Fugro Nv · EURONEXT:FUR
Fugro Nv — FY2019 Earnings Presentation
37 slides from Fugro Nv's earnings presentation, 2020
Slide 1: 2019 results
2019 results
Slide 2: Contents
Contents Highlights Markets and FY 2019 results and Strategy outlook 2
Slide 3: Highlights 2019
Highlights 2019 ▪ Second year of recovery with continued revenue growth and margin expansion ▪ EBIT margin of Fugro’s core business improved to 4.2% from 1.9% last year; driven by substantially better performance of marine ▪ Revenue growth of 2.7% on top of very strong increase last year, due to sel
Slide 4: 2019 key financials: continued margin improvement
2019 key financials: continued margin improvement Improved EBIT margin Free cash flow turns positive Healthy 12-month backlog adjusted +9.9%1 4.2% 1,011 58 902 1.9% 2018 2019 -21 2018 2019 2018 2019 ▪ Margin expansion driven by marine, land business lagging ▪ MSC continues strong performance; MAI tu
Slide 5: 2. Markets and strategy implementation
2. Markets and strategy implementation
Slide 6: Lower dependence on oil & gas, strong revenue growth in renewables and nautical
Lower dependence on oil & gas, strong revenue growth in renewables and nautical Share of market segments Revenue growth1 in market segments % of total revenue2 ▪ Strong growth offshore -1% wind and hydrography 55% 54% 52% 70% 62% ▪ Revenue decline in oil & 76% -1% gas due to rationalisation marine a
Slide 7: Oil & gas market: gradual recovery
Oil & gas market: gradual recovery Global oil and gas market Growth drivers Final Investment ▪ Increasing number of sanctioned offshore projects ▪ Brent oil seems to have stabilised in range of USD 55-70 per barrel Decisions after few years of decline. ▪ Steady growth of investments driven by new di
Slide 8: Offshore wind market: steep growth
Offshore wind market: steep growth Global offshore wind market Growth drivers ▪ Installed capacity to triple in next decade ▪ Maturing industry and recognised key source of ▪ Europe remains biggest market; China, US, Taiwan, Japan and India Amount of wind energy. turbines installed ▪ Strong growth i
Slide 9: Infrastructure markets: continued growth
Infrastructure markets: continued growth Global infrastructure market Growth drivers ▪ Market outlook provides growth outlook in key markets ▪ Population growth ▪ Expenditure remains growing in medium/longer term Urbanisation ▪ More people moving to urban areas ▪ Increasing pressure on existing infr
Slide 10: Diversified client base and long-standing client relationships
Diversified client base and long-standing client relationships Fugro services multiple markets and type of clients, offering low concentration Revenue by segment Revenue by client type Client concentration 4% 3% 3% 3% 4% 3% 7% 5% 9% 5% 19% IOCs - Majors 2% IOCs - Independent 2% Oil & Gas 6% 2% Top 1
Slide 11: Continuously rethinking what we do and how we do it
Continuously rethinking what we do and how we do it Sustainability is embedded in Fugro’s business Important role to play in the Increase safety while limiting Sustainable cities Mitigating climate change impact ongoing energy transition environmental impact with innovation Growth in renewable energ
Slide 12: Continuously rethinking what we do and how we do it
Continuously rethinking what we do and how we do it Sustainability is embedded in Fugro’s business De-risking of exploration activities Next level electricity network Insights for safe, and efficiently Increase safety while limiting management managed roads environmental impact with innovation Fugro
Slide 13: Path to Profitable Growth strategy
Path to Profitable Growth strategy Purpose Together we create a safe and liveable world Be the world’s leading Geo-data specialist Vision Unlocking valuable insights from Geo-data to help our clients design, build and operate their assets safely and sustainably Strategy Capture the upturn in Differe
Slide 14: Implementing Path to Profitable Growth strategy
Implementing Path to Profitable Growth strategy ▪ Nov 2018: Path to Profitable Growth strategy launched based on 3 strategic objectives • Capture the upturn in Energy & Infra • Differentiate by integrated digital solutions • Leverage core expertise in new growth markets ▪ May 2019: New top structure
Slide 15: Turnaround underperforming land business
Turnaround underperforming land business ▪ Finalise restructuring underperforming services in specific countries like UAE, Qatar, Oman, Lebanon, South Africa, Germany and France. ▪ Complete transformation of US service offering from predominantly oil and gas to infrastructure with selective tenderin
Slide 16: Progress divestment of non-core assets
Progress divestment of non-core assets ▪ In December 2019, Fugro acquired CGG’s 40% shareholding and terminated JV agreement, in exchange for EUR 31.3 million, which will Seabed Geosolutions facilitate divestment (100% stake) ▪ Multiple parties have shown interest ▪ Business classified as held for s
Slide 17: 3. 2019 results and outlook
3. 2019 results and outlook
Slide 18: 2019 key messages
2019 key messages ▪ Comparable revenue of core business up by 2.7% on top of exceptionally strong increase in 2018 ▪ Adjusted EBIT margin up from 1.9% to 4.2%, fully driven by marine business while land business is lagging ▪ YoY improvement in Europe-Africa and APAC, Americas and Middle East & India
Slide 19: Revenue and EBIT expansion driven by marine
Revenue and EBIT expansion driven by marine Revenue EBIT X EUR million X EUR million, adjusted +2.7%1 1,631 4.2% -9 36 47 - 18 1.9% 60 68 1,553 30 2018 Marine Land FX effect 2019 2018 Marine Land 2019 ▪ Marine site characterisation (MSC) double digit revenue growth; continued margin expansion. ▪ Mar
Slide 20: Mixed regional performance
Mixed regional performance Revenue EBIT X EUR million X EUR million, adjusted +2.7%1 4.2% -6 20 1,631 -12 -43 60 36 36 -7 1.9% 68 32 30 1,553 2018 Europe Ameri- APAC Middle FX effect 2019 2018 Europe Americas APAC Middle 2019 - Africa cas East - Africa East & & India India 1. Corrected for currency
Slide 21: Europe-Africa: strong improvement to double digit margin
Europe-Africa: strong improvement to double digit margin Revenue +4.9% ▪ Improved price levels in combination with increase in activity levels in marine and limited dry docks 0 ▪ Strong growth MSC in offshore wind and healthy growth 682 in MAI in oil & gas 650 ▪ LSC down due to delays and reduced wo
Slide 22: Americas: margin decline despite revenue growth
Americas: margin decline despite revenue growth Revenue +17.9% ▪ Growth supported by all business lines, especially 16 MSC, driven by offshore wind on the east coast of US 412 335 2018 Marine Land FX 2019 EBIT (margin) ▪ Decline mostly related to high level of maintenance, low 0.0% -2.8% utilisation
Slide 23: APAC: restructuring efforts start to pay off
APAC: restructuring efforts start to pay off Revenue - 11.4% ▪ Significant revenue decline in MAI due to ongoing rationalisation, more selective tendering and smaller 364 fleet; MSC up slightly 331 ▪ LSC revenue declined due to challenging Hong Kong market; LAI revenue down due to project delays 201
Slide 24: Middle East & India: margin decline, actions initiated
Middle East & India: margin decline, actions initiated Revenue -3.5% ▪ MSC revenue down due to low activity level in Egypt ▪ MAI up due to higher activity in positioning and 9 construction support 206 204 ▪ LSC was impacted by ongoing restructuring in certain countries and the challenging economic a
Slide 25: Seabed Geosolutions (held for sale): EBIT impacted by execution issues and under-utilisation
Seabed Geosolutions (held for sale): EBIT impacted by execution issues and under-utilisation Revenue ▪ Up to 4 crews active during the year, in Brazil, Middle +32.9% East, West-Africa and GoM, compared to 3 crews in 2018 ▪ Good execution of projects in West-Africa and GoM 136 97 2018 FX 2019 ▪ H1 EB
Slide 26: Results impacted by specific items
Results impacted by specific items Pro forma 2019 2018 x EUR million 20191 Adjusted EBIT 68.0 64.3 29.5 ▪ Increase in interest expense mainly relates Specific items (42.4) (42.4) (5.7) to IFRS16 impact, and higher net debt EBIT 25.6 21.9 23.8 ▪ Decrease income tax mainly due to Finance income 3.9 3.
Slide 27: Specific items 2019
Specific items 2019 Geo- Total Marine Land x EUR million science from continuing operations Onerous contract charges (2.1) (2.1) Restructuring costs (4.2) (2.8) (7.0) Arbitration penalty Southern Star (24.1) (24.1) Certain adviser and other (costs)/gains (5.9) (5.9) Impact on EBITDA (36.3) (2.8) (39
Slide 28: Working capital exceptionally low
Working capital exceptionally low Working capital (as % of revenue) from continuing operations 15.2% 14.9% 15.1% 400 13.0% ▪ Continued good working capital 12.6% 10.9% 11.0% 300 9.5% management, due to timely 200 billing & good collection 309 100 207 216 201 244 165 165 155 ▪ Working capital favoura
Slide 29: Positive free cash flow
Positive free cash flow 2019 Cash flow from operations after investing X EUR million, from continued operations X EUR million, from continued operations excluding Southern Star arbitration outcome 23 81 47 -70 -70 57 58 58 24 24 operating changes investing CF IFRS 16 free cash flow operating changes
Slide 30: Improvement financial ratios
Improvement financial ratios Net debt / EBITDA Solvency ≤3.0 latest covenant 40.9% 39.1% 38.5% 37.5% 34.9% 35.3% 34.7% 34.4% 33.5% 31.5% 32.8% 31.7% 2.9x 2.8x 2.8x 2.5x 2.5x 2.5x 2.2x 2.2x 2.2x ≥27.5% latest covenant 1.9x 1.9x 1.3x 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q17 2Q1
Slide 31: Refinancing
Refinancing Current maturity profile (YE 2019) Fugro anticipates to refinance its EUR 575 million X EUR million equivalents 765 revolving credit facility and repurchase any or all of its EUR 190 million convertible bonds due 2021 575 100 ▪ 5 year senior secured notes of EUR 500-550 million 0 190 0 0
Slide 32: Capital allocation
Capital allocation Focus on deleveraging, reduction of net debt and free cash flow generation 1 Capital Support profitable organic growth through EUR 80 -110 million expenditure maintenance, project & innovation related capex per year on average1,2 2 Targeting mid-term net Balance Sheet Further stre
Slide 33: 4. Outlook
4. Outlook
Slide 34: Management agenda
Management agenda Continue to improve profitability, with a special focus on the underperforming land business Generate sustained free cash flow and reduce net debt Arrange refinancing Divest non-core interest in Seabed Geosolutions Implement mid-term sustainability roadmap Strengthen employee engag
Slide 35: Strong growth 12-month backlog
Strong growth 12-month backlog X EUR million, from continued operations +9.9%1 1,011 920 934 902 856 386 297 367 378 348 285 272 270 251 244 217 220 Europe-Africa 179 166 199 Americas 103 104 98 106 133 APAC Middle East & India Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 1 Corrected for currency effect
Slide 36: Outlook 2020
Outlook 2020 from continuing operations ▪ Fugro will continue to deliver on Path to Profitable Growth strategy, capturing market opportunities, driving margin improvement and sustained free cash flow ▪ Capex of around EUR 90 million 36 FY 2019 results
Slide 37: Unlocking Insights from Geo-data
Unlocking Insights from Geo-data 37