EANS-News: Schoeller-Bleckmann Oilfield Equipment AG / Very challenging market environment reflected in operating result - Nonetheless, record free cash-flow and liquid funds increased - highly robust

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9-month report

Ternitz/Vienna, 26 November 2015. The entire oilfield service
industry was hit by the expected massive slump of drilling activity
in the first nine months of 2015. Schoeller-Bleckmann Oilfield
Equipment AG (SBO) responded at an early stage - already in Q3 2014 -
by taking a set of countermeasures to guide the company safely
through the downturn. Naturally, the market collapse was reflected in
the earnings figures of SBO. Nevertheless, SBO was able, in the first
nine months, to generate positive operating income (EBIT) before
impairments, record free cash-flow and to increase liquid funds in
this extremely difficult environment, which worsened even further
throughout the third quarter.

Sales contracted by 27.8 %, to MEUR 257.6 (1-9/2014: MEUR 356.6).
Earnings before interest, taxes, depreciation, and amortisation
(EBITDA) fell by 46.5 %, to MEUR 55.0 (1-9/2014: MEUR 102.9).
Earnings before interest and taxes (EBIT) before impairments dropped
by 77.1 %, to MEUR 16.5 (1-9/2014: MEUR 72.0). Profit before tax in
the first nine months came to MEUR 0.3 (1-9/2014: MEUR 64.5). Profit
after tax fell to MEUR minus 2.0 (1-9/2014: MEUR 46.8). Earnings per
share arrived at EUR minus 0.13 (1-9/2014: EUR 2.93).

Gerald Grohmann, CEO of SBO: "As we realised early that 2015 was
going to be a very challenging year for the oilfield service
industry, we started to take countermeasures still in 2014. We will
continue to pursue this course systematically. The market environment
deteriorated further in the third quarter and so we are preparing for
this downturn to last longer than those seen in the past. But we know
how to deal with the cycles in our industry. We are now positioning
the company to ensure that it can fully benefit from the next upswing
that is bound to set in sooner or later."

Due to the persistently challenging market situation, SBO made
goodwill impairments of MEUR minus 21.7 and an impairment of fixed
assets of MEUR minus 1.9, which were largely neutralised by the
revaluation of option commitments, which delivered earnings of MEUR
plus 21.7 in the third quarter. As a consequence, option commitments
totalling MEUR 9.7 were released in the first nine months.

The EBITDA margin was 21.4 % (1-9/2014: 28.9 %), the EBIT margin
before impairments stood at 6.4 % (1-9/2014: 20.2 %), and the EBIT
margin after impairments went to minus 2.8 %. The pre-tax margin was
0.1 % (1-9/2014: 18.1 %).

Despite the highly challenging environment SBO achieved a record free
cash-flow in the first nine months of MEUR 70.9 (1-9/2014: MEUR 27.5)
and increased its liquid funds. With its equity ratio of 59.4 % the
company has a very sound balance sheet structure. Cash-flow from
operating activities climbed by 53.7 %, to MEUR 86.1 (1-9/2014: MEUR
56.0). As at 30 September 2015, SBO had a net cash position of MEUR
12.2 (31 December 2014: net debt of MEUR 35.6; 30 September 2014: net
debt of MEUR 9.7). Liquid funds went up by 44 %, to MEUR 188.0 (31
December 2014: MEUR 130.2). This rise was mainly attributable to a
decrease of the net working capital of MEUR 36.5.

Bookings dropped by 58.2%, to MEUR 154.2 (1-9/2014: MEUR 369.4). The
order backlog recorded at the end of the third quarter was MEUR 40.2,
down 67.5 % from last year's reading (30 September 2014: MEUR 123.6).

Outlook

According to the International Energy Agency (IEA) oil demand is set
to go up by 1.8 mb/d in full 2015, to an average of 94.6 mb/d (2014:
92.7 mb/d). For 2016, the IEA anticipates decelerating growth to come
to 1.2 mb/d (IEA, Oil Market Report, November 2015).

Due to massive curtailment of E&P spending in non-OPEC countries, the
International Energy Agency expects production in non-OPEC countries
to drop by 0.6 mb/d in 2016. Therefore, our assumption is that the
balance between oil demand and supply will stabilise over the next
months. It is impossible to assess today to which extent OPEC will
compensate for the decline in production and growing demand as
described above.

In any event, SBO prepares for a continuation of the highly
challenging market environment. It cannot be predicted at the moment
at which point customers of SBO will abandon their restrictive
spending policies. SBO endeavours to make full use of existing
customer relations. However, as the level of bookings is low, the
company is facing significant challenges. SBO will consistently
continue implementing the countermeasures initiated in 2014 in the
months ahead. SBO merged its two US subsidiaries "Godwin-SBO LLC" and
"Knust-SBO LLC" as at 1 October 2015. Production of newly founded
"Knust-Godwin LLC" will be bundled at the site of Godwin. The merger
aims to create structural and sustainable cost benefits, although
capacities will remain at the same level.

Those measures can compensate for only part of the fierce decline in
demand in the established core markets. However, our positive
operating cash-flow, low debt and high level of liquid funds provide
SBO with a stable basis to overcome the current cyclical downturn.
Therefore, SBO is in a position to intensify its search for
strategically fitting acquisition targets, even in this difficult
environment. As a result, the company will be excellently positioned
to fully meet the demand that should re-emerge from the next upswing.

Comparison of key figures

1-9/2015 1-9/2014 Change
Sales in MEUR 257.6 356.6 -27.8 %
EBITDA in MEUR 55.0 102.9 -46.5 %
EBITDA margin in % 21.4 28.9 -
EBIT before impairments in MEUR 16.5 72.0 -77.1 %
EBIT margin before impairments in % 6.4 20.2 -
EBIT after impairments in MEUR -7.1 72.0 -
EBIT margin after impairments in % -2.8 20.2 -
Profit before tax in MEUR 0.3 64.5 -99.6 %
Profit after tax in MEUR -2.0 46.8 -
EPS* in EUR -0.13 2.93 -
Headcount** in numbers 1,231 1,663 -26.0 %

*) based on average number of shares outstanding
**) reporting date 30 September.

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
September 2015, SBO has employed a workforce of 1,231 worldwide (30
September 2014: 1,663), thereof 399 in Ternitz/Austria and 455 in
North America (including Mexico).

Further inquiry note:
MMag Florian Schütz, MBA
Head of Investor Relations SBO
Tel.: +43 2630 315-251
f.schuetz@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