EANS-News: C.A.T. oil continues its growth path in Q1 2014 despite challenging
environment
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Corporate news transmitted by euro adhoc. The issuer/originator is solely
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Subtitle: Operating performance accelerated across all segments despite harsh
weather conditions in Western Siberia
Devaluation of the Russian rouble by around 20% yoy impacts financial results:
Revenues down 8.3% yoy to EUR 90.7 million; EBITDA decreased by 13.1% yoy to EUR
20.9 million
Sustained high profitability with EBITDA margin of 23%
Net income up 32.1% yoy to EUR 9.5 million
Investment program 2014-16 fully on track
CEO Manfred Kastner reiterates outlook 2014: With our clear goal in mind to
achieve sustainable growth and value generation, our view of 2014 remains
unchanged. We continue to expect revenues in the range of EUR 420 to 450 million
and EBITDA of EUR 113 to 121 million.
quarterly report
C.A.T. oil AG (O2C, ISIN: AT0000A00Y78),one of the leading providers of oil and
gas field services in Russia and Kazakhstan, continued its growth path and
accelerated its operating performance in the first quarter of the year. Despite
reporting 2.5 times higher weather-related downtime days yoy, the Company
increased its total service job count as well as its drilling and sidetracking
footage by 4.3% and 17.9% yoy, respectively. The Russian rouble, which the
prevailing majority of C.A.T. oil's service contracts are denominated in, was
persistently weak during the first three months of the year and as such had
an impact on the financial results of the Company. Despite an 18.9% yoy rouble
devaluation relative to the euro, the first quarter revenues of C.A.T. oil
contracted by only 8.3% yoy to EUR 90.7 million (Q1 2013: EUR 98.9 million).
Revenues in the first quarter were bolstered by solid customer demand and high
operating activity levels. Although the EBITDA fell 13.1% yoy to EUR 20.9
million (Q1 2013: EUR 24.0 million), the EBITDA margin of 23.0%, down by only
1.3 percentage points yoy, once again demonstrated the Company's ability to
operate on a highly profitable basis. As such, C.A.T. oil confirms that the
implementation of its 2014-16 investment program of EUR 390 million is fully on
track. The Company reiterates its positive outlook for FY2014.
Manfred Kastner, CEO of C.A.T. oil, commented: "The first quarter 2014 marked a
challenging, but successful start into the year for us. With our clear goal in
mind to achieve sustainable growth and value generation, our view of 2014
remains unchanged. We continue to deliver state-of-the-art services and strive
to be a partner of choice for our customers in our markets. Our 2014-16
expansion program to further accommodate our customers growing demand for more
advanced services is well underway. We thus confidently reiterate our guidance
for 2014 and continue to expect revenues in the range of EUR 420 to 450 million
and an EBITDA of EUR 113 to 121 million (based on the average rouble-to-euro
exchange rate of 48)."
Top-line development reflects the Russian rouble devaluation
In the first quarter 2014, C.A.T. oil faced two key challenges: Extremely low
temperature in Western Siberia during the months of January and February,
resulting in an abnormally high number of downtime days, as well as a steep
rouble devaluation which negatively impacted the Company's financial results.
The Company's consolidated revenues contracted 8.3% yoy to EUR 90.7 million (Q1
2013: EUR 98.9 million). In rouble terms, however, C.A.T. oil increased its
revenues by 9.4% yoy. Despite the challenging environment, C.A.T. oil continued
its growth path and materially elevated its operating activity levels across all
reportable segments. The total job count accelerated 4.3% yoy to 909 jobs (Q1
2013: 872 jobs), whereas the average per job revenue declined 12.0% yoy to TEUR
100 (Q1 2013: TEUR 113) in the aftermath of the rouble devaluation.
The Company's Well Services segment's revenues decreased by 14.0% yoy to EUR
47.0 million (Q1 2013: EUR 54.7 million). The segment's job count staged an
upturn of 4.0% yoy to 856 jobs (Q1 2013: 823 jobs) driven by an increasing
demand for multi-stage fracking services. The average per job revenue was down
by 17.3% yoy to TEUR 55 (Q1 2013: TEUR 67) mainly owing to the negative foreign
exchange effect.
Drilling, Sidetracking and IPM segment reported a decline in revenues of 2.9%
yoy to EUR 42.9 million (Q1 2013: EUR 44.2 million), reflecting, on the one
hand, a 17.9% yoy gain in the total drilling and sidetracking footage to 70
thousand meters (Q1 2013: 59 thousand meters) and, on the other hand, the
devaluation effect. The segment's job count was up 9.0% yoy to 53 wells and
sidetracks (Q1 2013: 49 wells and sidetracks), whereas the share of horizontal
wells and sidetracks surged to 57% of the Company's overall drilling and
sidetracking mix (Q1 2013: 40%).
Tight cost control and high profitability
While dynamically growing its operating activity levels, C.A.T. oil successfully
managed its operating cost base. In the first three months of the year, the
Company's cost of sales went down 6.1% yoy to EUR 76.2 million (Q1 2013: EUR
81.1 million). Given a 30% expansion in C.A.T. oil's sidetracking capacity in
2013 along with the new staff additions, the Company's total weighted average
headcount rose by 9.3% yoy to 2,837 employees (Q1 2013: 2,595 employees). With
more than 90% of the Company's operating costs in roubles, the effect of the
rouble devaluation on the Company's margins was minimal. However, the steep rise
in weather-related downtime days put a strain on the margins. C.A.T. oil's
earnings before interest, tax, depreciation and amortization (EBITDA) diminished
13.1% yoy to EUR 20.9 million (Q1 2013: EUR 24.0 million). Nonetheless, the
EBITDA margin stayed at a high level of 23.0% (Q1 2013: 24.3%). The Company's
earnings before interest and tax (EBIT) decreased 16.1% to EUR 9.7 million (Q1
2013: EUR 11.5 million), resulting in the EBIT margin of 10.7% (Q1 2013: 11.7%).
An impressive 32.1% yoy upturn in net income
The Company's net financial result improved to EUR 0.1 million from EUR -1.6
million in Q1 2013, mainly due to the combined effect of foreign currency gains
of TEUR 4 (Q1 2013: losses of EUR 1.0 million) and net interest income of EUR
0.1 million (Q1 2013: expenses of EUR 0.5 million). Based on the positive net
financial result and a significant contraction in income tax expenses, the
Group's net income surged 32.1% yoy to EUR 9.5 million in Q1 2014 (Q1 2013: EUR
7.2 million).
Solid financial foundation with headroom for further growth
Despite a steep yoy rouble devaluation, the Company's cash flow from operating
activities was down only 6.1% yoy to EUR 5.7 million in Q1 2014 (Q1 2013: EUR
6.1 million). Driven by successful execution of the Company's 2014-16 investment
program, capital expenditures surged 18.9% yoy to EUR 17.5 million (Q1 2013: EUR
14.7 million). Cash flow from investing activities was a net outflow of EUR 17.3
million (Q1 2013: net outflow of EUR 14.0 million) and cash flow from financing
activities was a net inflow EUR 4.0 million (Q1 2013: net inflow of EUR 3.7
million).
As of 31 March 2014, C.A.T. oil's cash and cash equivalents stood at EUR 31.9
million, down 25.1% from EUR 42.6 million as of 31 December 2013. The Company
had net cash of EUR 10.3 million as of 31 March 2014 compared to net cash of EUR
24.6 million as of 31 December 2013. The Company's equity ratio remained solid
and amounted to 70.1% as of 31 March 2014 (31 December 2014: 71.4%).
Investment program 2014-16 fully intact
In November 2013, C.A.T. oil announced its 2014-16 capital expenditure plans of
EUR 390 million. This investment program stays fully intact. The Company will
invest EUR 135 million in 2014 aiming at expansion of the operating capacities
by 67% for drilling, 18% for sidetracking and 7% for fracking in the second half
of the year. Execution of the program and manufacturing of the ordered new
capacities are on schedule.
Supportive market environment
The Russian oilfield services market remains supportive to the Company's
expansionary plans as customers' demand for more complex and technologically
intense services accelerates. State-of-the-art horizontal drilling and multi-
stage fracking are amongst C.A.T. oil's important selling propositions. Shift in
customers' preferences towards these services is perfectly mirrored by the
Company's steeply growing share of horizontal jobs in the total drilling and
sidetracking footage and multi-stage fracks in the total fracking job count.
This development demonstrates C.A.T. oil's advantageous position in the market.
Outlook reiterated for FY2014
Since the publication of the FY2013 results on 23 April 2014, the Company has
been awarded additional service orders worth EUR 8 million for 2014 and EUR 18
million for 2015 (based on the average rouble-to-euro exchange rate of 48).
This, once again, shows the customers' trust and confidence in C.A.T. oil. As a
results, the Company's 2014-16 total order book stands at EUR 780 million as of
27 May 2014 (28 May 2013: EUR 538 million for 2013-15). Thereof, the 2014 order
book amounts to EUR 423 million (28 May 2013: EUR 400 million).
Based upon encouraging industry trends and a supportive operating environment as
well as the record order book the Company reiterates its guidance: In Fiscal
Year 2014 C.A.T. oil continues to expect revenues in the range of EUR 420 to 450
million and EBITDA of EUR 113 to 121 million (based on the average rouble-to-
euro exchange rate of 48).
www.catoilag.com
Press contact:
FTI Consulting
Thomas M. Krammer
Phone: +49 (0)69 92037-183
Email: thomas.krammer@fticonsulting.com
Steffi Fahjen
Phone: +49 (0)69 92037-115
Email: steffi.fahjen@fticonsulting.com
About C.A.T. oil AG:
C.A.T. oil AG is one of the leading independent oil and gas field service
contractors in Russia and Kazakhstan and is listed on the Frankfurt Stock
Exchange (SDAX). C.A.T. oil provides a range of high quality services, which
enable oil and gas producers to extend lifecycle of their fields or bring yet
unexploited oil and gas reserves to production.
Since its foundation in 1991 in Celle, Germany, C.A.T. oil has built up a
leading hydraulic fracturing service, a very effective method of well
stimulation by cracking rock formations with pressurized fluids, in Russia and
Kazakhstan. Following its IPO in 2006, the Company developed a second core
service of sidetrack drilling in 2006-08 and has established a strong presence
in Russia's sidetrack drilling market. Sidetrack drilling is a term used to
describe drilling of a new wellbore from the upper section of an existing well.
In 2011-12, the Company launched the next phase of its growth and
diversification strategy and set up high class drilling operations as a third
core service offering. High class drilling is the classical technology of
drilling vertical, inclined and horizontal wells for extraction of oil and gas.
In total, the Company has already invested more than EUR 450 million in growth
and diversification since its IPO in 2006.
Following the successful set up of high class drilling in 2011-12, C.A.T. oil
introduced its new segment reporting in 2013 clustering its activities in "Well
Services" (fracturing, cementing and completion operations) and "Drilling,
Sidetracking and IPM (Integrated Project Management)".
C.A.T. oil's customer base includes the leading Russian and Kazakh oil and gas
producers such as Rosneft, Lukoil, Gazprom Neft, Tomskneft VNK, Slavneft,
Russneft and KazMunaiGaz. The Company has long-standing relationships with these
customers and has been a reliable service provider since its market entrance in
the early nineties.
C.A.T. oil has its headquarters in Vienna. The Company's Q1 2014 weighted
average headcount stood at 2,837 people, most of which are based in Russia and
Kazakhstan.
Key financial figures for Q1 2014
[million EUR] Q1 2014 Q1 2013 Change (%)
Revenues 90.7 98.9 -8.3
Cost of sales 76.2 81.1 -6.1
Gross profit 14.6 17.8 -18.0
EBITDA 20.9 24.0 -13.1
EBITDA margin (%) 23.0 24.3
EBIT 9.7 11.5 -16.1
EBIT margin (%) 10.7 11.7
Net income 9.5 7.2 32.1
Earnings per share 0.194 0.147 32.1
(EUR)
Equity Ratio (%)[1] 70.1 71.4
Cash flow from 5.7 6.1 -6.1
operating activities
Cash flow from -17.3 -14.0 23.8
investing activities
Cash flow from 4.0 3.7 9.3
financing activities
Cash and cash 31.9 42.6 -25.1
equivalents1
Total job count 909 872 4.3
Per-job revenue 100 113 -12.0
(thou. EUR)
Employees 2,837 2,595 9.3
[1] As of 31 March 2014 and 31 December 2013 respectively
Further inquiry note:
Thomas Krammer
Tel: +49(0)69-92037-183
Email: thomas.krammer@fticonsulting.com
end of announcement euro adhoc
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company: C.A.T. oil AG
Kärntner Ring 11-13
A-1010 Wien
phone: +43(0) 1 535 23 20 - 0
FAX: +43(0) 1 535 23 20 - 20
mail: ir@catoilag.com
WWW: http://www.catoilag.com
sector: Oil & Gas - Upstream activities
ISIN: AT0000A00Y78
indexes: SDAX, Classic All Share, Prime All Share
stockmarkets: regulated dealing/prime standard: Frankfurt
language: English
