EANS-News: Schoeller-Bleckmann Oilfield Equipment AG / Annual result 2015

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annual report/annual result

Schoeller-Bleckmann Oilfield Equipment AG: Annual result 2015

  • Massive decline of global drilling activity impacted business result
  • Yet positive EBIT before one-off effects and free cashflow at record level
  • Fundamentally sound balance sheet structure: Liquid funds grown to nearly MEUR 200
  • Dividend proposal EUR 0.50 per share

Ternitz/Vienna, 17 March 2016. Schoeller-Bleckmann Oilfield Equipment AG (SBO), listed on the ATX market of the Vienna Stock Exchange, had to face a massive decline of global drilling activities by 45 % in the 2015 financial year, as did the entire oilfield service industry. Despite this extremely difficult environment, SBO managed to generate a positive operative result (EBIT) before impairments and a record free cashflow. Moreover, the companys significantly increased its liquid funds.

Gerald Grohmann, CEO of SBO: "The oilfield service industry experienced a profound downturn in 2015 - and this downturn is not over yet. We expect another difficult business year in 2016. However, with its fundamentally sound balance sheet structure and improved cost structure SBO is excellently prepared to meet the challenges. As before, we will pursue active cost management and, at the same time, systematically continue the search for attractive acquisition targets which fit in well with our strategy. We use the downturn in order to align SBO to ensure that it can fully benefit from the next upswing."

In the 2015 financial year, sales went down by 35.8 % to MEUR 313.7 (2014:
488.6). Earnings before interest, taxes, depreciation and amortisation (EBITDA) fell by 63.1 %, to MEUR 55.1 (2014: MEUR 149.3). The EBITDA margin came to 17.6 % (2014: 30.6 %). Nevertheless, SBO managed to generate a positive operating result (EBIT) before one-off effects of MEUR 3.7 (2014: MEUR 106.7). EBIT after one-off effects came to MEUR minus 22.1 (2014: MEUR 67.5). Profit after tax ended up at MEUR minus 19.0 (2014: MEUR 54.0). However these figures include one-off effects totalling MEUR 20.3, of which MEUR 18.3 were not cash effective. These result mainly from goodwill impairments and valuation of option commitments. Hence earnings per share were EUR minus 1.19 (2014: EUR 3.38).

The company's equity ratio as at 31 December 2015 stood at 60.8 % (31 December 2014: 56.9 %). Free cashflow climbed by 2,373.2 % to a record level of MEUR 85.1 (2014: MEUR 3.4), and the cashflow from operating activities rose by 52.3 % to MEUR 103.4 (2014: MEUR 67.9). As at 31 December 2015, SBO had a net cash position of MEUR 26.2 (31 December 2014: net debt of MEUR 35.6). Liquid funds went up by 50.7 % to MEUR 196.3 (31 December 2014: MEUR 130.2).

To ensure dividend continuity and based on the fundamentally sound balance sheet structure, the Executive Board proposes to pay a dividend for the 2015 financial year of EUR 0.50 per share.

Market development 2015

According to the International Energy Agency (IEA), average global oil consumption rose by 1.8 mb/d to 94.6 mb/d in 2015 (2014: 92.8 mb/d). Although demand was growing, the oil market remained considerably oversupplied with an average production of 96.4 mb/d exceeding consumption by 1.8 mb/d. Non-OPEC countries also stepped up their production by 1.4 mb/d more than in the previous year, while OPEC countries - mainly Saudi Arabia and Iraq - drove their output up by 1.2 mb/d. In the second half of the year, the persistent oversupply resulted in another massive oil price slump. Throughout the year, the global rig count (number of active drilling rigs) contracted by 45 % to 1,969 rigs in December 2015 (December 2014: 3,570 rigs).

Business development 2015

Due to the massive decline of drilling activities, bookings received in the 2015 financial year contracted by 59.1 % to MEUR 203.6, following record bookings in the previous year (2014: MEUR 497.9). The order backlog of MEUR 34.3 at year-end 2015 was down 71.9 % from last year's reading (31 December 2014: MEUR 122.1) and concerned mainly the segment of High Precision Components.

SBO subdivides its business activities into two segments: High Precision Components (manufacture of high-precision drillstring components) and Oilfield Equipment (non-magnetic drill collars, drilling motors, circulation tools, completion tools and other components including service and repair). Both segments were severely hit by the market collapse. In 2015, the segment of High Precision Components developed in line with reduced CAPEX-spending of customers. Bookings and sales went down considerably. All of these factors led to a negative result before tax. In the segment of Oilfield Equipment the sharp curtailment of global drilling activities also had a dampening effect on the business. Here, SBO posted declining bookings and sales too.

Investments

In the 2015 financial year, total investments in tangible fixed assets amounted to MEUR 22.9 (2014: MEUR 43.8). These were largely limited to maintenance investments and restructuring activities. Additionally, SBO selectively invested in site extensions.

The SBO share

In 2015, the SBO share price developed largely in line with the oil price:
On 2 January 2015, the share started into the trading year at EUR 60.00 per share and reached its annual high of EUR 67.22 on 11 June 2015. Throughout the year, the share - like the entire oilfield service sector - came under pressure as the oil price continued to fall and arrived at EUR 50.41 at the end of the year, down 16.0 % from the beginning of the year.

Outlook 2016

The International Energy Agency (IEA) projects oil demand to rise further in 2016 by 1.2 mb/d to 95.8 mb/d (2015: 94.6 mb/d). On the supply side, IEA expects production in non-OPEC countries to drop by 0.75 mb/d to 57.0 mb/d in 2016 due to their massive cuts on E&P spending. The crucial issue will be how Saudi Arabia, Iran and Russia will behave and how long OPEC will stick to its course of keeping production much higher than at 30 mb/d to counteract oil price recovery. The current policy has led to enormous loss of income for OPEC countries. It is not clear how long Saudi Arabia and the other members of OPEC will be able and willing to accept this situation.

SBO therefore also braces for a highly challenging market situation continuing throughout 2016. According to market surveys, oilfield service providers will further cut back on their exploration and production (E&P) spending by up to 20 % globally in 2016. Thus, E&P spending will, for the first time since 1986, drop in two consecutive years. The main difference to the 1986 downturn is, however, the clearly more robust oil demand and the significant lower spare capacity these days. This constellation of decreasing spending and, as a consequence, falling oil supply, and growing demand should result in a sustained recovery of the oil price and trigger new investments. It is impossible to predict today when this will occur. Visibility in the market remains very low. But past experience in the oilfield service industry has told us one thing: Each downturn is followed by an upturn. And the sharper and longer the downturn, the steeper the next upswing will normally be.

With its high cash position, current net liquidity, a positive free cashflow and a high equity ratio, SBO is also prepared for a lengthy downturn. In 2016, the company will systematically continue the counter-measures to combat the decline, implemented in 2015: Cost-cutting programmes will be stepped up and capacities adjusted further to the market situation. Site optimisation in the United States will be completed by mid-year. The strategy to develop new markets for the products of SBO in the Oilfield Equipment segment will be pursued consistently. Due to its profoundly strong balance sheet, SBO is able to push ahead with its search for strategically fitting acquisition targets.

Key figures: 2015 2014 Change in %

Sales MEUR 313.7 488.6 -35.8

Earnings before interest, taxes, depreciation and amortisation (EBITDA) MEUR 55.1 149.3 -63.1 EBITDA margin % 17.6 30.6 - EBIT before one-off effects MEUR 3.7 106.7 -96.5 EBIT margin before one-off effects % 1.2 21.8 - EBIT after one-off effects MEUR -22.1 67.5 N/A EBIT margin after one-off effects % -7.0 13.8 - Profit before tax MEUR -20.0 80.0 N/A Profit after tax MEUR -19.0 54.0 N/A Earnings per share EUR -1.19 3.38 N/A Free cashflow MEUR 85.1 3.4 2,373.2 Dividend per share EUR 0.5* 1.50 -66.7 Headcount 1,135 1,720 -34.0

* proposed

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 31 December 2015, SBO employed a workforce of 1,135 worldwide (31 December 2014: 1,720), thereof 376 in Ternitz/Austria and 399 in North America (including Mexico).

SBO financial calendar 2016

27 April 2016 Annual General Meeting

9 May 2016 Ex-dividend day 10 May 2016 Record date

11 May 2016 Dividend payment date

25 May 2016 Result Q1/2016 24 August 2016 Result H1/2016 23 November 2016 Result Q3/2016

end of announcement euro adhoc

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

Digital press kit: http://www.ots.at/pressemappe/2917/aom

Rückfragen & Kontakt:

MMag Florian Schütz, MBA
Head of Investor Relations SBO
Tel.: +43 2630 315-251
f.schuetz@sbo.co.at

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