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Schoeller-Bleckmann Oilfield Equipment AG

euro adhoc: Schoeller-Bleckmann Oilfield Equipment AG
Annual Reports
Schoeller-Bleckmann Oilfield Equipment AG: Confirmation of preliminary figures for 2003 Proposed dividend 30 cents/share, positive development of bookings, uncertainties due to do

  Disclosure announcement transmitted by euro adhoc.
  The issuer is responsible for the content of this announcement.
Ternitz/Vienna, March 31, 2004. Schoeller-Bleckmann Oilfield
Equipment AG (SBO) listed on the prime market of the Vienna Stock
Exchange confirms the preliminary figures for 2003 announced in
February. According to the now final figures group sales were EUR
134.2 mill. (following EUR 178.6 mill. in 2002). The EBIT was EUR
13.1 mill. (following EUR 26.1 mill. in the year before). However,
with an EBIT margin of 9.8 %SBO was able to manage well the business
year of 2003 that was rather challenging due to the difficult overall
economic situation. Adjusted for currency fluctuations and based on
the dollar - euro exchange rate in 2002 SBO would have generated an
EBIT of EUR 20.4 mill. and an EBIT margin of 13.2 %.
Gerald Grohmann, SBO’s CEO: "The result shows that SBO due to its
value strategy is able to generate satisfying results and a good
return on capital even against an economically most adverse
background. This strategy secures our challenging economic objectives
mainly in the long run."
The Executive Board will suggest to the General Meeting to distribute
a dividend of 30 cents per share (following a dividend of 30 cents
plus a premium of 20 cents in 2002). Based on the closing price of
EUR 8.9 this corresponds to a dividend yield of 3.4 %.
Dissatisfying market development in 2003 
The global demand for high-tech drilling equipment for the oilfield
service industry was dissatisfying in 2003. This development was due
to the fact that crude oil consumption was covered with existing
production capacities. Additionally, oilfield service companies could
cover most of their demand for drilling equipment from their
inventories.
The rise of the rig count, the most important indicator of drilling
activities, from 1,957 at the end of 2002 to 2,334 at the end of 2003
was almost exclusively due to onshore gas drillings conducted mainly
in North America. These gas drillings were vertical drillings
requiring only standard equipment. However, the market for
sophisticated directional drilling and complex offshore activities
stagnated.
Dollar exchange rate a major burden 
In the course of 2003, the USD lost around 20 % against the Euro. SBO
generated approx. 80 % of its sales revenues in USD, while some 60 %
of expenditure were due in USD. Apart from the weak market
development the heavy devaluation of the dollar was an additional
strain on the sales and results of the SBO group. These exchange rate
fluctuations could only partly be levelled out by currency hedging
measures.
Challenges successfully managed 
SBO counteracted this scenario by launching a variety of individual
steps such as flexible use of production capacities, productivity
increase programmes, continuous improvement of the product portfolio
and cost structure. A manufacturing co-operation scheme was concluded
in North America to subcontract standard production steps to Mexico.
In-house manufacture of standard oil tools was discontinued at
Darron/UK as the market for such products had declined.
The weakness of the dollar was used for strategic future-oriented
investments in the dollar region. In mid-2003 and retroactively from
January 1, 2003 SBO increased ownership of the most profitable
US-subsidiary Knust-SBO Ltd./Houston from 75 % to now 100 %. Moving
the location of the subsidiary Godwin-SBO L.P. in Houston in the
third quarter was the prerequisite of creating optimised production
flows which will allow to implement cost saving potentials in the
future as well. Moreover, additional space for expansion projects
will be available at the new location.
In 2003 gunhole drilling operations started in Houston. They will
help to step up capacities for high-precision specialty drillings in
order to meet growing demand for this technology.
In the wake of restructuring measures the headcount of the SBO group
was reduced from 852 as of December 31, 2002 to 800 as of December
31, 2003 while at the same time productivity was increased.
Successful relisting to Vienna 
SBO has been listed on the prime market of the Vienna Stock Exchange
since March 27, 2003 and on July 1, 2003 shares were delisted from
Nasdaq Europe. SBO has taken re-listing as an occasion to re-position
the SBO share with institutional and private investors, improve
liquidity and, therefore, obtain a fair valuation of the share.
Following re-listing to Vienna, trading volumes and share prices
developed rather positively. Since the introduction of the share on
the Vienna Stock Exchange, the average daily transaction volume has
been around EUR 106,754 (March 27 through December 31, 2003). The
price of the SBO share rose by around 14 %; considering the dividend
of 50 cents distributed for 2002 the value increase for shareholders
amounts to some 21 % in 2003.
Outlook into the first quarter and the business year of 2004 
The lately rather positive business data from Asia and the US should
lead to rising demand for crude oil, which, in turn, will trigger
higher demand for drilling equipment. Additionally, decreasing
equipment inventories at SBO’s customers over the year should be
mirrored in growing numbers of bookings. Compared with bookings in
2003, bookings received in the first quarter of 2004 already improved
markedly.
However, the dollar exchange rate is a major parameter for results to
be expected for the entire year of 2004. As a consequence of the
lately rather heavy currency fluctuations any outlook is difficult to
make because of the uncertainties involved.
SBO will adhere to its proven value strategy in 2004 as well.
Selective investments will help both to further strengthen the market
position and improve the cost structure of the group. Additionally,
SBO will continue its activities to expand its long-standing
technological edge. The introduction of new products, such as
recently a new downhole motor, will give the company additional sales
opportunities.
Comparison of key figures in MEUR
~
                           2003  2002
Sales                      134.2 178.6
EBIT                       13.1  26.1
EBIT margin (%)            9.8   14.6
Profit before tax          9.4   19.8
Consolidated group result  6.1   11.1
EPS*                       0.47  0.85
Headcount **               800   852
~
* based on average shares outstanding 
**Reporting date December 31
Schoeller-Bleckmann Oilfield Equipment AG is the global market leader
for high-precision components for the oilfield service industry. The
business focus is on non-magnetic drillstring components for
directional drilling. Worldwide, SBO employs a workforce of 800 (end
of 2002: 852), currently 207 in the company headquarters at Ternitz,
Lower Austria and 393 in North America. The majority shareholder of
the company (approx. 64 %) is Berndorf AG.
end of announcement        euro adhoc 31.03.2004

Further inquiry note:

Gerald Grohmann, Chief Executive Officer
Schoeller-Bleckmann Oilfield Equipment AG
A-2630 Ternitz, Hauptstraße 2
Tel: +43 2630/315 DW 110, fax: DW 101
E-Mail: sboe@sbo.co.at

Mick Stempel
Tel.: 01/5046987-85
mailto:m.stempel@hochegger.com

Branche: Oil & Gas - Upstream activities
ISIN: AT0000946652
WKN: 94665
Index: ATX Prime, WBI
Börsen: Wiener Börse AG / official dealing

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