Schoeller-Bleckmann Oilfield Equipment AG

EANS-News: Schoeller-Bleckmann Oilfield Equipment AG
Annual result 2015

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annual report/annual result

Schoeller-Bleckmann Oilfield Equipment AG: Annual result 2015 

- Massive decline of global drilling activity impacted business result 
- Yet positive EBIT before one-off effects and free cashflow at record level
- Fundamentally sound balance sheet structure: Liquid funds grown to nearly 
  MEUR 200 
- Dividend proposal EUR 0.50 per share

Ternitz/Vienna, 17 March 2016. Schoeller-Bleckmann Oilfield Equipment AG (SBO), 
listed on the ATX market of the Vienna Stock Exchange, had to face a massive 
decline of global drilling activities by 45 % in the 2015 financial year, as 
did the entire oilfield service industry. Despite this extremely difficult 
environment, SBO managed to generate a positive operative result (EBIT) before 
impairments and a record free cashflow. Moreover, the companys significantly 
increased its liquid funds.

Gerald Grohmann, CEO of SBO: "The oilfield service industry experienced a 
profound downturn in 2015 - and this downturn is not over yet. We expect 
another difficult business year in 2016. However, with its fundamentally sound 
balance sheet structure and improved cost structure SBO is excellently prepared 
to meet the challenges. As before, we will pursue active cost management and, 
at the same time, systematically continue the search for attractive acquisition 
targets which fit in well with our strategy. We use the downturn in order to 
align SBO to ensure that it can fully benefit from the next upswing." 

In the 2015 financial year, sales went down by 35.8 % to MEUR 313.7 
(2014: 488.6). Earnings before interest, taxes, depreciation and amortisation 
(EBITDA) fell by 63.1 %, to MEUR 55.1 (2014: MEUR 149.3). The EBITDA margin 
came to 17.6 % (2014: 30.6 %). Nevertheless, SBO managed to generate a positive 
operating result (EBIT) before one-off effects of MEUR 3.7 (2014: MEUR 106.7). 
EBIT after one-off effects came to MEUR minus 22.1 (2014: MEUR 67.5). Profit 
after tax ended up at MEUR minus 19.0 (2014: MEUR 54.0). However these figures 
include one-off effects totalling MEUR 20.3, of which MEUR 18.3 were not cash 
effective. These result mainly from goodwill impairments and valuation of 
option commitments. Hence earnings per share were EUR minus 1.19 
(2014: EUR 3.38). 

The company's equity ratio as at 31 December 2015 stood at 60.8 % 
(31 December 2014: 56.9 %). Free cashflow climbed by 2,373.2 % to a record 
level of MEUR 85.1 (2014: MEUR 3.4), and the cashflow from operating activities 
rose by 52.3 % to MEUR 103.4 (2014: MEUR 67.9). As at 31 December 2015, SBO had 
a net cash position of MEUR 26.2 (31 December 2014: net debt of MEUR 35.6). 
Liquid funds went up by 50.7 % to MEUR 196.3 (31 December 2014: MEUR 130.2). 

To ensure dividend continuity and based on the fundamentally sound balance 
sheet structure, the Executive Board proposes to pay a dividend for the 2015 
financial year of EUR 0.50 per share. 

Market development 2015

According to the International Energy Agency (IEA), average global oil 
consumption rose by 1.8 mb/d to 94.6 mb/d in 2015 (2014: 92.8 mb/d). Although 
demand was growing, the oil market remained considerably oversupplied with an 
average production of 96.4 mb/d exceeding consumption by 1.8 mb/d. Non-OPEC 
countries also stepped up their production by 1.4 mb/d more than in the 
previous year, while OPEC countries - mainly Saudi Arabia and Iraq - drove 
their output up by 1.2 mb/d. In the second half of the year, the persistent 
oversupply resulted in another massive oil price slump. Throughout the year, 
the global rig count (number of active drilling rigs) contracted by 45 % 
to 1,969 rigs in December 2015 (December 2014: 3,570 rigs). 

Business development 2015

Due to the massive decline of drilling activities, bookings received in the 
2015 financial year contracted by 59.1 % to MEUR 203.6, following record 
bookings in the previous year (2014: MEUR 497.9). The order backlog of 
MEUR 34.3 at year-end 2015 was down 71.9 % from last year's reading 
(31 December 2014: MEUR 122.1) and concerned mainly the segment of High 
Precision Components. 

SBO subdivides its business activities into two segments: High Precision 
Components (manufacture of high-precision drillstring components) and Oilfield 
Equipment (non-magnetic drill collars, drilling motors, circulation tools, 
completion tools and other components including service and repair). Both 
segments were severely hit by the market collapse. In 2015, the segment of 
High Precision Components developed in line with reduced CAPEX-spending of 
customers. Bookings and sales went down considerably. All of these factors led 
to a negative result before tax. In the segment of Oilfield Equipment the sharp 
curtailment of global drilling activities also had a dampening effect on the 
business. Here, SBO posted declining bookings and sales too. 

Investments

In the 2015 financial year, total investments in tangible fixed assets amounted 
to MEUR 22.9 (2014: MEUR 43.8). These were largely limited to maintenance 
investments and restructuring activities. Additionally, SBO selectively 
invested in site extensions. 

The SBO share

In 2015, the SBO share price developed largely in line with the oil price: 
On 2 January 2015, the share started into the trading year at EUR 60.00 per 
share and reached its annual high of EUR 67.22 on 11 June 2015. Throughout the 
year, the share - like the entire oilfield service sector - came under pressure 
as the oil price continued to fall and arrived at EUR 50.41 at the end of the 
year, down 16.0 % from the beginning of the year. 

Outlook 2016

The International Energy Agency (IEA) projects oil demand to rise further in 
2016 by 1.2 mb/d to 95.8 mb/d (2015: 94.6 mb/d). On the supply side, IEA 
expects production in non-OPEC countries to drop by 0.75 mb/d to 57.0 mb/d in 
2016 due to their massive cuts on E&P spending. The crucial issue will be how 
Saudi Arabia, Iran and Russia will behave and how long OPEC will stick to its 
course of keeping production much higher than at 30 mb/d to counteract oil 
price recovery. The current policy has led to enormous loss of income for OPEC 
countries. It is not clear how long Saudi Arabia and the other members of OPEC 
will be able and willing to accept this situation.

SBO therefore also braces for a highly challenging market situation continuing 
throughout 2016. According to market surveys, oilfield service providers will 
further cut back on their exploration and production (E&P) spending by up 
to 20 % globally in 2016. Thus, E&P spending will, for the first time 
since 1986, drop in two consecutive years. The main difference to the 1986 
downturn is, however, the clearly more robust oil demand and the significant 
lower spare capacity these days. This constellation of decreasing spending and, 
as a consequence, falling oil supply, and growing demand should result in a 
sustained recovery of the oil price and trigger new investments. It is 
impossible to predict today when this will occur. Visibility in the market 
remains very low. But past experience in the oilfield service industry has 
told us one thing: Each downturn is followed by an upturn. And the sharper and 
longer the downturn, the steeper the next upswing will normally be. 

With its high cash position, current net liquidity, a positive free cashflow 
and a high equity ratio, SBO is also prepared for a lengthy downturn. In 2016,
the company will systematically continue the counter-measures to combat the 
decline, implemented in 2015: Cost-cutting programmes will be stepped up and 
capacities adjusted further to the market situation. Site optimisation in the 
United States will be completed by mid-year. The strategy to develop new 
markets for the products of SBO in the Oilfield Equipment segment will be 
pursued consistently. Due to its profoundly strong balance sheet, SBO is able 
to push ahead with its search for strategically fitting acquisition targets.



Key figures:                                2015         2014     Change in %

Sales                               MEUR   313.7        488.6     -35.8
Earnings before interest, taxes,
depreciation and amortisation 
(EBITDA)                            MEUR    55.1        149.3     -63.1
EBITDA margin                       %       17.6         30.6      -    
EBIT before one-off effects         MEUR     3.7        106.7     -96.5
EBIT margin before one-off effects  %        1.2         21.8      -    
EBIT after one-off effects          MEUR   -22.1         67.5     N/A
EBIT margin after one-off effects   %       -7.0         13.8      -    
Profit before tax                   MEUR   -20.0         80.0     N/A
Profit after tax                    MEUR   -19.0         54.0     N/A
Earnings per share                  EUR    -1.19         3.38     N/A
Free cashflow                       MEUR    85.1         3.4      2,373.2
Dividend per share                  EUR     0.5*         1.50     -66.7
Headcount                                  1,135        1,720     -34.0

* proposed 


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 31 December 2015, SBO employed a workforce of 1,135 
worldwide (31 December 2014: 1,720), thereof 376 in Ternitz/Austria and 399 in 
North America (including Mexico).


SBO financial calendar 2016


27 April 2016           Annual General Meeting
9 May 2016              Ex-dividend day
10 May 2016             Record date
11 May 2016             Dividend payment date
25 May 2016             Result Q1/2016
24 August 2016          Result H1/2016
23 November 2016        Result Q3/2016

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
 

 


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