Schoeller-Bleckmann Oilfield Equipment AG
EANS-News: Schoeller-Bleckmann Oilfield Equipment AG
Very challenging market
environment reflected in operating result - Nonetheless, record free cash-flow
and liquid funds increased - highly robust balance sheet structure with equity
ratio of 59%
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9-month report
Ternitz/Vienna, 26 November 2015. The entire oilfield service industry was hit
by the expected massive slump of drilling activity in the first nine months of
2015. Schoeller-Bleckmann Oilfield Equipment AG (SBO) responded at an early
stage - already in Q3 2014 - by taking a set of countermeasures to guide the
company safely through the downturn. Naturally, the market collapse was
reflected in the earnings figures of SBO. Nevertheless, SBO was able, in the
first nine months, to generate positive operating income (EBIT) before
impairments, record free cash-flow and to increase liquid funds in this
extremely difficult environment, which worsened even further throughout the
third quarter.
Sales contracted by 27.8 %, to MEUR 257.6 (1-9/2014: MEUR 356.6). Earnings
before interest, taxes, depreciation, and amortisation (EBITDA) fell by 46.5 %,
to MEUR 55.0 (1-9/2014: MEUR 102.9). Earnings before interest and taxes (EBIT)
before impairments dropped by 77.1 %, to MEUR 16.5 (1-9/2014: MEUR 72.0). Profit
before tax in the first nine months came to MEUR 0.3 (1-9/2014: MEUR 64.5).
Profit after tax fell to MEUR minus 2.0 (1-9/2014: MEUR 46.8). Earnings per
share arrived at EUR minus 0.13 (1-9/2014: EUR 2.93).
Gerald Grohmann, CEO of SBO: "As we realised early that 2015 was going to be a
very challenging year for the oilfield service industry, we started to take
countermeasures still in 2014. We will continue to pursue this course
systematically. The market environment deteriorated further in the third quarter
and so we are preparing for this downturn to last longer than those seen in the
past. But we know how to deal with the cycles in our industry. We are now
positioning the company to ensure that it can fully benefit from the next
upswing that is bound to set in sooner or later."
Due to the persistently challenging market situation, SBO made goodwill
impairments of MEUR minus 21.7 and an impairment of fixed assets of MEUR minus
1.9, which were largely neutralised by the revaluation of option commitments,
which delivered earnings of MEUR plus 21.7 in the third quarter. As a
consequence, option commitments totalling MEUR 9.7 were released in the first
nine months.
The EBITDA margin was 21.4 % (1-9/2014: 28.9 %), the EBIT margin before
impairments stood at 6.4 % (1-9/2014: 20.2 %), and the EBIT margin after
impairments went to minus 2.8 %. The pre-tax margin was 0.1 % (1-9/2014: 18.1
%).
Despite the highly challenging environment SBO achieved a record free cash-flow
in the first nine months of MEUR 70.9 (1-9/2014: MEUR 27.5) and increased its
liquid funds. With its equity ratio of 59.4 % the company has a very sound
balance sheet structure. Cash-flow from operating activities climbed by 53.7 %,
to MEUR 86.1 (1-9/2014: MEUR 56.0). As at 30 September 2015, SBO had a net cash
position of MEUR 12.2 (31 December 2014: net debt of MEUR 35.6; 30 September
2014: net debt of MEUR 9.7). Liquid funds went up by 44 %, to MEUR 188.0 (31
December 2014: MEUR 130.2). This rise was mainly attributable to a decrease of
the net working capital of MEUR 36.5.
Bookings dropped by 58.2%, to MEUR 154.2 (1-9/2014: MEUR 369.4). The order
backlog recorded at the end of the third quarter was MEUR 40.2, down 67.5 % from
last year's reading (30 September 2014: MEUR 123.6).
Outlook
According to the International Energy Agency (IEA) oil demand is set to go up by
1.8 mb/d in full 2015, to an average of 94.6 mb/d (2014: 92.7 mb/d). For 2016,
the IEA anticipates decelerating growth to come to 1.2 mb/d (IEA, Oil Market
Report, November 2015).
Due to massive curtailment of E&P spending in non-OPEC countries, the
International Energy Agency expects production in non-OPEC countries to drop by
0.6 mb/d in 2016. Therefore, our assumption is that the balance between oil
demand and supply will stabilise over the next months. It is impossible to
assess today to which extent OPEC will compensate for the decline in production
and growing demand as described above.
In any event, SBO prepares for a continuation of the highly challenging market
environment. It cannot be predicted at the moment at which point customers of
SBO will abandon their restrictive spending policies. SBO endeavours to make
full use of existing customer relations. However, as the level of bookings is
low, the company is facing significant challenges. SBO will consistently
continue implementing the countermeasures initiated in 2014 in the months ahead.
SBO merged its two US subsidiaries "Godwin-SBO LLC" and "Knust-SBO LLC" as at 1
October 2015. Production of newly founded "Knust-Godwin LLC" will be bundled at
the site of Godwin. The merger aims to create structural and sustainable cost
benefits, although capacities will remain at the same level.
Those measures can compensate for only part of the fierce decline in demand in
the established core markets. However, our positive operating cash-flow, low
debt and high level of liquid funds provide SBO with a stable basis to overcome
the current cyclical downturn. Therefore, SBO is in a position to intensify its
search for strategically fitting acquisition targets, even in this difficult
environment. As a result, the company will be excellently positioned to fully
meet the demand that should re-emerge from the next upswing.
Comparison of key figures
1-9/2015 1-9/2014 Change
Sales in MEUR 257.6 356.6 -27.8 %
EBITDA in MEUR 55.0 102.9 -46.5 %
EBITDA margin in % 21.4 28.9 -
EBIT before impairments in MEUR 16.5 72.0 -77.1 %
EBIT margin before impairments in % 6.4 20.2 -
EBIT after impairments in MEUR -7.1 72.0 -
EBIT margin after impairments in % -2.8 20.2 -
Profit before tax in MEUR 0.3 64.5 -99.6 %
Profit after tax in MEUR -2.0 46.8 -
EPS* in EUR -0.13 2.93 -
Headcount** in numbers 1,231 1,663 -26.0 %
*) based on average number of shares outstanding
**) reporting date 30 September.
Schoeller-Bleckmann Oilfield Equipment AG is the global market leader in
high-precision components and a leading supplier of oilfield equipment for the
oilfield service industry. The business focus is on non-magnetic drillstring
components and high-tech downhole tools for drilling and completing directional
and horizontal wells. As of 30 September 2015, SBO has employed a workforce of
1,231 worldwide (30 September 2014: 1,663), thereof 399 in Ternitz/Austria and
455 in North America (including Mexico).
Further inquiry note:
MMag Florian Schütz, MBA
Head of Investor Relations SBO
Tel.: +43 2630 315-251
f.schuetz@sbo.co.at
end of announcement euro adhoc
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company: Schoeller-Bleckmann Oilfield Equipment AG
Hauptstrasse 2
A-2630 Ternitz
phone: 02630/315110
FAX: 02630/315101
mail: sboe@sbo.co.at
WWW: http://www.sbo.at
sector: Oil & Gas - Upstream activities
ISIN: AT0000946652
indexes: WBI, ATX Prime, ATX
stockmarkets: official market: Wien
language: English