Fugro Nv · EURONEXT:FUR
Fugro Nv — H1 2019 Earnings Presentation
44 slides from Fugro Nv's earnings presentation, 2019
Slide 1: HY 2019 results
HY 2019 results
Slide 2: Contents
Contents Highlights Strategy Market update HY 2019 results and implementation outlook 2
Slide 3: HY 2019 highlights
HY 2019 highlights ▪ After weak Q1, Q2 results of Fugro’s core business improved significantly. ▪ Stepped up efforts to divest non-core Seabed Geosolutions; now classified as ‘held for sale’1. ▪ Revenue growth of 5.7%, driven mainly by offshore wind, oil & gas, and nautical markets. ▪ Backlog growth
Slide 4: HY 2019 key financials: recovery continues
HY 2019 key financials: recovery continues Continued revenue growth Improved EBIT margin Healthy 12-month backlog excl. exceptional items +5.7%1 +0.5%1 734 797 2.9% 851 856 0.1% HY 2018 HY 2019 HY 2018 HY 2019 HY 2018 HY 2019 • Strong increase revenues and margin of marine site characterisation. • R
Slide 5: 2. Strategy implementation
2. Strategy implementation
Slide 6: 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 7: Strategy implementation priorities
Strategy implementation priorities Capture the upturn Digital solutions New growth markets ▪ Improve asset utilisation & ▪ Build Fugro’s Digital Drive contract awards in: mobilisation effectiveness Foundation to deliver Geo- data client support ▪ Hydrography ▪ Price increase and margin improvement ▪
Slide 8: Bluewater FPSO remote control project
Bluewater FPSO remote control project First remote FPSO operation in North Sea, managed by remote service centre Aberdeen. Reduction offshore crew, costs, CO2 footprint and mitigate risks. >100,000 project hours globally from 7 remote service centres. 8
Slide 9: California delta conveyance project
California delta conveyance project Conveyance of Sacramento- San Joaquin Bay Delta will be modernised to ensure reliability of drinking water. Fugro will deliver integrated services to optimise design and minimise construction risks in this earthquake-prone area. 9
Slide 10: Progress divestment non-core assets
Progress divestment non-core assets ▪ Divestment efforts intensified. Seabed Geosolutions ▪ Multiple parties have shown interest. (60% stake) ▪ Business classified as held for sale. ▪ Ongoing divestment process, aligned with majority owner HC2. Global Marine ▪ Huawei plans to sell 51% stake in Huawe
Slide 11: 3. Market update
we : rs a Market update
Slide 12: Revenue growth in key markets, lower dependence on oil & gas
Revenue growth in key markets, lower dependence on oil & gas Total revenue Revenue growth1 in key markets Share of key market segments X EUR million % of total revenue2 HY 2018 HY 2019 renewables 23% +5.7%1 oil & gas 3% 57% 57% 55% 66% 78% 74% infrastructure -3% 734 797 22% 22% power -18% 24% 21% 12
Slide 13: Key market indicators – 2019 vs. 2018
Key market indicators – 2019 vs. 2018 Brent oil price Offshore O&G project Offshore oil field final investment decisions services expenditure -5% +9% +2% Source: Rystad DCube, Pareto Jan Source: Rystad Dcube Jan 2019 2019 Source: forecasts of ABN AMRO, EIA, HSBC, IMF, Morgan Stanley, Sparebank, Ryst
Slide 14: Near term growth expected in key markets
Near term growth expected in key markets Offshore oil & gas Offshore wind Onshore energy & infrastructure OFS1 spend (X USD billion) Annual Capex2 (X EUR billion) Market3 (X USD billion) 355 32 +7% 843 +18% 789 302 736 +6% 25 25 687 613 637 239 249 256 603 234 20 549 542 572 207 210 220 19 192 14 10
Slide 15: Expected growth FID commitments
Expected growth FID commitments Offshore oilfield services Number of FIDs OFS1 spend (X USD billion) 97 99 +6% 249 256 58 234 210 220 207 192 2017 2018 2019 Total FID capex commitments2 X USD billion 179 98 17 18 19 20 21 22 23 80 2017 2018 2019 1. Offshore Oil Field Services 2. excluding internal e
Slide 16: Increased spending throughout offshore E&P cycle
Increased spending throughout offshore E&P cycle Exploration capex Greenfield & brownfield capex Production opex Abandonment cost X USD billion 95 89 78 67 65 56 59 54 80 81 49 48 48 72 74 75 46 47 47 65 67 25 27 27 26 28 19 22 4 3 4 5 5 5 5 2017 2018 2019 2020 2021 2022 2023 2017 2018 2019 2020 202
Slide 17: Shale expenditure stagnates, offshore grows
Shale expenditure stagnates, offshore grows On- and offshore O&G oilfield services expenditure OFS1 spend (X USD billion) 692 654 669 632 582 600 108 116 99 87 97 118 118 105 111 112 110 121 140 140 145 147 103 65 275 284 288 289 295 262 2016 2017 2018 2019 2020 2021 1. Onshore and Offshore Oil Fiel
Slide 18: Robust outlook major infrastructure projects
Robust outlook major infrastructure projects Global projects spending tunnel-infra (USD billion) 118 118 103 99 85 2018 2019 2020 2021 2022 Tunnel construction length top 10 countries (km) 0 50 100 150 200 250 300 350 400 450 500 China France USA UK Norway India Execution S. Arabia Pre-execution Aus
Slide 19: Fugro’s 4 regions
Fugro’s 4 regions 13% 20% 42% 24% project examples regional revenue share 19 HY 2019 results
Slide 20: 2019 project: Clair Ridge site characterisation
2019 project: Clair Ridge site characterisation ▪ 3D ultra-high-resolution imaging to support infrastructure planning in area of complex geology. ▪ Bespoke equipment designed and engineered by Fugro. ▪ Client benefits: de-risking of development, providing significant Data from Fugro trials location
Slide 21: 2019 project: quarry monitoring Valkenburg
2019 project: quarry monitoring Valkenburg ▪ Installation and maintenance of system to monitor risk of subsidence in quarries. ▪ Deploying Fugro’s fibre optic technology. ▪ Real-time data access via Fugro GAIA Insight cloud based data platform. ▪ Client benefits: securing safety of over 300,000 visi
Slide 22: 2019 project: Lake Michigan pipeline project
2019 project: Lake Michigan pipeline project ▪ Integrated ‘triple A’ project, providing land and marine characterisation requirements. ▪ Environmentally driven replacement of Enbridge’s existing pipeline for construction below Lake Michigan’s lakebed. ▪ Client benefit: risk reduction, accelerated pr
Slide 23: 2019 project: GoM remote rig positioning
2019 project: GoM remote rig positioning ▪ Using Fugro OARS® technology, providing centralised command centres with direct access to offshore projects. ▪ Record of 3 well spuds in 72 hour period completed from regional remote operations center. ▪ Client benefit: optimisation of offshore survey crew
Slide 24: 2019 project: Gas hydrates South China Sea
2019 project: Gas hydrates South China Sea ▪ Field investigation for Guangzhou Marine Geological Survey. ▪ Fugro’s 6th consecutive program since 2007. ▪ Client benefits: support for next series of production tests of China’s research program into production of gas hydrates. Exploration & Production
Slide 25: 2019 project: consultancy services Hong Kong
2019 project: consultancy services Hong Kong ▪ Consultancy and construction supervision services for Country Garden’s residential real estate development in Hong Kong. ▪ Client benefits: multidisciplinary consultancy services shorten overall programme through seamless engineering solution. Operation
Slide 26: 2019 project - roadway condition assessment UAE
2019 project - roadway condition assessment UAE ▪ Review of current condition of >14,000 kilometres of road and recommendations for future repairs. ▪ Client benefit: selection of preventative maintenance to optimise spending. Operation & Site appraisal Design & contracting Construction Decommissioni
Slide 27: 4. HY 2019 results
4. HY 2019 results
Slide 28: HY 2019 key messages
HY 2019 key messages ▪ Margin improvement driven by marine; land disappointing Q1 and improved Q2. ▪ Mixed regional performance. ▪ Seabed classified as ‘held for sale’. ▪ Negative free cash flow due to seasonality and higher capex. ▪ All covenants met. ▪ Extension of revolving credit facility to May
Slide 29: Recovery continues, driven by marine
Recovery continues, driven by marine Revenue EBIT X EUR million X EUR million, excl. exceptional items +5.7%1 2.9% 797 -1 20 -3 23 23 46 734 0.1% 1 HY 2018 Marine Land FX effect HY 2019 HY 2018 Marine Land HY 2019 1. Corrected for currency effect 29 HY 2019 results
Slide 30: Mixed regional performance
Mixed regional performance Revenue EBIT X EUR million X EUR million, excl exceptional items +5.7%1 797 2.9% 20 1 -17 -11 7 10 27 28 23 20 734 0.1% 1 HY 2018 Europe Ameri- APAC Middle FX effect HY 2019 HY 2018 Europe Americas APAC Middle HY 2019 - Africa cas East - Africa East & & India India 1. Corr
Slide 31: Europe-Africa: strong improvement to double digit margin
Europe-Africa: strong improvement to double digit margin Revenue +6.4% ▪ Strong growth MSC in offshore wind and oil & gas. 0 ▪ Slight increase MAI. 339 ▪ 10%-points higher vessel utilisation. 318 ▪ LSC down due to delays and reduced work scopes HY 2018 Marine Land FX HY 2019 on certain projects, in
Slide 32: Americas: margin decline despite revenue growth
Americas: margin decline despite revenue growth Revenue +17.0% ▪ Growth supported by all business lines, activity 9 levels high in Northeast US and Canada. 194 ▪ Vessel utilisation down by 16%-points due to 158 delayed maintenance and unforeseen repairs. HY 2018 Marine Land FX HY 2019 EBIT (margin)
Slide 33: APAC: restructuring efforts start to pay off
APAC: restructuring efforts start to pay off Revenue - 6.9% ▪ Significant reduction MAI due to ongoing restructuring, more selective tendering and 165 5 smaller fleet. 158 ▪ LSC pressured by challenging Hong Kong HY 2018 Marine Land FX HY 2019 market. EBIT (margin) ▪ MSC and LAI up. -9.6% -3.8% ▪ St
Slide 34: Middle East & India: steady margin
Middle East & India: steady margin Revenue +7.6% ▪ Strong growth MSC, especially in Qatar. 6 ▪ Healthy growth LSC and LAI due to 107 increased activity levels in oil & gas 94 across Saudi Arabia and India. HY 2018 Marine Land FX HY 2019 EBIT (margin) 7.6% 7.1% ▪ LSC impacted by geopolitical and econ
Slide 35: Seabed Geosolutions (held for sale): EBIT impacted by execution issues and delays
Seabed Geosolutions (held for sale): EBIT impacted by execution issues and delays Revenue +9.3% ▪ Increase activity levels with 2 node crews and shallow water crew almost fully occupied. 73 63 ▪ Start date of S-79 project delayed from May to July. HY 2018 HY 2019 EBIT (margin) ▪ EBIT severely impact
Slide 36: Strong reduction net loss from continuing operations
Strong reduction net loss from continuing operations Pro forma HY 19 HY 18 x EUR million HY 191 EBIT 16.8 16.5 (0.8) ▪ Increase in interest expenses mainly Finance income 2.2 2.2 3.4 relates to EUR 6.1 million of lease Interest expenses (26.8) (20.7) (18.8) liabilities (IFRS 16 impact). Exchange rat
Slide 37: Increased working capital in line with revenue growth
Increased working capital in line with revenue growth Working capital (as % of revenue) from continuing operations 15.2% 14.9% 15.1% 400 12.6% 13.0% ▪ Absolute increase in 10.9% 11.0% working capital resulting 300 200 from revenue growth. 309 100 207 216 201 244 165 165 0 ▪ Continued good working HY
Slide 38: Capital employed
Capital employed Capital employed X EUR million ▪ Increase in Marine and corresponding decrease in 1,237 1,200 Land related to full allocation of Global Marine equity holding to Marine. 882 922 ▪ Decline in Seabed Marine Geosolutions caused by non 208 Land cash goodwill impairment. 197 147 Seabed (d
Slide 39: Negative FCF due to seasonality and higher capex
Negative FCF due to seasonality and higher capex HY 2019 Cash flow from operations after investing X EUR million, from continued operations 26 -44 -29 13 -34 operating CF changes investing CF IFRS 16 free cash flow working capital HY 2019 39 HY 2019 results
Slide 40: RCF maturity extended to May 2021
RCF maturity extended to May 2021 Debt maturity per June 2019 X EUR million equivalents 474 revolving credit facility 190 subordinated convertible bond 2016 100 0 0 0 0 subordinated convertible bond 2017 2019 2020 May-21 Oct-21 2022 2023 Nov-24 Net debt X EUR millions 734 757 net debt including disc
Slide 41: Within all covenants
Within all covenants Fixed charge cover ≥2.5 covenant Solvency ≥27.5% covenant 3.0 2.7 2.8 2.7 2.5 40.9% 39.1% 38.5% 37.5% 2.3 2.3 2.3 34.9% 35.3% 34.7% 34.4% 33.5% 2.2 31.5% 1.9 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 Net debt/EBITDA ≤3.0
Slide 42: 4. Outlook
4. Outlook
Slide 43: Healthy 12-month backlog
Healthy 12-month backlog X EUR million, from continued operations +0.5%1 902 920 860 851 856 820 297 367 344 319 287 348 217 163 179 204 204 166 Europe-Africa 253 285 270 244 APAC 219 237 Americas 93 91 117 103 104 98 Middle East & India Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 1. Corrected f
Slide 44: Outlook full year 2019
Outlook full year 2019 from continuing operations ▪ Continued revenue growth ▪ Further improvement of EBIT margin ▪ Positive free cash flow ▪ Capex of around EUR 70 million 44 HY 2019 results