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Fugro to focus on geotechnical and survey activities

Second half year better than expected; restructuring measures accelerated due to challenging market

27 Feb 2015  
Leidschendam, the Netherlands

  • Fugro to focus on its core geotechnical and survey activities.
  • Restructuring Seabed Geosolutions in progress and Fugro actively seeking options to reduce its stake.
  • Process underway to find a partner to create a strong subsea services player. Options include a divestment of (part of) the subsea business.
  • The results in 2014 were poor due to the strong deterioration of the oil and gas market and performance issues.
  • Due to the poor results and to strengthen the balance sheet, Fugro will not pay a dividend for the year 2014.
  • Performance improvement measures have been accelerated and are on track.
  • 2nd half year EBIT margin (excluding impairments and write-offs) of 9.3% for the Geotechnical, Survey and Subsea divisions combined, compared to guidance of mid-single digit.
  • Impairments and write-offs in the second half year of EUR 283.4 million versus guidance of EUR 200 - 250 million. Total impairments and write-offs for the year of EUR 630.0 million.
  • Net debt to EBITDA at year end of 2.2 compared to requirement of below 3.5.
  • Backlog of the Geotechnical and Survey divisions decreased 7.9% on a currency comparable basis, in line with market developments.
Key figures (x EUR million) 2014 2013
Revenue 2,572.2 2,424.0
  currency comparable growth 5.9%  
EBITDA1 excluding impairments and write-offs 372.7 545.5
EBIT excluding impairments and write-offs 81.4 267.0
EBIT margin excluding impairments and write-offs (%) 3.2% 11.0%
Net result2 (457.6) 224.2
Backlog next 12 months 1,575.5 1,723.5
Cash flow from operating activities 336.7 365.4

1 EBITDA is EBIT before depreciation, amortisation (including amortisation on multi-client library), impairments related to goodwill, intangible assets, property, plant and equipment
2 attributable to owners of the company (from continued operations)

Paul van Riel, CEO: "Today we present important portfolio changes, as part of the updated strategy 'Building on strength' presented in October. Clearly, the way forward for Fugro is to fully focus on its survey and geotechnical activities. We have been able to build our global market leading Geotechnical and Survey divisions into pillars of strength on the foundation of being an independent service provider. We will continue to build Fugro on the strength of these activities. We are actively seeking options to reduce our share in Seabed Geosolutions and the process is underway to find a partner for Subsea Services; options include a divestment of (part of) the subsea business.

To address the current challenging environment, we initiated a series of measures throughout the company, starting in the second quarter of 2014 to restore margins, improve cash flow and return on capital employed. These have been expedited and are on track. Our second half year results in our Geotechnical, Survey and Subsea Services divisions were satisfactory considering the market circumstances.

We anticipate a weak oil and gas market for some time to come, while the infrastructure and windfarm markets continue to provide good opportunities. Our plan for 2015 is clear: focus on profitability, cash flow and strengthening the balance sheet by implementing restructuring measures. Strategically, our main objective is to implement the announced portfolio changes to strengthen the company, simplify and reduce the cost of the organisation and improve operational performance. This will position the company well to benefit from recovery in the oil and gas market when the demand-supply balance is restored."

Highlights 2nd half year

  • Revenue increased by 5.6% at constant currencies.
  • Improved performance in Geotechnical, Survey and Subsea Services leading to 9.3% EBIT margin for these divisions combined in the second half year compared to 7.0% in the first half of 2014 and mid-single digit guidance provided at the publication of the 3rd quarter trading update.
  • The impairments in the second half year of EUR 283 million were slightly higher than guided.
  • Additional measures implemented include fleet reductions in the Geotechnical and Survey divisions.
  • Onshore geotechnical continued to perform well, but the margin was impacted by amortisation of capitalised backlog related to the Geofor acquisition.
  • The margin in offshore geotechnical was substantially higher than in the first half year due to improved vessel utilisation.
  • Survey margin performance was better than in the first half, related to improved geophysical survey results.
  • Subsea Services' margin was at 6.9% substantially better than in same period last year, partly due to better performance in the construction support business line.
  • In Geoscience, Seabed Geosolutions made a severe loss in line with the first half of the year, as guided.

Highlights full year

  • Revenue of EUR 2,572.2 million; year-on-year growth at constant currencies of 5.9%.
  • EBITDA excluding impairments and one-off write-offs of EUR 372.7 million.
  • EBIT of EUR 81.4 million, excluding impairments and one-off write-offs, which represents a margin of 3.2% compared to 11.0% last year.
  • EUR 336.7 million positive cash flow from operating activities; cash flow before financing of EUR 42.4 million.
  • Solvency of 43% and net debt/ EBITDA (under amended definition) of 2.2 per year-end.
  • Total impairments and write-offs of EUR 630.0 million, the majority related to the Geoscience division.
  • Due to the poor 2014 results and to strengthen the balance sheet, Fugro will not pay a dividend for the year 2014.
  • Backlog of the Geotechnical and Survey divisions decreased 7.9% on a currency comparable basis, in line with market developments.
  • Onshore geotechnical performed well with 7.3% growth at constant currencies. Based on 2 acquisitions and organic growth, Fugro is now the market leading geotechnical player in Africa.
  • Offshore geotechnical suffered from the weak oil and gas market, with the revenue mix shifting to lower margin shallow water work for wind farm development.
  • Survey also impacted by weakened oil and gas market, especially the geophysical activities in Europe and the United States. The geospatial activities were restructured from a data collector into a high end solutions provider.
  • Subsea Services successfully realised the next step in its multi-year margin improvement programme.
  • In Geoscience, Seabed Geosolutions continued to be severely loss making; restructuring and corrective measures are underway. Multi-client sales suffered from the oil and gas market decline.

For more information


Serge van de Ven

+31 (0) 70 31 11129


Catrien van Buttingha Wichers

+31 (0) 70 31 15335


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