Fugro HY 2019: Recovery continues, driven by marine business

31-07-2019 Leidschendam Member news

Seabed Geosolutions classified as ‘held for sale’

■ After a weak first quarter, the second quarter results of Fugro’s core business improved significantly, resulting in an EBIT margin of 2.9% in the first half year compared to 0.1% in the same period last year.
■ Non-core Seabed Geosolutions is now classified as ‘held for sale’ and therefore revenue and EBIT(DA) are excluded from consolidated financials; a non-cash impairment of EUR 61 million has been recognised.
■ Revenue growth of 5.7%, driven mainly by offshore wind, oil & gas, and nautical markets.
■ Fugro remained within all covenants. Net debt/EBITDA was 2.8 and is expected to improve towards the end of the year.
■ Backlog growth in all regions, with the exception of Asia Pacific due to a significant reduction in capacity in marine asset integrity and an increased focus on projects with better margins.
■ Outlook 2019: continued revenue growth, further improvement of EBIT margin and positive free cash flow from continuing operations.

Mark Heine, CEO: ‘I am pleased to report a strong improvement in our marine activities, in particular for offshore wind developments and hydrography. By now, Fugro’s business in non-oil and gas is close to half of our revenue. We are also benefiting from the ongoing normalisation of investments in oil and gas, whilst in our land business the asset integrity services are picking up. We anticipate continued supportive market conditions going forward, with higher volumes and recovering pricing.

In line with our Path to Profitable Growth strategy, we are increasingly focusing on activities with better margins, improving the quality of our backlog. The marine asset integrity results show the impact from the restructuring in Asia Pacific while the market conditions are gradually improving. In the Americas, results should improve in the second half of the year, owing to higher utilisation of our vessel fleet.

In the land business we are taking additional measures to bring margins structurally at a higher level. The new top-management structure, that we introduced as of May with an Executive Leadership Team including the Group Directors of the four regions, allows us to gain operational efficiencies and further cost reductions. In addition, our differentiating digital technologies will provide benefits. We are also targeting a divestment of Seabed Geosolutions in the foreseeable future, supporting its ambition to capture the opportunities of a growing ocean bottom node seismic market.’ Read more