C.A.T. oil AG

EANS-News: C.A.T. oil AG
C.A.T. oil successfully boosts earnings and profitability in Q2 2014

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Subtitle: • Revenues up 1.0% yoy to EUR 112.4 million despite rouble devaluation
• EBITDA growth of 18.8% yoy to EUR 34.1 million
• Excellent profitability with the EBITDA margin of 30.3% 
• Net income surged 12.5% yoy to EUR 15.8 million
• CEO Manfred Kastner: “We remain fully committed to our operations and
customers and will further grow our business in the second half of this year. We
reiterate our 2014 guidance and remain adhered to our expansion plans.” 

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, significantly boosted its earnings
and profitability in the second quarter of the year. Despite the increased
political uncertainties, C.A.T. oil experienced a very strong upturn in
customers' demand for its services and further increased operating activity
levels in Western Siberia and Kazakhstan.

Manfred Kastner, CEO of C.A.T. oil, commented: "Although the political
environment deteriorated, we fully concentrated on our operations in the second
quarter. After challenges arising from abnormally cold weather in the first
quarter, our operations picked up considerably in the second quarter both
seasonally and compared to the same period of the previous year. Although we
expect macroeconomic and political environment to remain volatile, we are
confident in C.A.T. oil's performance going forward. We have not been active in
business activities restricted by the EU and the US sanctions for Russian oil
industry and have no plans to change our business model. We remain fully
committed to our operations and customers and will further grow our business in
the second half of this year. We reiterate our 2014 guidance and remain adhered
to our expansion plans."

Double digit revenue growth in local currency

The Russian rouble, which the prevailing majority of C.A.T. oil's service
contracts are denominated in, devaluated by almost 18% yoy against the Euro in
the first half of the year. In Q2 2014, the total service job count increased by
15.5% yoy to 1,148 jobs (Q2 2013: 994 jobs) but the average per job revenue
declined 12.5% yoy to TEUR 98 (Q2 2013: TEUR 112) due to the lower value of the
rouble. Despite significantly higher operating activity levels, the Company's
revenues thus edged up only 1.0% yoy to EUR 112.4 million in Q2 (Q2 2013: EUR
111.2 million) and were down 3.3% yoy to EUR 203.1 million in H1 2014 (H1 2013:
EUR 210.1 million). In local currency, however, the revenues improved by 19% in
Q2 and 14% in H1 2014.

Operating activities up across all segments

Well Services' revenues stayed effectively flat yoy at EUR 58.3 million in Q2
2014 (Q2 2013: EUR 58.5 million). Driven by a strong expansion of the fracturing
operations, the segment's job count rose by 15.7% yoy to 1,077 jobs (Q2 2013:
931 jobs). The average per job revenue diminished 13.9% yoy to TEUR 54 (Q2 2013:
TEUR 63), reflecting the rouble devaluation. The share of multi-stage fracturing
jobs in the total fracturing job count rose to 24% in Q2 2014 (Q2 2013: 17%).

Drilling, Sidetracking and IPM's revenues increased by 3.3% to EUR 53.5 million
in Q2 2014 (Q2 2013: EUR 51.8 million). Thereby, the higher operating activity
levels contributed to compensate negative currency effects. The segment reported
a 12.3% yoy gain in the job count to 71 wells and sidetracks (Q2 2013: 63 jobs)
and a significant expansion in the total drilling and sidetracking footage by
46.7% to 109.1 thousand meters (Q2 2013: 74.4 thousand meters).
 
High profitability with the EBITDA margin of 30.3%

C.A.T. oil significantly strengthened its earnings power and profitability due
to the higher capacity utilization and efficiency gains, on the one hand, and
the lower cost base, on the other hand. Cost of sales decreased by 5.4% yoy to
EUR 84.7 million in Q2 (Q2 2013: EUR 89.5 million) and 5.7% yoy to EUR 160.9
million in H1 2014 (H1 2013: EUR 170.7 million).

Earnings before interest, tax, depreciation and amortization (EBITDA) elevated
by 18.8% yoy to EUR 34.1 million in Q2 2014 (Q2 2013: EUR 28.7 million), with
the EBITDA margin expanding to 30.3% (Q2 2013: 25.8%). In H1 2014, EBITDA rose
by 4.3% yoy to EUR 54.9 million (H1 2013: EUR 52.7 million) and the EBITDA
margin widened to 27.0% compared to 25.1% a year ago.

Earnings before interest and tax (EBIT) grew even stronger, by 44.1% yoy to EUR
22.6 million in Q2 2014 (Q2 2013: EUR 15.7 million) and the EBIT margin
broadened to 20.1% (Q2 2013: 14.1%). In H1 2014, EBIT staged an 18.6% yoy
increase to EUR 32.3 million (H1 2013: EUR 27.2 million), bringing the EBIT
margin to 15.9% (H1 2013: 13.0%).

As of 30 June 2014, C.A.T. oil employed 2,873 (H1 2013: 2,641) people. The
increase in the headcount by 8.8% yoy reflected new hires in the Drilling,
Sidetracking and IPM segment.

Significantly increased net income

The Group's net income advanced by 12.5% yoy to EUR 15.8 million in Q2 (Q2 2013:
EUR 14.0 million) and 19.1% yoy to EUR 25.3 million in H1 2014 (H1 2013: EUR
21.2 million).

Robust balance sheet

Funds from operations grew by 39.3% yoy to EUR 30.9 million in Q2 2014 (Q2 2013:
EUR 22.2 million) and 11.3% yoy to EUR 48.8 million in H1 2014 (H1 2013: EUR
43.8 million) due to the higher profit before tax and the lower negative effects
of other non-cash positions compared to the respective reporting periods in
2013. Cash flow from operating activities diminished by 50.0% yoy to EUR 20.8
million in the second quarter (Q2 2013: EUR 41.5 million) and 44.4% yoy to EUR
26.4 million in the first half of the year (H1 2013: EUR 47.6 million),
reflecting a higher level of net working capital. Scheduled payments for the
ordered operating capacities led to an increase in capital expenditures by 49.7%
yoy to EUR 24.6 million in Q2 2014 (Q2 2013: EUR 16.4 million) and 35.1% yoy to
EUR 42.1 million in H1 2014 (H1 2013: EUR 31.1 million). Cash flow from
investing activities represented a net outflow of EUR 24.3 million in Q2 2014
(Q2 2013: EUR 15.1 million) and EUR 41.7 million in H1 2014 (H1 2013: EUR 29.1
million). Cash flow from financing activities was a net inflow of EUR 10.3
million (Q2 2013: net outflow of EUR 10.4 million) and EUR 14.3 million in H1
2014 (H1 2013: net outflow of EUR 6.8 million).

As of 30 June 2014, cash and cash equivalents were down 4.7% to EUR 40.6 million
from EUR 42.6 million as of 31 December 2013. C.A.T. oil maintained a solid
balance sheet with an equity ratio of 61.7% as of 30 June 2014 (31 December
2013: 71.4%).

Adherence to the 2014-16 investment program despite increased political
uncertainties

In early August, C.A.T. oil assessed the EU and USA sanctions imposed on the
Russian oil industry. Based on the initial assessments, C.A.T. oil concludes
that the export controls neither jeopardize its business model nor impact its
expansion plans. Therefore, C.A.T. oil remains adhered to execution of its 2014-
16 investment program of EUR 390 million in a timely and disciplined manner. For
the current year, C.A.T. oil budgeted EUR 135 million in growth and maintenance
capital expenditures. As the manufacturing schedules for the ordered equipment
remain unchanged, C.A.T. oil continues anticipating the new operating capacities
to be delivered to Russia before the yearend.

Management reiterates the outlook as market fundamentals stay solid

Despite the challenging geopolitical environment, C.A.T. oil sees high activity
levels among its customers with the ongoing strong demand for complex and
technologically sophisticated services. C.A.T. oil has been able to win
additional tenders, bringing the 2014-16 total order book to EUR 785 million as
of 28 August 2014 (27 May 2014: EUR 780 million).

Based on the solid operating and financial performance during the first six
months of 2014, C.A.T. oil has confidently entered the second half of the year.
The Company management believes that strong fundamentals of the Russian OFS
market should enable C.A.T. oil to further expand its business going forward.
C.A.T. oil reiterates its guidance for 2014 and continues projecting revenues of
EUR 420 million to EUR 450 million and EBITDA of EUR 113 million to EUR 121
million (based on the average rouble-to-euro exchange rate of 48).
 
www.catoilag.com
 


Press contact:
FTI Consulting
Carolin Amann
Phone: +49 (0)69 92037-132
Email: carolin.amann@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 H1 2014 weighted
average headcount stood at 2,873 people, most of which are based in Russia and
Kazakhstan.



Key financial figures for H1 2014


[million EUR]           H1 2014            H1 2013            Change (%)
Revenues                 203.1              210.1                -3.3
Cost of sales            160.9              170.7                -5.7
Gross profit              42.2               39.5                6.9
EBITDA                    54.9               52.7                4.3
EBITDA margin (%)         27.0               25.1                  
EBIT                      32.3               27.2                18.6
EBIT margin (%)           15.9               13.0                  
Net income                25.3               21.2                19.1
Earnings per share (EUR)  0.52               0.43                  
Equity Ratio (%)[1]       61.7               71.4                  
                                                                   
Cash flow from            26.4               47.6               -44.4
operating activities
Cash flow from           -41.7              -29.1                43.0
investing activities
Cash flow from            14.3               -6.8               >-100
financing activities
Cash and cash             40.6               53.2               -23.6
equivalents [1]
                                                                   
Total job count          2,057              1,866                10.2
Per-job revenue(TEUR)       99                113                -12.3
Employees                2,873              2,641                8.8


[1] As of 30 June 2014 and 31 December 2013 respectively

 


Key financial figures for Q2 2014


[in million EUR]        Q2 2014            Q2 2013            Change (%)
Revenues                 112.4              111.2                1.0
Cost of sales             84.7               89.5                5.4
Gross profit              27.7               21.7                27.4
EBITDA                    34.1               28.7                18.8
EBITDA margin (%)         30.3               25.8                  
EBIT                      22.6               15.7                44.1
EBIT margin (%)           20.1               14.1                  
Net income                15.8               14.0                12.5
Earnings per share (EUR)  0.32               0.29                  
                                                                   
Cash flow from            20.8               41.5               -50.0
operating activities
Cash flow from           -24.3              -15.1                60.7
investing activities
Cash flow from            10.3              -10.5               >-100
financing activities
                                                                   
Total job count          1,148               994                 15.5
Per-job revenue (TEUR)      98                112                -12.5

Further inquiry note:
Carolin Amann Tel: +49(0)69-92037-132 Email: carolin.amann@fticonsulting.com
Steffi Fahjen Tel: +49(0)69-92037-115 Email: steffi.fahjen@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
 

 


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