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Ternitz/Vienna, 24 August 2016. Schoeller-Bleckmann Oilfield Equipment AG (SBO),
listed on the ATX market of the Vienna Stock Exchange, was,like the entire
oilfield service industry, confronted with a continued deterioration of the
market environment in the first half of 2016. Oil companies cut back their
spending even further, the number of globally active drill rigs thus dropped
once again. Since the downturn started in 2014, the rig count has contracted by
more than 60 %.
In this extremely difficult environment, SBO generated a positive operating
cashflow and has a fundamentally strong balance sheet structure. Due to its
financial strength, SBO is in a position to pursue targeted investments in
implementing its long-term growth strategy even in the current cycle, such as
illustrated by the acquisition of US-based "Downhole Technology LLC" (Downhole
Technology) on 1 April 2016.Integration of Downhole Technology is running to
schedule. At the same time, SBO continues to optimise its cost structure. Hence,
the company decided, at the end of the second quarter, to restructure its
business activities in Singapore.
"The downturn is not over yet. While signs are increasing that supply and demand
in the oil market will gradually move towards a balance, we cannot really speak
of a reversal of the trend yet", comments Gerald Grohmann, CEO of SBO. "Our
focus is on navigating SBO safely through the cycle. We are aligning the company
to ensure it is perfectly prepared for the next upswing based on an improved
cost structure and strengthened market position. If demand for oil continues to
rise and spending of the oil companies remains low, it is only a matter of time
when overproduction turns into undersupply."
HY 2016 Results
Sales in the first half of 2016 went down by 52.9 % to MEUR 88.0 (1-6/2015: MEUR
186.9). In the first half of 2015, SBO had still profited from the record
bookings posted in 2014. As customers showed strong restraint in ordering,
bookings dropped by 28.4 %, to MEUR 75.0 (1-6/2015: MEUR 104.8). The order
backlog at the end of the first half of 2016 stood at MEUR 21.1, following MEUR
34.3 as at 31 December 2015 and MEUR 60.9 as at 30 June 2015. Downhole
Technology has delivered positive contributions to SBO's business development
from the beginning of the second quarter of 2016.
Earnings before interest, taxes, depreciation, and amortisation (EBITDA) were
MEUR minus 5.7 (1-6/2015: MEUR 45.1). Operating result before one-off effects
came to MEUR minus 28.9. By considering one-off expenses for due diligence of
MEUR 2.3 and expenses for impairment on property, plant and equipment, and
goodwill as well as restructuring of MEUR 5.0, therefore totalling MEUR 7.3,
reported operating result (EBIT) came to MEUR minus 36.2 (1-6/2015: MEUR 19.3).
The financial result in the first half of 2016 came to MEUR 9.4 (1-6/2015: MEUR
minus 14.6), including a positive one-off effect of MEUR 10.5 from the
revaluation of an option commitment. Profit before tax stood at MEUR minus 26.8
(1-6/2015: MEUR 4.8). Profit after tax was MEUR minus 16.9 (1-6/2015: EUR 0.0).
Earnings per share arrived at EUR minus 1.06 (1-6/2015: EUR 0.0). The market
collapse was reflected also in the margins: The EBITDA margin was minus 6.5 %
(1-6/2015: 24.1 %), the EBIT margin was minus 41.1 % (1-6/2015: 10.4 %). The
pre-tax margin came to minus 30.4 % (1-6/2015: 2.6 %).
Regardless of the difficult market conditions, SBO generated a positive cashflow
from operating activities of MEUR 18.5 in the first half of 2016 (1-6/2015: MEUR
57.1). The company has a profoundly strong balance sheet structure: Even after
the acquisition of 68 % of the shares in Downhole Technology at a purchase price
of MUSD 103, SBO's equity ratio as at 30 June 2016 totalled a sound 54.7 % (31
December 2015: 60.8 %). Liquid funds stood at MEUR 137.9 (31 December 2015: MEUR
196.3), and net debt at MEUR 59.7 (31 December 2015: net liquidity MEUR 26.2).
Spending for property, plant and equipment and intangible assets (CAPEX) was
curtailed by 54.0 % to MEUR 5.9 (1-6/2015: MEUR 12.9) compared to the first half
of 2015. Purchase commitments for expenditure in property, plant and equipment
as at 30 June 2016 were MEUR 0.2 (30 June 2015: MEUR 2.5).
The downturn that has hit the oilfield service industry since the fourth quarter
of 2014 is not over yet. Oil companies are continuously and heavily cutting back
on their investments: Following their massive reduction of spending for
exploration and production (E&P Spending) by 21 % in 2015, further reductions of
26 % are expected for 2016. Assuming that we continue to see a decline in
production combined with rising demand for oil, it is fair to expect that we are
heading towards a significant global supply deficit. At that point in time, new
spending will be required. It remains unclear when exactly this will be the
case. It is widely believed that a balance between demand and supply should be
reached in 2017. In any event, past experience in the oilfield service industry
has told us one thing: The sharper and longer the downturn, the steeper the next
upswing usually is.
With its strong cash balance, low net debt and high equity ratio, SBO is
prepared even for a lengthy downturn. The company is carefully reviewing
potential cost saving measures and continues the course initiated in 2014 and
2015 to combat the decline in 2016. SBO is improving its cost base and makes
targeted investments for growth: Cost-cutting programmes are consistently
implemented, and capacities are adjusted further to the market situation. The
strategy to develop new markets for the products of SBO in the Oilfield
Equipment segment will be pursued.
Following the acquisition of Canadian "Resource Well Completion Technologies
Inc." (Resource) in November 2014, SBO took over US-based Downhole Technology on
1 April 2016. With Resource and Downhole Technology, SBO now has become a
leading provider of products in the fields of "sliding sleeve" and "plug-n-
perf", the two dominating completion technologies.
Based on targeted investments to expand the Completion business and the
implementation of ongoing restructuring activities, SBO will be well prepared to
benefit fully from the next upswing as technology and market leader.
Comparison of key figures
| | | 1-6/2016| 1-6/2015| Change in %|
|Earnings | | | | |
|before | | | | |
|interest, | | | | |
|taxes, | MEUR| -5.7| 45.1| N.A.|
|depreciation | | | | |
|and | | | | |
|amortisation | | | | |
|Profit before| MEUR| -26.8| 4.8| N.A.|
|Profit after | MEUR| -16.9| 0.0| N.A.|
|Earnings per | EUR| -1.06| 0.0| N.A.|
|Cashflow from| | | | |
|operating | MEUR| 18.5| 57.1| -67.7|
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 June 2016, SBO has employed a workforce of1,183
worldwide (30 June 2015:1,279), thereof 317 in Ternitz/Austria and 520 in North
America (including Mexico).
Further inquiry note:
Andreas Böcskör, Head of Investor Relations
Schoeller-Bleckmann Oilfield Equipment AG
A-2630 Ternitz, Hauptstraße 2
Tel: +43 2630/315 DW 252, Fax: DW 101
end of announcement euro adhoc
company: Schoeller-Bleckmann Oilfield Equipment AG
sector: Oil & Gas - Upstream activities
indexes: WBI, ATX Prime, ATX
stockmarkets: official market: Wien