amortized using the straight-line method over its estimated useful life, not to exceed 15 years. Amortization is included in cost of sales.

Goodwill and fair value adjustments arising in connection with acquisitions of a foreign entity are treated as measurement currency assets and liabilities of the acquired entity.

(2)    Negative goodwill

Negative goodwill represents the excess of the fair values of Tenaris’ participation in an acquired companies’ net assets at the acquisition date over the acquisition cost. Negative goodwill is recognized as income on a systematic basis over the remaining weighted average useful life of the identifiable acquired depreciable assets, not to exceed 15 years. This income is included in cost of sales.

(3)    Information systems projects

Generally, costs associated with developing or maintaining computer software programs are recognized as an expense as incurred. However, costs directly related to development, acquisition and implementation of information systems are recognized as intangible assets if they have a probable economic benefit exceeding the cost beyond one year.

Information systems projects recognized as assets are amortized using the straight-line method over their useful lives, not exceeding a period of 3 years. Amortization charges are classified as selling, general and administrative expenses.

(4)     Research and development

Research expenditures are recognized as expenses as incurred. In accordance with IAS 38, development costs during the years ended on December 31, 2003, 2002 and 2001, were recorded as cost of sales in the income statement as incurred because they did not fulfill the criteria for capitalization. Research and development expenditures for the year ended 2003 totaled USD 6.1 million.

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(5)    Licenses and patents

Expenditures on acquired patents, trademarks, technology transfer and licenses are capitalized and amortized using the straight-line method over their useful lives, but not exceeding 20 years.

G     OTHER INVESTMENTS

Under IAS 39 “Financial Instruments: Recognition and Measurement”, investments have to be classified into the following categories: held-for-trading, held-to-maturity, loans and available-for-sale, depending on the purpose for acquiring the investments. Investments that do not fulfill the specific requirements of IAS 39 for held-for-trading, held-to-maturity or loan categories have to be included in the residual “available-for-sale” category. All of Tenaris’, which include primarily deposits in trust funds and insurance companies, are currently classified as available-for-sale as defined by IFRS, despite the fact that they are not technically available for disposition according to the terms of the underlying contracts.

Other investments comprise mainly financial resources placed by Siderca, Siat and Confab within off-shore trusts, the objective of which is exclusively to ensure that the financial needs for the normal development of their operations are met. At December 31, 2003 the trustee has allocated USD 49.4 million of such funds to constitute collateral guarantees within the scope of the trust agreement.

All purchases and sales of investments are recognized on the trade date, which is the date that Tenaris commits to purchase or sell the investment. These transactions typically settle shortly after the trade date. Costs include transaction costs.

Subsequent to their acquisition, these investments are carried at fair value. Realized and unrealized gains and losses arising from changes in the fair value in those investments are included in the income statement for the period in which they arise. Investments in companies for which fair values cannot be measured reliably are reported at cost.

H     INVENTORIES

Inventories are stated at the lower of cost (calculated using principally the first-in-first-out “FIFO” method) and net realizable value as a whole. The cost of finished goods and work in progress comprises raw materials, direct labor, other direct costs and related production overhead costs. Net realizable value is estimated collectively for inventories as the selling price in the ordinary course of business, less the costs of completion and selling expenses. Goods in transit at period end are valued at supplier invoice cost.

An allowance for obsolescence or slow-moving inventory is made in relation to supplies and spare parts and based on management’s analysis of their aging, the capacity of such materials to be used based on their levels of preservation and maintenance and the potential obsolescence due to technological changes. An allowance for slow-moving inventory is made in relation to finished goods based on management’s analysis of their aging.

I     TRADE RECEIVABLES

Trade receivables are carried at original invoice amount less an estimate made for doubtful receivables. The Company analyzes its trade accounts receivable on a regular basis and, when aware of a certain client’s impossibility to meet its financial commitments to Tenaris, it records a charge to the provision for doubtful accounts. This provision is adjusted periodically in accordance with the aging of overdue accounts.

J     CASH AND CASH EQUIVALENTS

Cash and cash equivalents and highly liquid short-term securities are carried at fair market value.

For the purposes of the cash flow statement, cash and cash equivalents is comprised of cash, bank current accounts and short-term highly liquid investments (original maturity of less than 90 days).

On the balance sheet, bank overdrafts are included in borrowings in current liabilities.

K     SHAREHOLDERS’ EQUITY

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(1)     Basis of combination

The combined consolidated statement of changes in shareholders’ equity for the years 2001 and 2002 was prepared based on the following:

The balances of the consolidated statement of changes in shareholders’ equity at December 31, 2003 and 2002 include:

Dividends are recorded in Tenaris’ financial statements in the period in which they are approved by Tenaris’ shareholders, or when interim dividends are approved by the Board of Directors in accordance to the authority given to them by the by-laws of the Company.

Dividends may be paid by Tenaris to the extent that it has distributable retained earnings, calculated in accordance with Luxembourg legal requirements. Therefore, retained earnings included in the consolidated financial statements may not be wholly distributable. See Note 24 (vi).

L     BORROWINGS

Borrowings are recognized initially for an amount equal to the proceeds received net of transaction costs. In subsequent periods, borrowings are stated at amortized cost; any difference between proceeds and the redemption value is recognized in the income statement over the period of the borrowings.

M     INCOME TAXES – CURRENT AND DEFERRED

Under present Luxembourg law, so long as the Company maintains its status as a holding company, no income tax, withholding tax (including with respect to dividends), or capital gain tax is payable in Luxembourg by the Company.

The current income tax charge is calculated on the basis of the tax laws existing in the countries in which the Tenaris “subsidiaries” operate.

Deferred income taxes are calculated, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. The principal temporary differences arise from the effect of currency translation on fixed assets, depreciation on property, plant and equipment –originated in both difference in valuation and useful lives considered by accounting standards and tax regulations-, inventories valuation and provisions for pensions. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on tax rates and tax laws that have been enacted or substantially enacted by the balance sheet date.

Deferred tax assets are recognized to the extent it is probable that future taxable income will be available to utilize those temporary differences recognized as deferred tax assets against such income.

N     EMPLOYEE LIABILITIES

(1)    Employees’ statutory profit sharing

Under Mexican law, Tenaris’ Mexican subsidiaries are required to pay an annual benefit to their employees, which is calculated using a basis similar to the one used for the calculation of the income tax. Employees’ statutory profit sharing is provided under the liability method. Temporary differences arise between the “statutory” bases of assets and liabilities used in the determination of the profit sharing and their carrying amounts in the financial statements.

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(2)    Employees’ severance indemnity

This provision comprises the liability accrued on behalf of employees at Tenaris’ Italian and Mexican subsidiaries at the balance sheet date in accordance with current legislation and the labor contracts in effect in the respective countries.

Employees’ severance indemnity costs are assessed annually using the projected unit credit method: the cost of providing this obligation is charged to the income statement over the service lives of employees in accordance with the advice of the actuaries. This provision is measured at the present value of the estimated future cash outflows using applicable interest rates. This provision amounts to USD66.4 million at December 31, 2003.

(3)    Pension obligations

Certain Argentine Tenaris officers are covered by a defined benefit employee retirement plan designed to provide retirement, termination and other benefits to those officers.

Tenaris is accumulating assets for the ultimate payment of those benefits in the form of investments that carry time limitations for their redemption. The investments are not part of a particular plan, nor are they segregated from Tenaris’ other assets. Due to these conditions, the plan is classified as “unfunded” by International Financial Reporting Standards definitions.

Retirement costs are assessed using the projected unit credit method: the cost of providing retirement benefits is charged to the income statement over the service lives of employees based on actuarial calculations. This provision is measured at the present value of the estimated future cash outflows using applicable interest rates. Actuarial gains and losses are recognized over the average remaining service lives of employees.

Benefits provided by the plan are in U.S. Dollars, and are calculated based on a three-year or seven-year salary average (whichever is more favorable to the beneficiary) for those executives who have retired or were terminated before December 31, 2003. After this date, the benefits of the plan are calculated based on a seven-year salary average.

(4)    Other compensation obligations

Employee entitlements to annual leave and long-service leave is accrued as earned.

Other length of service based compensation to employees in the event of dismissal or death is charged to income in the year in which it becomes payable.

O     PROVISIONS AND OTHER LIABILITIES

Provisions are accrued to reflect estimations of amounts due relating to expenses as they are incurred based on information available as of the date of preparation of the financial statements. If Tenaris expects a provision to be reimbursed (for example under an insurance contract), and the reimbursement is virtually certain, the reimbursement is recognized as an asset.

Tenaris has certain contingent liabilities with respect to existing or potential claims, lawsuits and other proceedings.. Unless otherwise specified, Tenaris accrues liabilities when it is probable that future cost could be incurred and that cost can be reasonably estimated. Generally, accruals are based on developments to date, Tenaris’ estimates of the outcomes of these matters and the advice of Tenaris’ legal advisors. As the scope of the liabilities becomes better defined, there may be changes in the estimates of future costs, which could have a material effect on Tenaris’ future results of operations and financial conditions or liquidity.

P     REVENUE RECOGNITION

Revenues are recognized as sales when revenue is earned and is realized or realizable. This includes satisfying the following criteria: the arrangement with the customer is evident, usually through the receipt of a purchase order; the sales price is fixed or determinable; delivery -as defined by the risk transfer provision of the sales contracts- has occurred, which may include delivery to the customer storage warehouse location at one of the Company’s subsidiaries; and collectability is reasonably assured.

Other revenues earned by Tenaris are recognized on the following bases:

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Q     COST OF SALES AND SALES EXPENSES

Cost of sales and expenses are recognized in the income statement on the accrual basis of accounting.

Shipping and handling costs related to client orders are classified as selling, general and administrative expenses.

R     EARNINGS PER SHARE

Earnings per share are calculated by dividing the net income attributable to shareholders by the daily weighted average number of ordinary shares issued during the year. See Note 8.

S     DERIVATIVE FINANCIAL INSTRUMENTS

Tenaris adopted IAS 39 at the beginning of the fiscal year ended December 31, 2001. Under IAS 39, derivative financial instruments are initially recognized in the balance sheet at cost and subsequently remeasured at fair value. Changes in the fair value of any derivative instruments are recognized in the income statement as financial results. The total impact on shareholders’ equity on December 31, 2001, as a result of the adoption of IAS 39, was a USD1,007 thousand loss. That impact arises from the remeasurement to fair value of derivatives that do not qualify for hedge accounting.

Information about accounting for derivative financial instruments and hedging activities is included within the section “Financial Risk Management” below.

T     SEGMENT INFORMATION

Business segments provide products or services that are subject to risks and returns that are different from those of other business segment. Allocation to a specific business segment relates to the type of production process, type of product, nature of client and or intensity of infrastructure usage. Geographical segments provide products or services within a particular economic environment that is subject to risks and returns that are different from those of arising in other economic environments.

U     SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) AND GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN THE UNITED STATES OF AMERICA (US GAAP)

The accompanying consolidated financial statements have been prepared in accordance with IFRS, which differ in certain important respects from US GAAP. The significant differences at December 31, 2003 and 2002 and for the years ended December 31, 2003, 2002 and 2001 are reflected in the reconciliation provided in Note 33 and principally relate to the items discussed in the following paragraphs:

Tenaris directly or indirectly acquired interests in Tavsa and Amazonia. As part of this investment, Tenaris and its partners developed a business plan which contemplated workforce reductions. As a result of Tenaris’ plans to reduce the workforce, the liabilities associated with the reductions were accrued by Tavsa and Amazonia as of the date of the acquisition, which resulted in additional goodwill under IFRS.

Under US GAAP, at the time of acquisition accrual of workforce reduction costs was required when certain conditions were met. (i) A restructuring plan must have been approved by an appropriate level of management; (ii) the benefit arrangement must have been sufficiently communicated to employees so that they could determine their benefits; (iii) the plan must have specifically identified the number of employees, their classification and location; and (iv) it was unlikely that significant changes to the plan would occur. In general, the plan should have been finalized within one year.

(2)    Deferred income tax

Under IFRS, a temporary difference is originated by the excess of the accounting value of net assets, translated at historical exchange rates, over the taxable base translated using year-end exchange rates. Under US GAAP, no deferred tax is recognized for differences related to assets and liabilities that are remeasured from local currency into the functional currency resulting from changes in exchange rates or indexing for tax purposes.

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(3)    Equity in investments in associated companies

The significant differences that give rise to US GAAP adjustments on equity in associated companies are related to the provision for restructuring costs net of its tax effect.

(4)     Unrecognized prior service costs

Under IFRS past service costs related to pension benefits are recognized over the remaining vesting period. Where benefits have already vested, past service costs are recognized immediately.

Under US GAAP, past service costs are recognized over the remaining service lives of active employees.

(5)     Accounting changes

As discussed in Note S, at the beginning of the fiscal year ended December 31, 2001, the Company adopted IAS 39. The impact of the adoption corresponds to the remeasurement to fair value of derivatives related to non–qualifying hedges and it was accounted for in a separate line in the consolidated statement of changes in shareholders’ equity.

Under US GAAP the company adopted Statement of Financial Accounting Standards (“SFAS”) No. 133 “Accounting for Derivative Instruments and Hedging Activities”, and its corresponding amendments under SFAS N° 137 and 138 on January 1, 2001. The cumulative effect adjustment was recognized in net income.

(6)     Consolidation of non-majority-owned subsidiaries

Under IFRS, companies in which the ultimate parent company did not own more than 50% of the voting rights but had the necessary power as to exercise control by other means (such as appointing the majority in the board of directors and key management) are consolidated.

Under US GAAP, only majority-owned subsidiaries (companies in which a parent has a controlling financial interest through direct or indirect ownership of a majority voting interest) are consolidated. Accordingly, condensed income statement and cash flow are presented in Note 33, without consolidating Dalmine for the year ended December 31, 2001.

(7)     Financial assets’ changes in fair value

The Company has certain investments in trust funds. Under IFRS, the Company is carrying these investments at market value with unrealized gains and losses, if any, included in the statement of income.

As explained in Note G, the company has allocated certain investments in trust funds to the “available-for-sale” category as defined by IAS 39. Under US GAAP, the Company is carrying these investments at market value with material unrealized gains and losses, if any, included in shareholder’s equity in accordance with Statement of Financial Accounting Standards No. 115 “Accounting for Certain Investments in Debt and Equity Securities” (“SFAS No. 115”). SFAS No. 115 also states that for such investments an enterprise shall determine whether a decline in fair value below the amortized cost basis is other than temporary. In such event, accumulated unrealized losses included in Other Comprehensive Income shall be reclassified into the Statement of Income.

Specific identification was used to determine cost in computing realized gain or loss. For the purpose of assigning these investments to the categories specified in IAS 39, the Company’s considers available potential needs for liquidity, changes in the availability of and the yield on alternative instruments or changes in funding securities at the time of purchase.

(8)     Goodwill

Under IFRS, purchased goodwill is capitalized as an intangible asset, with a rebuttable presumption that its useful life does not exceed 20 years.

An impairment review of goodwill is required wherever events or changes in circumstances indicate that the carrying amount may not be recoverable and annually if estimated useful life exceeds 20 years.

Under US GAAP, an investment recorded under the purchase method of accounting requires an estimation of the fair values of the underlying, separately identifiable assets and liabilities. Any excess of the cost of the investment over the fair value of acquired net assets is treated as goodwill.

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As a result of the adoption of SFAS No. 142 “Goodwill and other intangible assets”, the Company assessed the goodwill for impairment. The steps taken are fully explained in Note 34 (d), and the impairment losses are presented as a cumulative effect of a change in accounting principle in the quantitative reconciliation in Note 34.

Effective January 1, 2002, in accordance with SFAS No. 142, the Company ceased the amortization of goodwill under US GAAP.

(9)    Cost of the 2002 Exchange Offer

Under IFRS, direct costs relating to an acquisition, including the cost of registering and issuing equity securities, are considered in determining the cost of acquisition.

Under US GAAP, in accordance with SFAS No. 141 “Business combinations”, costs of registering and issuing equity securities shall be recognized as a reduction of the fair value of the securities.

FINANCIAL RISK MANAGEMENT

(1)     FINANCIAL RISK FACTORS

Tenaris’ activities expose it to a variety of financial risks, including the effects of changes foreign currency exchange rates and interest rates. Tenaris’ subsidiaries use derivative financial instruments to minimize potential adverse effects on Tenaris’ financial performance, by hedging certain exposures.

(i)    Foreign exchange rate risk

Tenaris operates internationally and is exposed to foreign exchange rate risk arising from various currency exposures. Certain Tenaris’ subsidiaries use forward contracts in order to hedge their exposure to exchange rate risk primarily in U.S. Dollars.

(ii)    Interest rate risk

Tenaris’ income and operating cash flows are substantially independent from changes in market interest rates. Tenaris’ subsidiaries generally borrow at variable rates. Dalmine has entered into interest rate swaps for long-term debt to hedge future interest payments, converting borrowings from floating rates to fixed rates.

(iii)    Concentration of credit risk

Tenaris has no significant concentrations of credit risk from customers. No single customer accounts for more than ten percent of Tenaris’ sales.

Tenaris’ subsidiaries have policies in place to ensure that sales of products and services are made to customers with an appropriate credit history, or use credit insurance, letters of credit and other instruments to reduce credit risk whenever deemed necessary. These subsidiaries maintain allowances for potential credit losses.

Derivative counterparties and cash transactions are limited to high credit quality financial institutions.

(iv)    Liquidity risk

Prudent liquidity risk management recommends maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions.

(2)     ACCOUNTING FOR DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES

Derivative financial instruments are initially recognized in the balance sheet at cost and subsequently marked to market. Tenaris does not hedge its net investments in foreign entities.

Derivative transactions and other financial instruments, while providing economic hedges under risk management policies, do not qualify for hedge accounting under the specific rules in IAS 39. Changes in the fair value of any derivative instruments that do not qualify for hedge accounting under IAS 39 are recognized immediately in the income statement. The fair values of derivative instruments are disclosed in Note 23.

(3)     FAIR VALUE ESTIMATION

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The estimated fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

For the purpose of estimating the fair value of financial assets and liabilities with maturities of less than one year, the face value less any estimated credit adjustments was considered. For other investments, including, the trust fund, quoted market price was used. As most borrowings include variable rates or fixed rates that approximate market rates and the contractual repricing occurs every 3 to 6 months, the fair value of the borrowings approximates its carrying amount and it is not disclosed separately.

In assessing the fair value of derivatives and other financial instruments, Tenaris uses a variety of methods, including estimated discounted value of future cash flows using assumptions based on market conditions existing at each balance sheet date.

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     INDEX TO THE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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1 Segment information

Primary reporting format – business segments

Tenaris’ main business segment is the manufacturing and trading of seamless pipes.

The main transactions between segments, which were eliminated in the consolidation, relate to sales of Energy to Seamless units for USD 62,755 in 2003, USD 50,021 in 2002 and USD 37,067 in 2001. Other such transactions include sales of scrap and pipe protectors from Other segments to Seamless units for USD 37,647, USD 22, 269 and USD 34,934 in 2003, 2002 and 2001, respectively.

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Secondary reporting format – geographical segments