EANS-News: Schoeller-Bleckmann Oilfield Equipment AG / Persistently challenging market environment weighs on business result - Positive operating cashflow and fundamentally strong balance sheet struct

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6-month report

Ternitz/Vienna, 24 August 2016. Schoeller-Bleckmann Oilfield
Equipment AG (SBO), listed on the ATX market of the Vienna Stock
Exchange, was,like the entire oilfield service industry, confronted
with a continued deterioration of the market environment in the first
half of 2016. Oil companies cut back their spending even further, the
number of globally active drill rigs thus dropped once again. Since
the downturn started in 2014, the rig count has contracted by more
than 60 %.

In this extremely difficult environment, SBO generated a positive
operating cashflow and has a fundamentally strong balance sheet
structure. Due to its financial strength, SBO is in a position to
pursue targeted investments in implementing its long-term growth
strategy even in the current cycle, such as illustrated by the
acquisition of US-based "Downhole Technology LLC" (Downhole
Technology) on 1 April 2016.Integration of Downhole Technology is
running to schedule. At the same time, SBO continues to optimise its
cost structure. Hence, the company decided, at the end of the second
quarter, to restructure its business activities in Singapore.

"The downturn is not over yet. While signs are increasing that supply
and demand in the oil market will gradually move towards a balance,
we cannot really speak of a reversal of the trend yet", comments
Gerald Grohmann, CEO of SBO. "Our focus is on navigating SBO safely
through the cycle. We are aligning the company to ensure it is
perfectly prepared for the next upswing based on an improved cost
structure and strengthened market position. If demand for oil
continues to rise and spending of the oil companies remains low, it
is only a matter of time when overproduction turns into undersupply."

HY 2016 Results

Sales in the first half of 2016 went down by 52.9 % to MEUR 88.0
(1-6/2015: MEUR 186.9). In the first half of 2015, SBO had still
profited from the record bookings posted in 2014. As customers showed
strong restraint in ordering, bookings dropped by 28.4 %, to MEUR
75.0 (1-6/2015: MEUR 104.8). The order backlog at the end of the
first half of 2016 stood at MEUR 21.1, following MEUR 34.3 as at 31
December 2015 and MEUR 60.9 as at 30 June 2015. Downhole Technology
has delivered positive contributions to SBO's business development
from the beginning of the second quarter of 2016.

Earnings before interest, taxes, depreciation, and amortisation
(EBITDA) were MEUR minus 5.7 (1-6/2015: MEUR 45.1). Operating result
before one-off effects came to MEUR minus 28.9. 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 5.0, therefore totalling MEUR 7.3, reported
operating result (EBIT) came to MEUR minus 36.2 (1-6/2015: MEUR
19.3). The financial result in the first half of 2016 came to MEUR
9.4 (1-6/2015: MEUR minus 14.6), including a positive one-off effect
of MEUR 10.5 from the revaluation of an option commitment. Profit
before tax stood at MEUR minus 26.8 (1-6/2015: MEUR 4.8). Profit
after tax was MEUR minus 16.9 (1-6/2015: EUR 0.0). Earnings per share
arrived at EUR minus 1.06 (1-6/2015: EUR 0.0). The market collapse
was reflected also in the margins: The EBITDA margin was minus 6.5 %
(1-6/2015: 24.1 %), the EBIT margin was minus 41.1 % (1-6/2015: 10.4
%). The pre-tax margin came to minus 30.4 % (1-6/2015: 2.6 %).

Regardless of the difficult market conditions, SBO generated a
positive cashflow from operating activities of MEUR 18.5 in the first
half of 2016 (1-6/2015: MEUR 57.1). The company has a profoundly
strong balance sheet structure: Even after the acquisition of 68 % of
the shares in Downhole Technology at a purchase price of MUSD 103,
SBO's equity ratio as at 30 June 2016 totalled a sound 54.7 % (31
December 2015: 60.8 %). Liquid funds stood at MEUR 137.9 (31 December
2015: MEUR 196.3), and net debt at MEUR 59.7 (31 December 2015: net
liquidity MEUR 26.2). Spending for property, plant and equipment and
intangible assets (CAPEX) was curtailed by 54.0 % to MEUR 5.9
(1-6/2015: MEUR 12.9) compared to the first half of 2015. Purchase
commitments for expenditure in property, plant and equipment as at 30
June 2016 were MEUR 0.2 (30 June 2015: MEUR 2.5).

Outlook

The downturn that has hit the oilfield service industry since the
fourth quarter of 2014 is not over yet. Oil companies are
continuously and heavily cutting back on their investments: Following
their massive reduction of spending for exploration and production
(E&P Spending) by 21 % in 2015, further reductions of 26 % are
expected for 2016. Assuming that we continue to see a decline in
production combined with rising demand for oil, it is fair to expect
that we are heading towards a significant global supply deficit. At
that point in time, new spending will be required. It remains unclear
when exactly this will be the case. It is widely believed that a
balance between demand and supply should be reached in 2017. In any
event, past experience in the oilfield service industry has told us
one thing: The sharper and longer the downturn, the steeper the next
upswing usually is.

With its strong cash balance, low net debt and high equity ratio, SBO
is prepared even for a lengthy downturn. The company is carefully
reviewing potential cost saving measures and continues the course
initiated in 2014 and 2015 to combat the decline in 2016. SBO is
improving its cost base and makes targeted investments for growth:
Cost-cutting programmes are consistently implemented, and capacities
are adjusted further to the market situation. The strategy to develop
new markets for the products of SBO in the Oilfield Equipment segment
will be pursued.

Following the acquisition of Canadian "Resource Well Completion
Technologies Inc." (Resource) in November 2014, SBO took over
US-based Downhole Technology on 1 April 2016. With Resource and
Downhole Technology, SBO now has become a leading provider of
products in the fields of "sliding sleeve" and "plug-n- perf", the
two dominating completion technologies.

Based on targeted investments to expand the Completion business and
the implementation of ongoing restructuring activities, SBO will be
well prepared to benefit fully from the next upswing as technology
and market leader.

Comparison of key figures

_____________________________________________________________________
________ | | | 1-6/2016|
1-6/2015| Change in %| |Key_figures:_|_______________|____________
___|_______________|_______________| |Sales________|___________MEUR|_
__________88.0|__________186.9|__________-52.9|

|Earnings | | | | |
|before | | | | |
|interest, | | | | |
|taxes, | MEUR| -5.7| 45.1| N.A.|
|depreciation | | | | |
|and | | | | |
|amortisation | | | | |
|(EBITDA)_____|_______________|_______________|_______________|_______________|
|EBITDA_margin|______________%|___________-6.5|___________24.1|_______-_______|
|EBIT_________|___________MEUR|__________-36.2|___________19.3|___________N.A.|
|EBIT_margin__|______________%|__________-41.1|___________10.4|_______-_______|

|Profit before| MEUR| -26.8| 4.8|
N.A.| |tax__________|_______________|_______________|_______________|
_______________| |Profit after | MEUR| -16.9|
0.0| N.A.| |tax__________|_______________|_______________|_
______________|_______________| |Earnings per | EUR|
-1.06| 0.0| N.A.| |share_(EPS)__|_______________
|_______________|_______________|_______________| |Cashflow from|
| | | | |operating |
MEUR| 18.5| 57.1| -67.7|

|activities___|_______________|_______________|_______________|_______________|
|Headcount____|_______________|__________1,183|__________1,279|___________-7.5|

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 2016, SBO has employed a workforce of1,183 worldwide (30 June
2015:1,279), thereof 317 in Ternitz/Austria and 520 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

Original-Content von: Schoeller-Bleckmann Oilfield Equipment AG, übermittelt durch news aktuell