Earnings Release • Nov 26, 2020
Earnings Release
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| OPERATING CASHFLOW | MEUR | 81.3 | (1-9/2019: | 74.7) |
|---|---|---|---|---|
| NET LIQUIDITY | MEUR | 10.5 | (2019: | -20.1) |
| SALES | MEUR | 236.4 | (1-9/2019: | 345.9) |
| EBIT BEFORE ONE-OFF EFFECTS | MEUR | 1.1 | (1-9/2019: | 55.6) |
| EBIT AFTER ONE-OFF EFFECTS | MEUR | -19.8 | (1-9/2019: | 54.5) |
| PROFIT AFTER TAX | MEUR | -21.3 | (1-9/2019: | 26.6) |
"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 crisistested 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." "
GERALD GROHMANN
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 Aktiengesellschaft (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).
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).
"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."
Gerald Grohmann, CEO
SBO's business is divided into two segments, "Advanced Manufacturing & Services" (AMS) and "Oilfield Equipment" (OE). Sales of the late-cycle AMS segment went down from the reference period of last year, arriving at MEUR 131.4 in the first three quarters (1-9/2019: MEUR 172.5), while profit from operations (EBIT) before one-off effects was MEUR 9.8 (1-9/2019: MEUR 25.1). Sales of the OE segment were heavily impacted by the declining North American business, contracting to MEUR 105.0 (1-9/2019: MEUR 173.3). Profit / loss from operations (EBIT) before one-off effects was MEUR minus 1.0 (1-9/2019: MEUR 29.2).
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).
| UNIT | 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 |
Headcount as of 30 September 2020 / 31 December 2019 1,150 1,535
In 2020, the COVID-19 pandemic triggered a global economic crisis that hit nearly all industries. In the third quarter of 2020, the global economy slowly began to recover. Compared to the previous quarter, the GDP in the euro zone increased by 12.7 % and in the United States by 7.4 %. The oil market also stabilized to some extent, as demand rose slightly in the summer. After historic lows due to lockdowns in numerous countries, oil prices started to pick up again moderately. However, at an average of USD 40 per barrel, oil prices were still substantially below those of the previous year and did not achieve any level of sustainability required for medium and long-term recovery.
Global oil production in the third quarter of 2020 came to 91.0 million barrels per day (mb/d), that is 2.2 mb/d below demand of 93.2 mb/d. This development was largely attributable to the severe production cuts by OPEC+ states observed since May 2020. Demand increased by 10.2 mb/d compared to the second quarter of 2020 (4-6/2020: 83.0 mb/d). OPEC crude oil production dropped to 29.2 mb/d in the third quarter of 2020 (24.1 mb/d excluding natural gas liquids / NGLs) as a result of the production cuts, which was significantly lower than in 2019 (34.9 mb/d) and the third quarter of 2019 (34.4 mb/d). Production in the United States declined, amounting to 16.3 mb/d following 17.2 mb/d in the year 2019. Overall, the production volume of non-OPEC countries arrived at 61.9 mb/d (2019: 65.5 mb/d).1
Having dropped sharply since March 2020, the rig count (number of active drilling rigs) started to bottom out in North America in the third quarter and recovered slightly. During year 2020, the US rig count reported a decrease of 547 rigs or 68.0 % to 257 rigs in September 2020 (December 2019: 804 rigs). The cycle trough was reached at 244 rigs. This development has not yet occurred internationally. The international rig count fell in the first three quarters, from 1,104 rigs at year-end 2019 to 702 rigs at the end of September, resulting in a reduction of 36.4 %. All in all, the global rig count came to 1,019 rigs at the end of September 2020, down by 1,024 rigs or 50.1 % during 2020 (December 2019: 2,043 rigs).2
In the first half of 2020, oil prices were initially exposed to strong downward pressure and high volatility as the OPEC+ alliance could not agree on a cut in production and due to the extremely weak market environment. However, oil prices recovered slightly throughout the third quarter. North Sea crude Brent started into 2020 at a price of USD 66.00 and was trading at USD 40.95 on the last trading day of the third quarter, down by 38.0 %. In the same period, the price of North American crude WTI fell from USD 61.06 per barrel to USD 40.22, down by 34.1 %.3
1 International Energy Agency (IEA), Oil Market Report, November 2020.
2 Baker Hughes Rig Count.
3 Bloomberg: CO1 Brent Crude (ICE) and CL1 WTI Crude (Nymex).
The International Monetary Fund (IMF) expects the global economy to shrink by 4.4 % in 2020. From 2021 onward, a significant recovery should take place, as global economic output is projected to grow by 5.2 %, 3.9 % in industrial countries and 6.0 % in emerging markets and developing economies.4
In its current report, the International Energy Agency (IEA) predicts a decline in oil demand of 8.8 mb/d for 2020. For 2021, an increase of 5.8 mb/d is expected compared to 20205 , which should lead to a recovery on the oil market. Exploration and production (E&P) spending is estimated to go down by a total of 27 % in 2020. Internationally, a reduction of 22 % is predicted this year, and a dramatic decline of as much as 42 % is expected for North America.6
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.
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.
4 IMF, World Economic Outlook, October 2020.
5 International Energy Agency (IEA), Oil Market Report, November 2020.
6 Evercore ISI Research, The 2020 Evercore ISI Global E&P Mid-Year Spending Outlook, June 2020.
"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."
Gerald Grohmann, CEO
SCHOELLER-BLECKMANN OILFIELD EQUIPMENT Aktiengesellschaft (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 highefficiency 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).
The share of Schoeller-Bleckmann Oilfield Equipment Aktiengesellschaft is listed on the Prime Market of the Vienna Stock Exchange and is part of the leading Austrian index ATX. In total, 16,000,000 par value shares with a nominal value of EUR 1.00 each have been issued.
The SBO share started the year on 2 January 2020 at a price of EUR 50.30 and closed at EUR 22.75 on 30 September 2020 falling by a total of 54.8 %. In the first three quarters of 2020, which were globally hit by the COVID-19 pandemic, a low of EUR 15.74 was recorded on 17 March 2020. The Oil Service Sector Index (OSX) performed along similar lines, dropping by 64.4 %. The ATX, the leading Austrian index, also declined by 33.8 %. By way of comparison, WTI crude oil contracted by 34.1 %, and Brent crude oil fell by 38.0 %.
On 23 March 2020, the company launched a share buyback program under which 231,938 shares, representing 1.4496 % of the share capital, were repurchased. All buybacks were carried out on the Vienna Stock Exchange.
Market capitalization as of 30 September 2020 was MEUR 364, and 67 % of the shares were in free float at that date.
| DATE | EVENT |
|---|---|
| 19 January 2021 | Preliminary result for 2020 |
| 17 March 2021 | Annual financial statements for 2020 |
| 29 April 2021 | Annual General Meeting, 10 a.m. (CET) |
| 19 May 2021 | Q1 2021 |
| 19 August 2021 | HY 2021 |
| 25 November 2021 | Q3 2021 |
Further information about SBO is available on www.sbo.at. If you have any questions regarding the company or would like to be included in SBO's Investor Relations Information Service (IRIS), please send an e-mail to [email protected].
Note on this quarterly financial report: This quarterly financial report is also available in German language. In the event of discrepancies, the German version shall prevail.
This corporate publication contains information with forward-looking statements. Parts of those statements contain forecasts regarding the future development of SBO, SBO group companies, relevant industries and the markets. All these statements as well as any other information contained in this corporate publication are for information only and do not substitute professional financial advice. As such, this information must not be understood as a recommendation or offer to buy or sell SBO shares, and SBO cannot be held liable therefrom.
| IN TEUR | 9 MONTHS PERIOD ENDED | 3 MONTHS PERIOD ENDED | |||
|---|---|---|---|---|---|
| 30.09.2020 | 30.09.2019 | 30.09.2020 | 30.09.2019 | ||
| Sales | 236,418 | 345,851 | 51,916 | 109,620 | |
| Cost of | |||||
| goods sold | -182,669 | -240,083 | -46,228 | -78,570 | |
| Gross profit | 53,749 | 105,768 | 5,688 | 31,050 | |
| Selling expenses | -17,306 | -19,833 | -4,127 | -6,735 | |
| General and administrative expenses | -26,201 | -31,560 | -7,531 | -11,595 | |
| Other operating expenses | -13,296 | -8,872 | -5,070 | -2,757 | |
| Other operating income | 4,195 | 10,103 | -203 | 6,707 | |
| Profit / loss from operations before impairments and restructuring measures |
1,141 | 55,606 | -11,243 | 16,670 | |
| Restructuring losses | -509 | -1,242 | -57 | -105 | |
| Restructuring gains | 0 | 168 | 0 | 71 | |
| Impairment on property, plant and equipment | -1,690 | 0 | 35 | 0 | |
| Impairment on goodwill and other intangible assets | -13,157 | 0 | 237 | 0 | |
| Impairment on current assets | -5,608 | 0 | 111 | 0 | |
| Profit / loss from operations after | |||||
| impairments and restructuring measures | -19,823 | 54,532 | -10,917 | 16,636 | |
| Interest income | 1,388 | 2,732 | 254 | 891 | |
| Interest expenses | -3,387 | -7,048 | -1,182 | -1,405 | |
| Other financial income | 22 | 0 | -1 | 0 | |
| Other financial expenses | 0 | -10,861 | 0 | -96 | |
| Gains / losses from remeasurement | |||||
| of option liabilities | 0 | 4,112 | 0 | 22 | |
| Financial result | -1,977 | -11,065 | -929 | -588 | |
| Profit / loss before tax | -21,800 | 43,467 | -11,846 | 16,048 | |
| Income taxes | 496 | -16,899 | 2,587 | -6,725 | |
| Profit / loss after tax | -21,304 | 26,568 | -9,259 | 9,323 | |
| Average number of shares outstanding |
15,793,147 | 15,953,491 | 15,723,465 | 15,955,403 | |
| EARNINGS PER SHARE IN EUR | |||||
| (BASIC = DILUTED) | -1.35 | 1.67 | -0.59 | 0.59 |
| ASSETS | ||
|---|---|---|
| IN TEUR | ||
| 30.09.2020 | 31.12.2019 | |
| Current assets | ||
| Cash and cash equivalents | 321,951 | 265,211 |
| Trade receivables | 58,410 | 112,257 |
| Other receivables and other assets | 7,933 | 7,411 |
| Assets held for sale | 3,080 | 3,301 |
| Inventories | 125,030 | 141,956 |
| Total current assets | 516,404 | 530,136 |
| Non-current assets | ||
| Property, plant and equipment | 129,760 | 146,647 |
| Goodwill | 123,068 | 140,435 |
| Other intangible assets | 16,408 | 26,271 |
| Long-term receivables and assets | 4,225 | 5,235 |
| Deferred tax assets | 25,655 | 25,885 |
| Total non-current assets | 299,116 | 344,473 |
| TOTAL ASSETS | 815,520 | 874,609 |
| IN TEUR | ||
|---|---|---|
| 30.09.2020 | 31.12.2019 | |
| Current liabilities | ||
| Liabilities to banks | 35,551 | 31,052 |
| Current portion of long-term loans | 26,667 | 47,596 |
| Lease liabilities | 2,027 | 2,595 |
| Trade payables | 16,542 | 24,736 |
| Government grants | 319 | 319 |
| Income tax payable | 4,040 | 7,392 |
| Other liabilities | 150,307 | 155,518 |
| Other provisions | 4,639 | 3,014 |
| Total current liabilities | 240,092 | 272,222 |
| 9,084 430 |
11,858 695 |
|---|---|
| 7,087 | 6,862 |
| 304 | 304 |
| 6,060 | 5,899 |
| 249,187 | 206,683 |
| 303,276 | 370,086 |
|---|---|
| 211,826 | 251,991 |
| 12,225 | 32,434 |
| 19 | 19 |
| 785 | 785 |
| 62,698 | 68,902 |
| 15,723 | 15,955 |
| IN TEUR | 9 MONTHS PERIOD ENDED | |
|---|---|---|
| 30.09.2020 | 30.09.2019 | |
| OPERATING ACTIVITIES | ||
| Profit / loss after tax | -21,304 | 26,568 |
| Adjustment for dividends relating to put/call-options | 0 | 10,626 |
| Depreciation, amortization and impairments | 47,029 | 37,089 |
| Other non-cash expenses and revenues | 2,175 | -3,937 |
| Cashflow from profit | 27,900 | 70,346 |
| Expenditures for the acquisition of non-controlling interests | -87 | -21,114 |
| Change in working capital | 53,464 | 25,490 |
| Cashflow from operating activities | 81,277 | 74,722 |
| INVESTING ACTIVITIES | ||
| Expenditures for property, plant and equipment and intangible assets | -13,864 | -23,893 |
| Expenditures for the acquisition of non-controlling interests | 0 | -8,914 |
| Other activities | 2,856 | 2,668 |
| Cashflow from investing activities | -11,008 | -30,139 |
| FREE CASHFLOW | 70,269 | 44,583 |
| FINANCING ACTIVITIES | ||
| Dividend payment | -18,861 | -15,955 |
| Dividends paid relating to put/call-options | 0 | -2,178 |
| Acquisition of treasury shares | -6,680 | 0 |
| Change in financial liabilities | 23,899 | -17,096 |
| Cashflow from financing activities | -1,642 | -35,229 |
| Change in cash and cash equivalents | 68,627 | 9,354 |
| Cash and cash equivalents at the beginning of the period | 265,211 | 241,532 |
| Effects of exchange rate changes on cash and cash equivalents | -11,887 | 9,523 |
| Cash and cash equivalents at the end of the period | 321,951 | 260,409 |
| IN TEUR | ADVANCED MANUFACTURING & SERVICES |
OILFIELD EQUIPMENT |
SBO-HOLDING & CONSOLIDATION |
GROUP |
|---|---|---|---|---|
| External sales | 131,368 | 105,050 | 0 | 236,418 |
| Intercompany sales | 32,456 | 16,057 | -48,513 | 0 |
| Total sales | 163,824 | 121,107 | -48,513 | 236,418 |
| Profit / loss from operations (EBIT) before impairments and restructuring measures |
9,848 | -1,028 | -7,679 | 1,141 |
| Profit / loss before tax | 2,156 | -14,018 | -9,938 | -21,800 |
| IN TEUR | ADVANCED MANUFACTURING & SERVICES |
OILFIELD EQUIPMENT |
SBO-HOLDING & CONSOLIDATION |
GROUP |
|---|---|---|---|---|
| External sales | 172,538 | 173,313 | 0 | 345,851 |
| Intercompany sales | 72,625 | 15,999 | -88,624 | 0 |
| Total sales | 245,163 | 189,312 | -88,624 | 345,851 |
| Profit / loss from operations (EBIT) before restructuring measures |
25,121 | 29,185 | 1,300 | 55,606 |
| Profit / loss before tax | 24,779 | 19,823 | -1,135 | 43,467 |
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