Schoeller-Bleckmann Oilfield Equipment AG: Positive operating result in persistently challenging market environment – Stringent measures taken to combat downturn – Very sound balance sheet structure with liquid means of MEUR 165 and cashflow increased to MEUR 57
 

Ternitz/Vienna, 20 August 2015. In the first half of 2015, the oilfield service industry was hit by the expected collapse of drilling activity, and so was Schoeller-Bleckmann Oilfield Equipment AG (SBO). Nevertheless, SBO was able to generate positive operating income in this extremely difficult market environment.

Sales fell by 18.9 %, to MEUR 186.9 (1-6/2014: MEUR 230.3). Here, SBO still profited from the strong bookings in the fourth quarter of 2014. Earnings before interest, taxes, depreciation, and amortisation (EBITDA) fell by 31.5 %, to MEUR 45.1 (1-6/2014: MEUR 65.9). Earnings before interest and taxes (EBIT) shrank by 57.6 %, to MEUR 19.3 (1-6/2014: MEUR 45.7). Half-year profit before tax arrived at MEUR 4.8, down 88.5 % from last year's reading (1-6/2014: MEUR 41.4). Half-year profit after tax arrived at MEUR 0.0 (1-6/2014: MEUR 30.3). Half-year earnings per share were EUR 0.0 (1-6/2014: EUR 1.90). Cashflow from operating activities increased from MEUR 28.4 by 101.5 % to MEUR 57.1.

An effect created by the quarterly valuation of option commitments was reflected in the financial result, concerning essentially the option for acquiring 33 % of the shares in Resource Well Completion Inc. (Resource): According to IFRS 13, an additional non-cash-effective expenditure of MEUR 12.1 had to be included. While business prospects for Resource remain unchanged and thus had no influence on this adjustment, modification of the quarterly multiple used - which had no effect on the actual value of the option - was relevant to increasing the option commitment.

Gerald Grohmann, CEO of SBO: "We delivered a positive operating income in the first half of 2015, despite the continued extremely difficult market environment. Cashflow from operating activities even doubled from last year's reading. As we expected, 2015 is going to be a challenging year for the entire oilfield service industry. We are preparing for the current downturn to last longer than previous ones. But we know our industry and have learnt how to deal with its cycles. This is why we initiated a set of measures at a very early point and will consistently pursue this course."

The EBITDA margin came to 24.1 % (1-6/2014: 28.6 %), the EBIT margin was 10.4 % (1-6/2014: 19.8 %), and the pre-tax margin arrived at 2.6 % (1-6/2014: 18.0 %). Compared to year-end 2014, net debt as at 30 June 2015 fell by 69.4 %, to MEUR 10.9 (31 December 2014: MEUR 35.6). Liquid means went up by 27.3 %, to MEUR 165.7 (31 December 2014: MEUR 130.2). This rise was mainly attributable to a decrease of the net working capital of MEUR 38.6.

With its equity ratio of 57 % SBO has a very sound balance sheet structure and therefore was able, despite the current downturn, to distribute to shareholders an unchanged high dividend of EUR 1.50 per share for the year 2014 (MEUR 24).
Bookings dropped by 54.1 %, to MEUR 104.8 (1-6/2014: MEUR 228.5). The order backlog at the end of the first half of the year arrived at MEUR 60.9, down 43.7 % from last year's reading (30 June 2014: MEUR 108.1).

Outlook

In its most recent report the International Monetary Fund (IMF) reviewed its forecast for global economic growth in full 2015 slightly downwards, from 3.5 % to 3.3 % (2014: 3.4 %). For 2016, the IMF currently projects growth to arrive at 3.8 %. According to the International Energy Agency (IEA), oil consumption is set to go up in the third and fourth quarter (94.5 mb/d and 95.2 mb/d, following 93.5 mb/d in the second quarter). Calculated for full 2015, this should bring average growth up by 1.6 mb/d to 94.2 mb/d. For 2016, IEA anticipates growth to come to 1.4 mb/d. Barclays, one of Britain's major banks, projects growth levels of 1.7 mb/d in 2016.

SBO continues to expect global E&P spending to contract by 20 % to 30 % in full 2015. Consequently, the company braces for a continuation of the very difficult development in fiscal 2015. SBO will consistently continue implementing the countermeasures initiated in 2014 throughout the second half of 2015. However, those measures can compensate for only part of the fierce decline in demand in the established core markets. Our operating cashflow remains positive, debt is low and liquid means are sufficiently high to provide SBO with a stable basis to overcome the current cyclical downturn. As a result, SBO is in a position to continue its search for strategically fitting acquisition targets, even in the present challenging environment.

The current situation has demonstrated once again how fast the business cycle in the oil and gas industry can turn around. While full attention is now focused on managing the downturn, it is clear that the medium to long-term growth perspectives for the oilfield service industry remain absolutely intact. Growing demand for oil and gas, in addition to increasing decline rates from existing fields, will call for new spending and usher in the next upswing for which SBO, as technology and market leader, is well prepared.


Comparison of key financial figures

1) based on average number of shares outstanding
2) reporting date 30 June

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 2015, SBO has employed a workforce of 1,279 worldwide (30 June 2014: 1,640), thereof 408 in Ternitz/Austria and 486 in North America (including Mexico).

Further inquiry note:
Florian Schütz, Head of Investor Relations
Schoeller-Bleckmann Oilfield Equipment AG
A-2630 Ternitz, Hauptstraße 2
Phone: +43 2630/315 ext 251
e-mail: f.schuetz@sbo.co.at