Schoeller-Bleckmann Oilfield Equipment AG:

o   Sound market environment and strong demand boost SBO's subsidiary Downhole Technology

o   Considerably higher company value requires expense posting of MEUR 90 for the shares of minority shareholders

o   Operational performance remains successful throughout the financial year, sales in the third quarter of 2017 at MEUR 92 even doubled in a year-on-year comparison

 

Ternitz/Vienna, 17 October 2017. Downhole Technology, the latest addition to the Well Completion business of Schoeller-Bleckmann Oilfield Equipment AG (SBO) is exceeding the group's high expectations in terms of sales and profit due to strong demand and a sound market environment.

"We were absolutely right in expanding our Well Completion business and acquiring Downhole Technology counter-cyclically“, comments Gerald Grohmann, CEO of SBO. "This helps us to benefit even more from the booming North American market. As the products of Downhole Technology are easy to handle and deliver great efficiency advantages, they create enormous demand and disproportionately high market share gains exceeding our initial assumptions by far.“

This positive development which is also reflected in the business result of SBO has an effect on the valuation of the put/call option for minority shareholders, agreed upon in course of the acquisition of Downhole Technology. On 1 April 2016, SBO had acquired 68 % of the shares in Downhole Technology. In the wake of the acquisition an option was concluded for the remaining 32 % of the shares in the company with the minority shareholders. This option can be exercised not earlier than 1 April 2019. Owing to the strong growth of Downhole Technology, the price for acquiring the remaining shares at the earliest possible date for exercising the option is now projected to be considerably higher. SBO's accounting principles require in the third quarter of 2017 a non-cash-effective expense posting of MEUR 90 in the financial result of the income statement of SBO.

"The strong growth of Downhole Technology is definitely in our best interest, as it shows that we made a highly beneficial decision by investing at the right point in time. The value of our majority shares is rising on the same scale“, comments Mr. Grohmann. "The fact that we need to absorb the increase in the company value in the put/call option is only a short-term downside. In the long run, we will obviously benefit from the higher value of a subsidiary that will be wholly owned by SBO after the option has been exercised.“

This will have no effect on the strong operating result of SBO: In the third quarter of 2017 sales are expected to come to MEUR 92, more than doubling the figure reported in the same period of last year (Q3/2016: MEUR 45.1), while earnings before interest, taxes, depreciation, and amortisation (EBITDA) should come to MEUR 26. The operating result (EBIT) of MEUR 13 will be in positive territory for the second consecutive quarter. For the first time since the crisis started the EBITDA margin will settle at 28 %, above its long-term average (2001-2016: 24.1 %). Profit before tax will arrive at MEUR minus 78 in the third quarter, considering the expense posting from the option. This positive operating result will be the decisive factor for the dividend proposal for the 2017 financial year. All amounts mentioned are preliminary figures. The final results for the first three quarters of 2017 will be published on 23 November 2017 as planned. "I am very satisfied with the operational development of our business. This is why I believe that we will again make a dividend proposal for the 2017 financial year. We will continue to take full advantage of the North American growth and, at the same time, prepare for the time when the international market starts to get back on track“, says Mr. Grohmann, SBO's CEO.

Key performance indicators at a glance

		Q1-Q3 / 2017 (preliminary)	Q1-Q3 / 2016
Sales	MEUR	228	133.1
Bookings	MEUR	241	116.5
EBITDA	MEUR	48	-7.2
EBITDA margin	%	21	-5.4
EBIT	MEUR	10	-50.9
EBIT margin	%	4	-38.2
Profit before tax	MEUR	-86	-36.2

SBO is a leading supplier of tools and equipment for directional drilling and well completion applications and the global market leader in the manufacture of high-precision components made of non-magnetic steel. The product offering ranges from complex customer-specific components for the oilfield service industry to high-efficiency solutions and products for the oil and gas industry. On 1 April 2016, SBO had acquired 68 % of the shares in Downhole Technology at a purchase price of MUSD 103. The purchase price was financed from available liquid funds. 32 % of the company are held by the founders and the management of Downhole Technology. As of 30 September 2017, SBO employed a workforce of 1,386worldwide (31 December 2016: 1,200), thereof 313 in Ternitz / Austria and 724 in North America (including Mexico).

 

Further inquiry note:

back