Results Q1-Q3 2020: High liquidity and strong balance sheet strengthen SBO's position in a challenging environment
· Sales of MEUR 236.4, EBIT before one-off effects at MEUR 1.1
· Operating cash flow increased to MEUR 81.3, net liquidity rose to MEUR 10.5 and liquid funds to MEUR 322
Ternitz, November 26, 2020. The market environment of the oilfield service industry in the first three quarters of 2020 was characterized by the massive global repercussions of the COVID-19 pandemic. Schoeller-Bleckmann Oilfield Equipment AG (SBO), listed on the ATX leading index of the Vienna Stock Exchange, took off to a good start into the year and launched proactive measures early in order to mitigate the negative effects. The crisis-proven management team adjusted capacities as demanded by local requirements, scaled back capital spending and implemented cost savings as part of crisis management. A high liquidity and strong balance sheet support the company’s position even in a challenging environment and ensure long-term success.
However, due to the exceptional situation worldwide, sales and earnings declined compared to the same period of the previous year. In addition, SBO recognized non-cash impairments of MEUR 20.5 on assets at subsidiaries in North America as of 30 June 2020, which impacted earnings. SBO’s sales generated in the first three quarters of the year came to MEUR 236.4, while profit / loss from operations (EBIT) before one-off effects remained positive at MEUR 1.1. EBIT after one-off effects totaled MEUR minus 19.8, and profit after tax arrived at MEUR minus 21.3. SBO generated an operating cashflow of MEUR 81.3 in the first nine months of 2020, resulting even in a net liquidity of MEUR 10.5. Gearing improved to minus 3.5 %. Liquid funds increased to MEUR 322.0 (31 December 2019: MEUR 265.2).
CEO Gerald Grohmann: “The massive impact of COVID-19 on the global economy has not spared our industry. After the sharp decline in the first half of the year the oil markets have stabilized again. However, demand for crude oil was still too low for a sustainable recovery. In our cyclical business, we are crisis-tested and experienced in responding promptly to changing market conditions. We have taken targeted measures and adjusted promptly to the current environment. Our sound balance sheet and strong cash position help us to navigate safely through this crisis.”
Sales and earnings in line with the environment, strong liquidity base expanded
SBO’s sales in the first three quarters of 2020 amounted to MEUR 236.4 (1-9/2019: MEUR 345.9,
minus 31.6 %). Bookings dropped from the previous year and stood at MEUR 184.0 (1-9/2019: MEUR 376.5, minus 51.1 %). The order backlog at the end of September 2020 was MEUR 69.7 (31 December 2019: MEUR 123.0). Earnings before interest, taxes, depreciation, and amortization (EBITDA) for the first three quarters of 2020 were MEUR 27.2, compared to MEUR 91.6 in 2019. The EBITDA margin was 11.5 % (1-9/2019: 26.5 %).
Profit / loss from operations (EBIT) before one-off effects remained positive at MEUR 1.1 including
foreign exchange losses, which had a negative impact on earnings. Impairments and restructuring
expenses of approximately MEUR 21.0 resulted in an EBIT after one-off effects of MEUR minus 19.8 (1-9/2019: MEUR 54.5). As a result, SBO’s profit / loss before tax amounted to MEUR minus 21.8 (1-9/2019: MEUR 43.5), profit / loss after tax arrived at MEUR minus 21.3 (1-9/2019: MEUR 26.6). Earnings per share in the first three quarters of 2020 were EUR minus 1.35 (1-9/2019: EUR 1.67).
SBO’s equity arrived at MEUR 303.3 after the first three quarters of 2020 (31 December 2019: MEUR 370.1). SBO’s equity ratio decreased to 37.2 % (31 December 2019: 42.3 %). The positive
cashflows could turn the already low level of net debt in the amount of MEUR 20.1 as of 31 December 2019 even into a net liquidity of MEUR 10.5 as of 30 September 2020. Gearing improved further to minus 3.5 % (31 December 2019: 5.4 %). Liquid funds increased to MEUR 322.0 (31 December 2019: MEUR 265.2). SBO additionally strengthened its already strong liquidity base by raising loans in the amount of MEUR 81.0 in the third quarter. Cashflow from operating activities rose to MEUR 81.3 in the first three quarters of 2020 (1-9/2019: MEUR 74.7). Capital expenditure in property, plant and equipment and intangible assets (CAPEX, excluding rights of use) was reduced in line with the market environment and amounted to MEUR 13.9 (1-9/2019: MEUR 23.9).
“The currently challenging industrial environment caused by the coronavirus crisis requires experience and a management approach based on long-term considerations. This is secured by our high liquidity, which we strengthened in the third quarter of 2020 through additional loans raised. While we could not prevent a decline in sales and earnings in the current exceptional market situation, our highly qualified employees are using all their expertise to deal with the effects of the global economic crisis as best as possible and to maintain our competitiveness over the long term", says CEO Grohmann.
Bottom seems to be reached; significant recovery expected in the second half of 2021
The uncertain current situation makes it difficult to make reliable, robust forecasts for future economic development and the recovery of the oil market. However, there are clear indications that the industry has bottomed out, even though the international markets are running behind. Market perception is that the prevailing market conditions are going to continue over the upcoming quarters. Recovery should start to set in in the second half of 2021 at the latest, which will largely depend on how quickly the COVID-19 pandemic will be contained and global economic growth will be pointing upward again.
“It seems that the bottom has been reached: The US rig count shows a slight increase and well completion activities are also picking up again. Recovery is expected to set in clearly in the second half of 2021, provided that the consequences of the coronavirus pandemic can be mitigated until then. Actively managing crises is one of our core competencies. While this is the focus of our attention, we do not lose sight of opportunities for the future because the next upturn is bound to come", says SBO CEO Gerald Grohmann.
In the medium term, demand for oil and gas, and with it demand for SBO products and services, will rise again. In the long-term, there should even be a backlog in spending for exploration and production. It is an undisputed fact that oil and gas will continue to play a key role in supplying the world for a long time and cover more than 50 % of global energy demand for decades to come. With its innovative products and services, SBO is ready to contribute to the safe and sustainable
production of oil and gas going forward.
SBO's key performance indicators at a glance
|
|
|
1-9/2020
|
1-9/2019
|
|
Sales
|
MEUR
|
236.4
|
345.9
|
|
Earnings before interest, taxes, depreciation and amortization (EBITDA)
|
MEUR
|
27.2
|
91.6
|
|
EBITDA margin
|
%
|
11.5
|
26.5
|
|
Profit / loss from operations (EBIT)
before impairments and restructuring measures |
MEUR
|
1.1
|
55.6
|
|
EBIT margin
|
%
|
0.5
|
16.1
|
|
Profit / loss from operations (EBIT)
after impairments and restructuring measures |
MEUR
|
-19.8
|
54.5
|
|
Profit / loss before tax
|
MEUR
|
-21.8
|
43.5
|
|
Profit / loss after tax
|
MEUR
|
-21.3
|
26.6
|
|
Earnings per share
|
EUR
|
-1.35
|
1.67
|
|
Cashflow from operating activities
|
MEUR
|
81.3
|
74.7
|
|
Liquid funds as of 30 September 2020 / 31 December 2019
|
MEUR
|
322.0
|
265.2
|
|
Net liquidity as of 30 September 2020 / 31 December 2019
|
MEUR
|
10.5
|
-20.1
|
|
Headcount as of 30 September 2020 / 31 December 2019
|
|
1,150
|
1,535
|
SBO is a globally leading supplier of products and solutions used by the oil and gas industry for directional drilling and well completion. SBO is the global market leader in the manufacture of high-precision components made of non-magnetic high-alloy stainless steel. The company produces components specifically according to the requirements of customers in the oilfield service industry. At the same time, SBO is a leading provider of high efficiency drilling tools and equipment for the oil and gas industry, successfully establishing the company in technologically challenging, profitable niches. As of 30 September 2020, SBO had 1,150 employees worldwide (31 December 2019: 1,535), thereof 370 in Ternitz, Austria, and 462 in North America (including
Mexico).
Contact:
Andreas Böcskör, Head of Investor Relations
Schoeller-Bleckmann Oilfield Equipment AG
Tel: +43 2630 315 ext. 252, Fax: ext. 101
E-Mail: a.boecskoer@sbo.co.at
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