Fugro Nv · EURONEXT:FUR
Fugro Nv — H1 2018 Earnings Presentation
36 slides from Fugro Nv's earnings presentation, 2018
Slide 1: Half year 2018 results
Half year 2018 results
Slide 2: Cautionary statement
Cautionary statement This presentation may contain forward-looking statements. Forward-looking statements are statements that are not historical facts, including (but not limited to) statements expressing or implying Fugro’s beliefs, expectations, intentions, forecasts, estimates or predictions (and
Slide 3: Highlights HY 2018
Highlights HY 2018 ▪ Strong revenue growth after three years of decline ▪ Supportive markets with strong growth renewables, gradual recovery oil & gas and continued growth building & infrastructure ▪ EBIT margin turns positive with significantly better performance of Marine division ▪ Some price rec
Slide 4: Financial highlights HY 2018
Financial highlights HY 2018 Strong revenue growth* Solid 12 month backlog * * + 16.6% * + 3.1% 1,776 1,497 774 797 971 943 HY 2017 HY 2018 June 2017 June 2018 EBIT margin turns positive Improved, yet negative free cash flow EBIT margin (excl exceptional items) 75 0.5% 1.9 x -3.3% - 66 - 44 - 47 HY
Slide 5: Recent projects - Marine
Recent projects - Marine Site investigations Hornsea, UK Hydrocarbon seep survey for TGS, Brazil ▪ Geophysical, geotechnical and Gas hydrate research project, China unexploded ordnance (UXO) surveys for world’s largest offshore wind farm ▪ De-risking of client’s project: site ▪ Cost effective way of
Slide 6: Recent projects - Land
Recent projects - Land High-speed rail site investigation,UK ADNOC’s Hail & Ghasha project, Abu Dhabi ▪ Site investigation work as part of design and construction preparation for Phase 1 of HS2 network Mapping Essential Energy’s network, ▪ Assisting Align consortium’s design NSW, Australia team to m
Slide 7: Markets improving in site characterisation, with regional differences
Markets improving in site characterisation, with regional differences Americas Europe ▪ Growth in exploration (Mexico, Brazil, ▪ Higher activity in North Sea O&G E&P Caribbean, Canada, Guyana) ▪ Oversupplied IRM market due to limited ▪ Low activity levels US Gulf of Mexico construction opportunities
Slide 8: Key priorities 2018
Key priorities 2018 CLIENTS Strengthen commercial capabilities PEOPLE Increase engagement, training and diversity CASH Cost discipline and positive cash flow EXCELLENCE Standardise & digitalise services and work safely INNOVATION Launch commercially successful innovations 8 HY 2018 results www.fugro
Slide 9: First observations new CEO
First observations new CEO ▪ Strong brand and technological platform ▪ Market leading positions and satisfied customers ▪ Unique ability to offer global and bundled services ▪ Professionalism and expertise of Fugro employees ▪ Results improving, yet further improvement clearly required ▪ Fugro has t
Slide 10: Market update
Market update
Slide 11: Fugro's different market segments
Fugro’s different market segments Revenue - % of group total 57 56 66 78 74 24 25 21 12 16 7 10 3 9 7 4 6 3 4 FY14 FY15 FY16 FY17 HY18 oil & gas building & infra renewables * power nautical * mining other * 11 HY 2018 results until FY2017, renewables included in power, and nautical in building & inf
Slide 12: Market summary
Market summary ▪ Brent oil price reached highest level in 3 years ▪ US shale remains important for oil market balance, but further near-term growth is limited by infrastructure bottlenecks ▪ Offshore oil projects becoming more competitive and are required to meet demand growth ▪ Offshore project FID
Slide 13: Key market indicators 2018
Key market indicators 2018 Market forecast annual growth 2018 vs 2017 ▪ Steady growth world economy ▪ Brent oil price expected to increase Global growth Brent oil price Offshore OFS significantly versus 2017 expenditure +3.9% +24% ▪ Offshore oilfield services -3% expenditure bottoming out in 2018 ▪
Slide 14: Brent oil price at highest level in years
Brent oil price at highest level in 3 years Oil supply/demand development Brent oil price development ▪ Brent oil price increased due to supply disruptions and Iran 100 2.5 100 sanctions by USA 99 2.0 79 98 1.5 80 ▪ OPEC+ agreed to ease 68 97 1.0 production cuts to maintain 57 market balance and pre
Slide 15: Offshore projects becoming more competitive
Offshore projects becoming more competitive Cumulative peak oil production and breakevens for new developments ▪ US shale remains important factor for oil market balance ▪ Further near-term shale growth is limited by infrastructure bottlenecks ▪ Offshore offers many lower cost opportunities but with
Slide 16: New offshore developments required to meet demand growth
New offshore developments required to meet demand growth ▪ Current producing fields expected Global oil production 2017 vs. 2022 to decline by 14.6 mb/d as fields are depleting ▪ New shale developments potentially add 12.5 mb/d, but constrained by infrastructure bottlenecks ▪ New offshore developmen
Slide 17: Offshore oilfield services expenditure to increase as of 2019
Offshore oilfield services expenditure to increase as of 2019 ▪ Increase in offshore project Onshore OFS expenditure forecast sanctioning activity expected to 600 581 462 438 424 USD billions result in oilfield service 345 392 400 expenditure growth from 2019 200 onwards 0 2014 2015 2016 2017 2018 2
Slide 18: Offshore wind continues to grow, North America upcoming
Offshore wind continues to grow, North America upcoming ▪ Investment in new offshore Offshore wind capex Offshore Annual wind installed offshore capacity wind capacity forecast forecast installation forecast wind farms continues to grow 50 16 14.6 Gigawatts (GW) EUR billions 44 14.2 45 ▪ New offshor
Slide 19: Stable growth of buildings & infrastructure expenditure
Stable growth of buildings & infrastructure expenditure ▪ Growth in buildings Global infrastructure expenditure Global buildings expenditure forecast forecast expenditure largely driven by 10 Commercial need for housing and 10 Roads Trillions Trillions Industrial Rail commercial 9 Other Infrastructu
Slide 20: Highlights HY 2018
Highlights HY 2018 ▪ Strong revenue growth after three years of decline ▪ Supportive markets with strong growth renewables, gradual recovery oil & gas and continued growth building & infrastructure ▪ EBIT margin turns positive with significantly better performance of Marine division ▪ Some price rec
Slide 21: Financials
Financials
Slide 22: Financial key take-aways
Financial key take-aways ▪ EBIT margin turned positive and improved to 0.5% from - 3.3% in H1 2017; Q2 mid single digit margin ▪ Excluding higher working capital impact, cash flow up from - EUR 37 million H1 2017 to + EUR 12 million ▪ Days of revenue outstanding improved to 88 days from 92 days in s
Slide 23: Strong revenue growth and improved EBIT
Strong revenue growth and improved EBIT Revenue EBIT (margin) Capital employed ROCE Cash flow excluding exceptional items excluding exceptional items + 16.6% * X EUR million 1,268 1,237 774 797 0.5% 4.0 HY 2017 HY 2018 -25.3 HY 2017 HY 2018 - 0.5% -3.3% - 2.5% -66 -44 HY 2017 HY 2018 HY 2017 HY 2018
Slide 24: Second quarter of revenue growth after 12 quarters of decline
Second quarter of revenue growth after 12 quarters of decline Strong year-on-year growth Revenue growth in all divisions X EUR million 30% 30 + 16.6%* 25 112 1 9 896 20 797 13% 774 15 11% - 99 10 3% 5 -1% 0% -2% 0 -3% -5 -12% -13% -10 -16% -15 -20%-21% -20% -22% -20 -23% -26% -25 -30% -30 HY 2017 Ma
Slide 25: EBIT turns positive driven by improved results Marine division
EBIT turns positive driven by improved results Marine division excl. exceptional items X EUR million -2 One-off * 4 -6 HY 2017 2 35 -25 HY 2017 Marine Land Geoscience HY 2018 * Including EUR 5.2 million one-off related to sale of spare cable assets 25 HY 2018 results www.fugro.com
Slide 26: Marine EBIT turnaround driven by strong revenue increase
Marine EBIT turnaround driven by strong revenue increase Revenue EBIT (margin) Capital employed excluding exceptional items + 26.3%* 873 873 X EUR million 467 503 Asset 253 Integrity 284 Site 250 Characterisation 183 - 8.0% - 0.4% HY 2017 HY 2018 -2 -37 HY 2017 HY 2018 HY 2017 HY 2018 Revenue ▪ Site
Slide 27: Land division's performance close to last year
Land division’s performance close to last year Revenue EBIT (margin) Capital employed excluding exceptional items + 0.3% ** 263 X EUR million 246 231 Asset 208 Integrity 56 47 4.9% 190 6 Site 184 1.6% Characterisation One-off 6 4 HY 2017 HY 2018 HY 2017 HY 2018 HY 2017 HY 2018 Revenue ▪ Growth in bu
Slide 28: Seabed: higher activity level
Seabed: higher activity level Revenue EBIT (margin) Capital employed excluding exceptional items + 14.2%** 156 X EUR million 63 131 61 147 131 3.3% 0% 5 One-off Seabed 0 0 9 -3 Other * * HY 2017 HY 2018 HY 2017 HY 2018 HY 2017 HY 2018 Revenue ▪ Seabed: 3 projects executed in Brazil, Nigeria and Trin
Slide 29: Lower net finance costs
Lower net finance costs x EUR million HY 2018 HY 2017 Interest expenses Finance income 4 3 Interest expenses decreased by EUR 1.9 million Interest expenses (19) (21) ▪ Paid interest up from EUR 12.6 million to EUR 14.0 million, due to higher average debt Exchange rate variances (17) (17) despite low
Slide 30: Increased working capital in line with revenue growth
Increased working capital in line with revenue growth Working capital Working capital improvement x EUR million HY 2018 HY 2017 ▪ Good collection and billing performance resulted in improvement in DRO from 92 a year ago to 88 Working capital 223 207 ▪ Due to strong revenue growth, working capital as
Slide 31: Positive cash flow excluding impact of higher working capital
Positive cash flow excluding impact of higher working capital ▪ Cash flow from operating activities after investments was negative resulting from strong revenue growth and related working capital requirements ▪ Excluding impact of higher working capital, cash flow was positive and significantly abov
Slide 32: Well within covenants and good liquidity
Well within covenants and good liquidity Net debt/ EBITDA Debt maturity per June 2018 (X millions, euro equivalents) 430 ≤ 3.0 covenant revolving credit facility subordinated 2.9 2.2 2.2 2.0 2.0 2.2 2.5 2.5 convertible bond 2016 190* 1.7 1.8 1.8 1.9 subordinated * 1.6 1.1 1.3 convertible bond 2017 1
Slide 33: Outlook
Outlook
Slide 34: Backlog: increase after three years of decline
Backlog: increase after three years of decline 12 month backlog comparable growth* x EUR million 2Q17 1Q18 2Q18 Y-on-Y Q-on-Q Site characterisation Marine 236 247 260 11.5% 1.9% Asset integrity Marine 370 341 318 (0.6%) (8.4%) Marine 606 588 578 4.5% (4.1%) Site characterisation Land 230 204 207 (8.
Slide 35: Outlook 2018
Outlook 2018 ▪ Revenue growth on comparable basis ▪ Marginally positive EBIT margin ▪ Positive cash flow from operating activities after investments, dependent on revenue growth and the related working capital requirement at year-end ▪ Capex of around EUR 80 million 35 HY 2018 results www.fugro.com
Slide 36: Q&A
Q&A 36 HY 2018 results www.fugro.com