Schoeller-Bleckmann Oilfield Equipment AG

EANS-News: Schoeller-Bleckmann Oilfield Equipment AG
Persistently challenging market environment weighs on result, but increasing signs of bottoming of the cycle reached - Positive operating cashflow and fundamentally strong balance sheet structure ...

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9-month report

Ternitz / Vienna, 23 November 2016. The oilfield service industry has been
marked by the steepest decline in more than 30 years. Like the entire industry,
Schoeller-Bleckmann Oilfield Equipment AG (SBO), listed on the ATX market of the
Vienna Stock Exchange, has been hit by this development. Since the beginning of
the downturn, the number of globally active drilling rigs has gone down by more
than 60 % to its lowest level in the second quarter of 2016. In the past months,
increasing signs have suggested that the cycle has reached its bottom. However,
oil companies have again significantly cut back on their spending for
exploration and production (E&P spending), following a reduction by 21 % in
2015. The low demand weighs on the result of SBO.
 
In this extremely difficult environment, SBO generated a positive operating
cashflow. Thanks to its fundamentally strong balance sheet structure and high
liquidity base, SBO remains in a position to continue targeted investments in
its long-term growth strategy. Following the acquisition of Canadian "Resource
Well Completion Technologies Inc." (Resource) in November 2014, SBO took over US
based "Downhole Technology LLC" (Downhole Technology) on 1 April 2016. Downhole
Technology has delivered positive contributions, and in line with expectations,
to SBO's business development. At the same time, SBO continues to optimise its
cost base.
 
"It seems that the most challengingand longest downcycle in our industry has
reached its bottom. However, also the fourth quarter of 2016 will be
challenging", comments Gerald Grohmann, CEO of SBO. "Supply and demand in the
oil market are gradually moving towards a balance. We assume that the first
market to respond to an upswing will be the North American market where we are
well positioned based on our drilling motor business and acquisitions in the
Well Completion business".
 
Results for the first three quarters of 2016
 
Due to low demand, sales went down by 48.3 % in the first three quarters of
2016, to MEUR 133.1 (1-9/2015: MEUR 257.6). In the first three quarters of 2015,
SBO had still benefited from record bookings received in 2014. While bookings
fell compared to the previous year, reflecting the strong customer restraint in
ordering, by 24.5 % to MEUR 116.5 (1-9/2015: MEUR 154.2), they improved from the
first and the second quarters of 2016. At the end of the third quarter of 2016,
the order backlog stood at MEUR 17.4, following MEUR 40.2 as at 30 September
2015.
 
Earnings before interest, taxes, depreciation, and amortisation (EBITDA) were
MEUR minus 7.2 (1-9/2015: MEUR 55.0). The operating result (EBIT) before one-off
effects came to MEUR minus 44.0. 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 4.6, therefore
totalling MEUR 6.9, reported operating result (EBIT) came to MEUR minus 50.9 (1-
9/2015: MEUR minus 7.1). The financial result went to MEUR 14.6 (1-9/2015: MEUR
7.4), therein considered the result from the revaluation of option commitments
of MEUR 16.9. Profit before tax was MEUR minus 36.2 (1-9/2015: MEUR 0.3), profit
after tax came to MEUR minus 22.9 (1-9/2015: MEUR minus 2.0). Earnings per share
arrived at EUR minus 1.43 (1-9/2015: EUR minus 0.13). The margins reflect the
market collapse: The EBITDA margin was minus 5.4 % (1-9/2015: 21.4 %), and the
EBIT margin was minus 38.2 % (1-9/2015: minus 2.8 %). The pre-tax margin stood
at minus 27.2 % (1-9/2015: 0.1 %).
 
Regardless of the persisting downturn, SBO generated a positive operating
cashflow of MEUR 28.9 (1-9/2015: MEUR 86.1) in the first three quarters of 2016.
 
The balance sheet structure of SBO remains fundamentally strong. Liquid funds as
at 30 September 2016 amounted to MEUR 141.6 (31 December 2015 - prior to the
acquisition of Downhole Technology: MEUR 196.3). Net debt stood at MEUR 56.1 (31
December 2015: Net cash position of MEUR 26.2). Spending for property, plant and
equipment and intangible assets (CAPEX) was cut by 48.7 % from the first three
quarters of 2015 to MEUR 9.4 (1-9/2015: MEUR 18.3). Purchase commitments for
expenditure in property, plant and equipment as at 30 September 2016 amounted to
MEUR 0.2 (30 September 2015: MEUR 1.1). The equity ratio stood at 54.8 % (31
December 2015: 60.8 %).
 
Outlook
 
Since the fourth quarter of 2014, the oilfield service industry has been
affected by a massive downturn which is still persisting. Global spending for
exploration and production will probably be curbed by another 26 % in 2016. In
North America, the decline is projected to come to 41 %, and internationally to
21 %.
 
At the same time, global oil oversupply is decreasing gradually. Global demand
for oil is rising constantly. It is widely believed that the balance of supply
and demand should be reached in 2017. If OPEC members decide to introduce the
discussed production ceiling on 30 November 2016, this should accelerate the
process. Given the lack of E&P spending in recent years, expectations are that
the decreasing oil supply cannot meet the growing oil demand in the future. At
this point in time, at the latest, new investments will be necessary.
 
The year 2016 will remain challenging also in the fourth quarter. However, SBO
is prepared to cope well with the steepest downturn in decades. The strong cash
balance, low net debt and high equity ratio provide the company with a basis to
make targeted investments in its long-term growth strategy even in the downturn.
With the establishment of its Well Completion business and its activities in
research & development, SBO is preparing systematically for the next upswing. At
the same time, ongoing cost-cutting programmes are implemented consistently and
capacities adjusted to the market situation. SBO is well positioned to benefit
fully from the next upswing as technology and market leader.
 
Comparison of key figures
 
 _____________________________________________________________________________
|             |               |     1-9 / 2016|     1-9 / 2015|    Change in %|
|_Key_figures:|_______________|_______________|_______________|_______________|
|Sales________|___________MEUR|__________133.1|__________257.6|_________-_48.3|

|Earnings     |               |               |               |               |
|before       |               |               |               |               |
|interest,    |               |               |               |               |
|taxes,       |           MEUR|          - 7.2|           55.0|           n.a.|
|depreciation |               |               |               |               |
|and          |               |               |               |               |
|amortisation |               |               |               |               |
|(EBITDA)_____|_______________|_______________|_______________|_______________|
|EBITDA_margin|______________%|__________-_5.4|___________21.4|_______-_______|
|EBIT_________|___________MEUR|_________-_50.9|__________-_7.1|___________n.a.|
|EBIT_margin__|______________%|_________-_38.2|__________-_2.8|_______-_______|

|Profit before|           MEUR|         - 36.2|            0.3|           n.a.|
|tax__________|_______________|_______________|_______________|_______________|
|Profit after |           MEUR|         - 22.9|          - 2.0|           n.a.|
|tax__________|_______________|_______________|_______________|_______________|
|Earnings per |            EUR|         - 1.43|         - 0.13|           n.a.|
|share________|_______________|_______________|_______________|_______________|
|Operating    |           MEUR|           28.9|           86.1|         - 66.5|

|cashflow_____|_______________|_______________|_______________|_______________|
|Headcount____|_______________|__________1,184|__________1,231|__________-_3.8|

 

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 September 2016, SBO has employed a workforce
of 1,184 worldwide (30 September 2015: 1,231), thereof 318 in Ternitz / Austria
and 521 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
E-Mail: a.boecskoer@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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