C.A.T. oil AG

EANS-News: C.A.T. oil AG
Strong earnings growth in 2010 sets solid basis for expansion

• FY2010 revenues of EUR 228.8 million • EBITDA increase of 24.5% - strong profitability with EBITDA margin of 24.7% • Net profit increased from EUR 8.4 million to EUR 19.5 million • Dividend proposal of EUR 0.10 per share

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annual result

Subtitle: • FY2010 revenues of EUR 228.8 million • EBITDA increase of 24.5% - strong profitability with EBITDA margin of 24.7% • Net profit increased from EUR 8.4 million to EUR 19.5 million • Dividend proposal of EUR 0.10 per share

Vienna, 28 April, 2011 (euro adhoc) - C.A.T. oil AG (O2C, ISIN: AT0000A00Y78), one of the leading providers of oil and gas field services in Russia and Kazakhstan, today announced its results for the Full Year 2010, during which the Company was able to successfully utilize the global recovery for further profitable growth and prepare the next milestone of its business development. With revenues of EUR 228.8 million C.A.T. oil exceeded its objective to realize revenues in the range of EUR 215 to 225 million. In addition, C.A.T. oil achieved its goal to substantially increase its profitability: the EBITDA-margin expanded to 24.7% from 19.9% in 2009. EBITDA improved 24.5% yoy to EUR 56.4 million and net profit more than doubled yoy to EUR 19.5 million.

Manfred Kastner, CEO of C.A.T. oil, commented: "We have been more than successful in delivering on all our objectives. Our development in 2010 clearly underlined how well we are able to capitalize on our strong reputation in the market and how successful we are in pursuing our strategic goals. We have further increased our market share in Russia and Kazakhstan and have substantially increased our earnings. 2010 has thus been a year of transition in which we prepared for the next phase of our Company development."

Manfred Kastner continued: "In 2011, the year of our twentieth anniversary, we will expand into Conventional Drilling as our third core business. We will leverage our experience and strong customer relations and we remain com-mitted to delivering high quality services and maintaining efficiency levels as we continue to develop our business."

Revenues of EUR 228.8 million slightly exceed target range

At EUR 228.8 million, revenues developed slightly ahead of the target range of EUR 215 to 225 million. During the reporting period, C.A.T. oil benefitted from higher than expected utilization levels, as well as a favorable rouble-to-euro exchange rate. In comparison to the previous year, revenues remained stable (2009: EUR 228.0 million) which is attributable to three main effects: The outsourcing of low-margin services, the increased proportion of day rate contracts in sidetrack drilling activities and the customer trend towards inhouse procurement of proppant for fracturing operations. The average per job revenue remained stable at TEUR 75.2 in 2010 (2009: TEUR 75.0), primarily reflecting a change in revenue mix.

Efficiency as one of the key value drivers

In 2010, C.A.T. oil once again clearly committed itself to efficiency and lean structures across all operations and processes. C.A.T. oil managed to increase the sidetrack drilling job count by 17.2% yoy and the fracturing job count by 6.3% yoy. In addition, C.A.T. oil continued to concentrate its activities on its core business and outsourced the low-margin services of its business. Accordingly, capacities for workover services were reduced by around 75% and seismic operations, which are part of its Formation Evaluation segment, were further rationalized.

Cost discipline maintained - cost of sales down 3.4% yoy

C.A.T. oil continued its strict cost management across the group. Despite an 8.7% yoy appreciation of the average rouble-to-euro exchange rate during the reporting period, C.A.T. oil was able to further cut costs primarily through the rationalization of its seismic and auxiliary operations. Cost of sales went down 3.4% yoy to EUR 186.7 million in 2010 (2009: EUR 193.3 million). Cost of materials and supply reduced 11.9% yoy to EUR 62.6 million (2009: EUR 71.1 million), primarily owned to the effects of a tighter procurement and more efficient use of disposable materials, fuel and spare parts. General and administrative expenses diminished 1.9% yoy to EUR 18.2 million (2009: EUR 18.6 million). As a result of the outsourcing process, wages and salaries were reduced by 7.5% yoy to EUR 31.3 million (2009: EUR 33.8 million). In 2010, the total weighted average headcount contracted 15.6% yoy to 2,424 employees (2009: 2,873 employees) primarily employed in the Company´s core services.

Significant improvement in earnings and margins

C.A.T. oil increased earnings before interest, tax, depreciation and amortization (EBITDA) by 24.5% yoy to EUR 56.4 million (2009: EUR 45.3 million). The EBITDA margin went up to 24.7% (2009: 19.9%) reflecting C.A.T. oil´s persistent cost management and efficiency improvements. Earnings before interest and tax (EBIT) improved 50.1% yoy to EUR 27.5 million (2009: EUR 18.3 million), and EBIT margin expanded from 8.0% in 2009 to 12.0% during the reporting period. Due to the higher operating profit and financial result as well as the normalized effective corporate tax rate of 30.8% (2009: 43.1%) C.A.T. oil´s net profit more than doubled yoy to EUR 19.5 million from EUR 8.4 million in 2009.

Diversification of the business based on solid financial position

Following the economic recovery in 2010, C.A.T. oil decided to increase its capital expenditure program beyond its maintenance level to a EUR 150 million investment program for the fiscal years 2011 and 2012. The program aims at expanding the Company activities into the area of high-class Conventional- Drilling-Services as a third core business line, as well as strengthening the existing sidetrack drilling and fracturing operations.

Capital expenditures went up to EUR 43.3 million in 2010 (2009: EUR 12.0 million) reflecting the upgrade and expansion of the existing fracturing and sidetrack drilling capacities as well as early prepayments for nine new mobile rigs for Conventional Drilling as a part of the 2011-12 investment program.

Despite a 29.6% yoy increase in funds from operations to EUR 48.3 million (2009: EUR 37.3 million), cash flow from operating activities was down 5.0% yoy to EUR 59.2 million (2009: 62.4 million), primarily reflecting changes in working capital for 2010 compared to 2009. Cash flow from investing activities represented an outflow of EUR 39.7 million (2009: outflow of EUR 10.9 million). Cash flow from financing activities was an outflow of EUR 13.3 million in 2010 (2009: outflow of EUR 36.9 million), reflecting the payment of the 2009 dividend of EUR 14.7 million.

Despite the launch of the new investment cycle C.A.T. oil continued generating positive free cash flow of EUR 19.6 million in 2010 (2009: EUR 51.5 million).

Cash and cash equivalents increased 17.3% yoy to EUR 34.1 million as of December 31, 2010. With an equity ratio of 83.2% as of December 31, 2010. C.A.T. oil operated on the basis of a very strong balance sheet.

Optimistic outlook for 2011

For 2011, C.A.T. oil is optimistic and expects a solid demand growth for its high-class services. The current market environment is very supportive for both, the traditional business and the diversification into High Class Conven-tional Drilling.

At the end of April 2011, the Company orders for the current fiscal year amounted to EUR 230 million (based on a rouble-to-euro exchange rate of 40), including a first order for Conventional-Drilling-Services. C.A.T. oil is confident that it will receive additional orders later in the year and expects the total revenues for 2011 to come in above the current order book level of EUR 230 million. For the fiscal year 2012, C.A.T. oil has also already received first orders of about EUR 37 million, bringing the total order book volume for 2011 and 2012 to a level of EUR 267 million.

In its daily business C.A.T. oil will continue to deliver high quality services and remains committed to efficient processes. Although the diversification into Conventional Drilling can have effects on profitability on a quarterly basis, C.A.T. oil remains committed to profitable growth and expects the 2011 EBITDA-margin to stay close to the 2010 level. Following the successful launch of Conventional Drilling operations, C.A.T. oil anticipates that its third core business line will make a significant contribution to the Company´s revenues, earnings and cash flow in 2012 and beyond.

Dividend proposal of EUR 0.10 per share

Manfred Kastner said: "Due to our outstanding performance in 2010, we are proud that shareholders once again can participate in C.A.T. oil´s successful earnings´ development. At the AGM on June 17, 2011 the Management Board and the Supervisory Board will propose a dividend of EUR 0.10 per share, representing a profit distribution of 25% and thus exceeding the 20% threshold set by our dividend policy."

www.catoilag.com Press contact:

FD                               FD
Carolin Amann                    Thomas Krammer
Tel.: +49 (0)69 92037-132        Tel.: +49 (0)69 92037-183
Email: carolin.amann@fd.com   Email: thomas.krammer@fd.com


About C.A.T. oil AG: 

C.A.T. oil AG is one of the leading providers of oil and gas field services in Russia and Kazakhstan and is listed on the Frankfurt Stock Exchange (SDAX). C.A.T. oil offers a wide spectrum of services to increase the lifecycle of an oil field or to make unexploited oil fields accessible. The Company´s growth is driven by the following factors: Existing oil fields need to be stimulated due to shrinking oil and gas resources in order to optimize capacities. Simultaneously, idle wells are reactivated or made accessible through new methods in order to deploy wells to their maximum. Additionally C.A.T. oil will establish conventional drilling as third core service which allows to activate completely unexploited oil and gas sources. Since its foundation in 1991 in Celle, Germany, C.A.T. oil has built up a leading hydraulic fracturing services business in Russia and Kazakhstan. Following its IPO in 2006 the Company has invested more than EUR 250 million in additional services and capacities: sidetrack drilling has become the Company´s second core business. In November 2010, the Company introduced a comprehensive investment program with a volume of EUR 150 million which will mainly be used to set up conventional drilling as part of the Company´s service portfolio. Furthermore, C.A.T. oil offers coiled tubing, well work-over, cementing and seismic services. Due to the recent investments C.A.T. oil´s fleets and rigs are state-of-the-art and therefore allow for time-efficient and effective deployment. C.A.T. oil´s customer base includes the leading Russian and Kazakh oil and gas producers amongst them Gazprom, KazMunaiGaz, LUKOIL, Rosneft and TNK-BP. C.A.T. oil has a long-standing relationship with these customers and has been a reliable service provider since its market entrance in the early nineties. The Company has its headquarters in Vienna. As of 31 December 2010, the Company employed an average of 2,424 people, most of which are based in Russia and Ka-zakhstan.

Key financial figures for FY 2010 [in million EUR]

FY 2010    FY 2009   Change in %
Revenues                   228.8      228.0       0.3
Cost of sales              186.7      193.3      -3.4
Gross profit                42.1       34.7      21.3
EBITDA                      56.4       45.3      24.5
EBITDA margin (in%)         24.7       19.9
EBIT                        27.5       18.4      50.1
EBIT margin (in%)           12.0        8.0
Net income                  19.5        8.4      >100
Earnings per share
(in EUR)                    0.40       0.17      >100
Equity Ratio (in %)         83.2       84.6

Cash flow from
operating activities        59.2       62.4      -5.0
Cash flow from
investing activities       -39.7      -10.9      >100
Cash flow from
financing activities       -13.3      -36.9     -64.0
Cash and
cash equivalents(1)         34.1       29.1      17.3

Total job count            3,014      3,002       0.4
Per-job revenue
(in thou. EUR)              75.2       75.0       0.3
Employees                  2,424      2,873     -15.6

(1) As of 31 December 2010 and 31 December 2009 respectively 

Key financial figures for Q4 2010 [in million EUR]

Q4 2010    Q4 2009   Change in %
Revenues                    55.0       51.2       7.4
Cost of sales               46.0       49.8      -7.5
Gross profit                 9.0        1.4      >100
EBITDA                      13.0        5.2      >100
EBITDA margin (in%)         23.6       10.1
EBIT                         5.9       -2.0      >100
EBIT margin (in%)           10.7       -3.9
Net income                   3.3       -3.5      >100
Earnings per share
(in EUR)                   0.067     -0.071      >100

Cash flow from
operating activities        14.2       24.0     -40.6
Cash flow from
investing activities       -14.8       -5.1      >100
Cash flow from
financing activities        -0.4       -8.7     -95.9

Total job count              759        650      16.8
Per-job revenue
(in thou. EUR)              72.0       78.8      -8.6 
end of announcement                               euro adhoc
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Contact:

Thomas Krammer
Tel: +49(0)69-92037-183
Email: thomas.krammer@fd.com

Branche: Oil & Gas - Upstream activities
ISIN: AT0000A00Y78
WKN: A0JKWU
Index: SDAX, Classic All Share, Prime All Share
Börsen: Frankfurt / regulated dealing/prime standard



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