Fugro Nv · EURONEXT:FUR

Fugro Nv — Investor Day (October 2014)

78 slides from Fugro Nv's investor day presentation, Oct 29, 2014

  1. Slide 1: Q3 Trading and Strategy Update

    Q3 Trading and Strategy Update Capital markets day 2014 presentation

  2. Slide 2: Safe harbour

    Safe harbour Cautionary statement regarding forward-looking statements 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, in

  3. Slide 3: Today's program

    Today’s program Q3 Trading update / Strategy update Paul van Riel 10:30 – 11:00 Finance update Paul Verhagen 11:00 – 11:30 Q&A 11:30 – 12:00 Lunch 12:00 – 12:45 Division discussion Scott Rainey Geotech 12:45 – 13:05 Mark Heine Survey 13:05 – 13:25 Steve Thomson Subsea 13:25 – 13:45 Scott Rainey Seab

  4. Slide 4: Q3 Trading Update

    Q3 TRADING UPDATE Paul van Riel 4 www.fugro.com

  5. Slide 5: Market conditions remain challenging

    Q3 Trading update Market conditions remain challenging Oil and gas industry faces continued headwinds 2014 YTD Brent oil price US$/bbl  Decelerating oil & gas markets 120  Increasing capital discipline international oil companies (“IOCs”) 110  Rapidly declining oil price 100  Delays and postpone

  6. Slide 6: Q3 Results significantly below expectations

    Q3 Trading update Q3 Results significantly below expectations Revenue (unaudited, excluding multi-client) 2014 2013 Revenue growth Q3 EUR 696 million EUR 667 million + 1.4% at constant exchange rates Year-to-date EUR 1,848 million EUR 1,783 million + 5.5% at constant exchange rates Margins  Mid sin

  7. Slide 7: Fugro Q3 Performance

    Q3 Trading update Fugro Q3 Performance Highlights Challenges  Market leadership positions maintained in  Duration and size of losses in Seabed challenging environment  Less favourable business mix and lower  Continued good performance in geotech utilisation in geotech offshore onshore and severa

  8. Slide 8: 2014 Outlook

    2014 Outlook  Project postponements and cancellations causing increased uncertainty  Combined Geotech, Survey and Subsea H2-2014 EBIT margin: mid-single digit1  Continued losses in Seabed Geosolutions in H2-2014: around H1-2014 level1  Low visibility in multi-client sales 1. excluding impairment

  9. Slide 9: Stepping up action across the board to improve profitability and cash flow

    Q3 Trading update Stepping up action across the board to improve profitability and cash flow Group level Divisional level  Maintain market share and leadership in Geotech  Exit well intervention market Geotech and Survey  Postpone fleet replacement investments  Review options for underperforming

  10. Slide 10: Strategy Update

    STRATEGY UPDATE Paul van Riel 10 www.fugro.com

  11. Slide 11: Key takeaways

    Strategy update Key takeaways  Compelling long-term potential but challenging mid-term market conditions  Geotech and Survey continue to provide a sound core  Building on our strengths to restore margins, improve ROCE and sustain strong cash flow generation  Tangible action being taken across th

  12. Slide 12: Leadership in providing essential earth and engineering data

    Strategy update Leadership in providing essential earth and engineering data Full services suite Key strengths  Global leadership in Geotech and Survey  Unparalleled capabilities based on proprietary technology and in-depth expertise and experience  Increasing share of large multi-disciplinary pr

  13. Slide 13: Diversified revenue base

    Strategy update Diversified revenue base Diversified revenue base Revenues by segment Geoscience Other 10% 4% Building and Geotech infrastructure 29% 17% Subsea 24% Oil and gas Survey related 37% 79% Revenues by geography Revenues by client type Utilities & Mining Europe water majors Americas 35% 3%

  14. Slide 14: Oil and gas – medium-term headwinds, long-term appealing

    Strategy update Oil and gas – medium-term headwinds, long-term appealing Short- to medium-term headwinds Positive long-term outlook Exploration Capex as % of Total Brent Oil Price US$ Million boe 18% 120 100 Yet to find Average level of exploration capex since 2000 75 Fields under 12% 80 appraisal F

  15. Slide 15: Exposure across full oil and gas value chain

    Strategy update Exposure across full oil and gas value chain Final investment decision Exploration Development Field Production Abandon & & appraisal planning development & maintenance decommission Site investigation Survey Construction support Positioning signals & serv. Positioning signals & serv.

  16. Slide 16: Oil and gas – offshore reserves required to meet 2020 demand

    Strategy update Oil and gas – offshore reserves required to meet 2020 demand Break-even prices for non-producing assets Break-even price, USD/bbl 100 Arctic Onshore 78 Rest of the US Deepwater Offshore World shale 75 74 shelf 62 54 55 57 Onshore 53 50 Middle East 49 43 Onshore Ultra Russia deepwater

  17. Slide 17: Other markets – continued opportunity

    Strategy update Other markets – continued opportunity Renewable energy Infrastructure  Long-term growth in renewable energy is  Slow post recession recovery particularly in expected (despite current dip as result of Europe policy uncertainty in some countries)  Developing markets offer best growt

  18. Slide 18: Markets changes affect Fugro

    Strategy update Markets changes affect Fugro Key market trends Impact on Fugro  Reduced work volume from IOCs Capital discipline by oil and gas majors  Project delays, postponements and cancellations  Price pressure Deepwater / pre-FID market expected to be subdued  Reduced deepwater higher marg

  19. Slide 19: Strategic priorities rebalanced to reflect current environment

    Strategy update Strategic priorities rebalanced to reflect current environment  Since October last year and our 2013 strategy update, markets have changed dramatically  Fugro has taken strong action and adapting to today’s environment, which is expected to remain challenging for some time  Strate

  20. Slide 20: Focused portfolio

    Strategy update Focused portfolio  Geotech and Survey continue to provide sound core  Maintain leadership in offshore Geotech & grow selected positions onshore  Exit well services  Strengthen market leadership in Survey  Focus on operator opex in Subsea  Explore partnership options to build a

  21. Slide 21: Strategic priorities for Team Fugro

    Strategy update Strategic priorities for Team Fugro  Capex discipline, operational cost reduction and Performance Improvement Step-up Programme across divisions performance discipline  Working capital reduction programme in place  Continue to strengthen project execution  Simplify group organisa

  22. Slide 22: Strategy update – 'Building on Strength'

    Strategy update Strategy update – ‘Building on Strength’ Building on Strength What: Focused portfolio How: Team Fugro Maintain leadership in offshore Geotech & Step-up performance discipline grow selected positions onshore Strengthen market leadership in Survey Leverage our scale Focus on operator o

  23. Slide 23: Updated mid-term targets

    Strategy update Updated mid-term targets Fugro has updated its mid-term targets to reflect current market conditions and profit improvement initiatives currently underway Building on Strength Growth through Leadership Updated mid-term targets (2017) Previous mid-term targets (2016) Low end range: cu

  24. Slide 24: Key takeaways

    Strategy update Key takeaways  Compelling long-term potential but challenging mid-term market conditions  Geotech and Survey continue to provide a sound core  Building on our strengths to restore margins, improve ROCE and sustain strong cash flow generation  Tangible action being taken across th

  25. Slide 25: Finance Update

    FINANCE UPDATE Paul Verhagen 25 www.fugro.com

  26. Slide 26: Key takeaways

    Finance update Key takeaways  Adapting Fugro to current and mid-term market conditions  Addressing unacceptable margin and ROCE development and return to positive cash flow to delever the balance sheet  Actions defined to improve EBIT margin by 5–6 percentage points in the next 2 years with the m

  27. Slide 27: Addressing unacceptable margin development

    Finance update Addressing unacceptable margin development Geotech Survey Subsea Geoscience Fugro EBIT Margin (%) (1) 18.1 11.8 11.8 11.4 7.4 0.3 12.5 2.8(2) 2.1 (1.4) (36,5) 1HY13 1HY14 1HY13 1HY14 1HY13 1HY14 1HY13 1HY14 1HY13 1HY14 Tangible action being taken across the board to improve EBIT margi

  28. Slide 28: Q3 Results significantly below expectations

    Finance update Q3 Results significantly below expectations  Fugro expects additional impairments in Q4 in the range of EUR 200-250 million due to lower than expected results and deteriorating mid term market conditions  Impairments will be required for following items  Majority in Geoscience divi

  29. Slide 29: Tangible actions being taken to improve EBIT margin

    Finance update Tangible actions being taken to improve EBIT margin Target EBIT margin expansion Majority of improvement actions to be finalised in 2015 + 5–6% Geotech Survey Subsea Turn-around Simplification Investments / 2016 / 2017 Seabed savings restructuring Actions costs Stop loss Aerial making

  30. Slide 30: H1 2014 − Working cap, M&A, capex, dividends

    Finance update Significant investments and M&A impact H1- 2014 free cash flow H1 2014 − Working cap, M&A, capex, dividends (7) 102 (134) (88) (65) (169) 17 (52) (30) Operating CF Working capital Capex Acquisitions Other CF from Free cash flow Dividend Share CF before other before working investing r

  31. Slide 31: Working capital – opportunities for significant efficiency gains identified

    Finance update Working capital – opportunities for significant efficiency gains identified  Deep-dive analysis of 10 pilot operating companies undertaken Key findings 1 – Development of AR & WIP best practice guidelines  Operations focused on technical solutions and project execution 2 – Dash-for-

  32. Slide 32: Working capital – first quick wins realised with D4C initiative

    Finance update Working capital – first quick wins realised with D4C initiative  D4C initiative increases focus on managing cash to all levels of organisation  D4C initiative require prioritisation of largest receivables accounts and WIP projects with systematic follow-up, escalation and decision m

  33. Slide 33: Enhanced capex and M&A discipline

    Finance update Enhanced capex and M&A discipline Target annual investment level EUR Million 425 Additional 25 central R&D 75 M&A 200 – 300 225 Replacement + expansion capex 25 0-50 75-125 100 Maintenance capex 100 Previous guidance Updated guidance Investments in vessels and equipment will be reduce

  34. Slide 34: Positive free cash flow through increased capital efficiency

    Finance update Positive free cash flow through increased capital efficiency Pro-forma annual cash flow development 75 175 25 270 145 + net income = Free Cash Flow Depreciation and Working capital Capex and M&A Additional R&D Free cash flow amortisation improvement 34 www.fugro.com

  35. Slide 35: Strong liquidity buffer

    Finance update Strong liquidity buffer Debt maturity profile Strong liquidity buffer EUR Million  EUR 520 million undrawn committed revolving credit facility (RCF) 399  ~80% of debt matures 2018+  Net debt / EBITDA of 2.4 excluding uncalled bank guarantees and one-offs, 2.9 267 including  Fixed

  36. Slide 36: Strengthening of business controls – what's done, what's next

    Finance update Strengthening of business controls – what’s done, what’s next  Key positions filled  Group controller and treasurer in place  Internal audit team installed; risk based audit plan being rolled out  Regional controller responsibilities aligned with regional management set-up  Accel

  37. Slide 37: Fugro does not expect to pay dividend over 2014

    Finance update Fugro does not expect to pay dividend over 2014  Fugro has a long-standing tradition of Historical dividends (€ per share) returning profits to shareholders through EUR per share dividends 63% 62% 61% 58%  Due to weak results and to strengthen the 54% 55% 52% 52% Stock as % 50% bala

  38. Slide 38: Updated mid-term targets

    Strategy update Updated mid-term targets Fugro has updated its mid-term targets to reflect current market conditions and profit improvement initiatives currently underway Building on Strength Growth through Leadership Updated mid-term targets (2017) Previous mid-term targets (2016) Low end range: cu

  39. Slide 39: Key takeaways

    Finance update Key takeaways  Adapting Fugro to current and mid-term market conditions  Addressing unacceptable margin and ROCE development and return to positive cash flow to delever the balance sheet  Actions defined to improve EBIT margin by 5–6 percentage points in the next 2 years with the m

  40. Slide 40: Highlights Geotech

    HIGHLIGHTS GEOTECH Scott Rainey 40 www.fugro.com

  41. Slide 41: Key takeaways - Geotech

    Divisional highlights - Geotech Key takeaways  Offshore  Business realignment following weak global performance  Vessel replacement capex cut by EUR 90 million in following 3 years  Reduction of annual operational cost by EUR 15 million by taking out two charters  Maintain strong market positio

  42. Slide 42: Geotech – unrivalled service portfolio

    Divisional highlights - Geotech Geotech – unrivalled service portfolio Multiple services Unique service combinations  Clear global market leader in the space we operate  Unparalleled deepwater capability Geoconsulting services  Global presence with locally positioned resources  Differentiating c

  43. Slide 43: Geotech performance 2014 YTD

    Divisional highlights - Geotech Performance 2014 YTD: underperformance in part of portfolio EBIT margin % Performance Offshore  Business line significantly underperformed 11.8  Reduced demand in oil & gas market resulting in delays and project cancellations 7.4  Less favourable business mix of pr

  44. Slide 44: Offshore Geotech: adapt to market conditions

    Divisional highlights - Geotech Offshore Geotech: adapt to market conditions Status & way forward  Expect difficult market conditions for 2015/2016  Align resources with current market and 2015/2016 expectations  Reduction of fixed cost  Delay vessel expansion plans  Reduce number of chartered

  45. Slide 45: Onshore Geotech: grow in emerging markets

    Divisional highlights - Geotech Onshore Geotech: grow in emerging markets Status & way forward  Continue growth in emerging markets by repositioning resources to support expansion  Accelerate the growth in Africa with new acquisitions CPT testing truck  Strengthen our position in niche markets wh

  46. Slide 46: Key takeaways - Geotech

    Divisional highlights - Geotech Key takeaways  Offshore  Business realignment following weak global performance  Vessel replacement capex cut by EUR 90 million in following 3 years  Reduction of annual operational cost by EUR 15 million by taking out two charters  Maintain strong market positio

  47. Slide 47: Highlights Survey

    HIGHLIGHTS SURVEY Mark Heine 47 www.fugro.com

  48. Slide 48: Key takeaways - Survey

    Divisional highlights - Survey Key takeaways  Global market leader with unique competitive strengths  Robust performance in current market conditions  Under performance in geospatial and geophysical surveys  Drastic restructuring aerial mapping to asset light geospatial solution provider  Stepp

  49. Slide 49: Market position: Global leader with unique competitive strengths

    Divisional highlights - Survey Market position: Global leader with unique competitive strengths Five global business lines Unique competitive strengths  Market leader in offshore survey Positioning  Unmatched scale in geography, people, experience and assets  Integrated multi-divisional services

  50. Slide 50: 2014 YTD: Robust performance in current market conditions

    Divisional highlights - Survey 2014 YTD: Robust performance in current market conditions EBIT margin % Performance  Stable revenue and backlog  Good results Positioning, Construction 18.1 Support and MetOcean 11.8  Less Geophysical activity in pre-FID oil and 1HY13* 1HY14 ** gas work * incl. COFG

  51. Slide 51: Geospatial: Drastic restructuring aerial mapping

    Divisional highlights - Survey Geospatial: Drastic restructuring aerial mapping Situation & way forward  Traditional aerial mapping industry highly commoditised and under performing globally  Stop losses by drastic restructuring  25% cost reduction completed  Withdrawal from traditional mapping

  52. Slide 52: Geophysical: Maintain market share & protect margins

    Divisional highlights - Survey Geophysical: Maintain market share & protect margins Situation & way forward  Lower demand for pre-FID work due to Capex reduction in Oil & Gas market  Increased work in non-O&G activities  Best in-class survey vessel fleet protecting market share AUVs play an incre

  53. Slide 53: EBIT margin: Stepping up performance improvement

    Divisional highlights - Survey EBIT margin: Stepping up performance improvement Situation & way forward Performance Improvement Programmes 1. Cost reduction program at opco level 2. Standardization and Delivery Excellence program continues All services are analyzed using Lean Concepts 3. 3rd party c

  54. Slide 54: Maintain market share and improve margin through innovation

    Divisional highlights - Survey Maintain market share and improve margin through innovation  Automated data processing  Less personnel, faster delivery  Remote services  Less offshore personnel and risk exposure  Modern fleet  High uptime, safe operations, better data  Automated seep detection

  55. Slide 55: Maintain market share and improve margin through innovation

    Divisional highlights - Survey Maintain market share and improve margin through innovation Geophysical Geophysical The MH370 aircraft search program uses “Back-to-base” New technologies (Seep detection) that turns around the way technology exploration is done Construction Support Positioning Mapping

  56. Slide 56: Key takeaways - Survey

    Divisional highlights - Survey Key takeaways  Global market leader with unique competitive strengths  Robust performance in current market conditions  Under performance in geospatial and geophysical surveys  Drastic restructuring aerial mapping to asset light geospatial solution provider  Stepp

  57. Slide 57: Highlights Subsea

    HIGHLIGHTS SUBSEA Steve Thomson 57 www.fugro.com

  58. Slide 58: Key takeaways - Subsea

    Divisional highlights - Subsea Key takeaways  Growing market for subsea, specifically in asset integrity and reliability services  Substantial progress made to become a strong IRRM player (Inspection, Repair, Replace & Maintenance)  Fugro Subsea shifting exposure from capex toward opex clients bu

  59. Slide 59: Subsea performance 2014 YTD

    Divisional highlights - Subsea Performance 2014 YTD EBIT margin % Performance  Europe: improved results driven by construction support incl. trenching 0.3 2.8 ** -1.4  Asia Pacific: low ROV and vessel utilisation in H1, but improved in Q3 1HY13 1HY14* * Excluding impairments and one-offs  Q2 inci

  60. Slide 60: Structural improvements to core activities progressing

    Divisional highlights - Subsea Structural improvements to core activities progressing Completed restructuring  Closed down Norwegian based operations  Restructured tooling into global business line Actions & way forward  Downsizing ROV business in Asia Pacific  Stepping up Performance Improvemen

  61. Slide 61: Market position: strong IRRM player

    Divisional highlights - Subsea Market position: strong IRRM player Fugro Subsea overview Strong IRRM capabilities  Strong positions in key regions and services  Dependable service provider with long track record recognized by major oil companies Inspection, repair, replace & maintenance resulting

  62. Slide 62: Building on best global footprint to address operator's opex

    Divisional highlights - Subsea Building on best global footprint to address operator’s opex Situation & way forward  Opportunities for multi year expansion in Africa and Asia Pacific  Build a seamless services offering across Subsea, Survey and Geotech tailored to clients operating units ROV opera

  63. Slide 63: Increasing capital effectiveness and efficiency

    Divisional highlights - Subsea Increasing capital effectiveness and efficiency Key actions Enhanced capital discipline  Maximising lifetime of current ROV fleet  Optimizing mix of vessel ownership and flexible structure of charters (2 owned, 8 charters, 10 tripartite)  Optimising utilisation of R

  64. Slide 64: Key takeaways - Subsea

    Divisional highlights - Subsea Key takeaways  Growing market for subsea, specifically in asset integrity and reliability services  Substantial progress made to become a more focused IRRM player (Inspection, Repair, Replace & Maintenance)  Fugro Subsea shifting exposure from capex toward opex clie

  65. Slide 65: Highlights Seabed Geosolutions

    HIGHLIGHTS SEABED GEOSOLUTIONS Scott Rainey 65 www.fugro.com

  66. Slide 66: Key takeaways - Seabed Geosolutions

    Divisional highlights - Seabed Geosolutions Key takeaways  Immediate actions to stop the bleeding in the Seabed Geosolutions:  Changed leadership: CEO and Board  Significantly strengthened project management and cost control on current projects  Operational production improvement essential to im

  67. Slide 67: Challenging market conditions

    Divisional highlights - Seabed Geosolutions Challenging market conditions Seabed Geosolution overview Market position & trends ubsea overview  Largest seabed seismic operator providing full range of seabed technologies  Market has become very challenging due Ocean bottom nodes to capital disciplin

  68. Slide 68: Seabed Geosolutions performance 2014 YTD

    Divisional highlights - Seabed Geosolutions Performance 2014 YTD Seabed Geosolutions EBIT margin % Performance  Unacceptable performance due to:  Deteriorating market conditions - 50,3 - 48,3  Discretionary spending cuts  Project start date delays  Large losses on current projects 1HY13 1HY14 *

  69. Slide 69: Structural turn around in progress

    Divisional highlights - Seabed Geosolutions Structural turn around in progress Transformation actions Expected impact  Management changes, CEO and Board  Fixed cost base reduction (More hands-on support)  Strengthen project management to reduce  Project execution improvement cost and improve ope

  70. Slide 70: Key takeaways - Seabed Geosolutions

    Divisional highlights - Seabed Geosolutions Key takeaways  Immediate actions to stop the bleeding in the Seabed Geosolutions:  Changed leadership: CEO and Board  Significantly strengthened project management and cost control on current projects  Operational production improvement essential to im

  71. Slide 71: Highlights Multi-Client Library

    HIGHLIGHTS MULTI-CLIENT LIBRARY Steve Thomson 71 www.fugro.com

  72. Slide 72: Key takeaways - Geoscience

    Divisional highlights – Geoscience Key takeaways  No change in strategic direction for multi-client library  No guidance due to uncertainty in the market 72 www.fugro.com

  73. Slide 73: Multi-client library performance 2014 YTD

    Divisional highlights – Multi-client library Performance 2014 YTD Multi-client library EBIT margin % Performance Results 31.4  Revenue in multi-client sales significantly - 48,3 declined  Client interest hampered by general - weakness exploration market; not expected 13.2 1HY13 1HY14 * to recover

  74. Slide 74: Multi-client data base

    Divisional highlights – Multi-client library Multi-client data base Profile  Seismic database of about 1.8 million km 2D data and >135,000 km of 3D data, focused on Australia and Norway  Marketing and licensing agreements  with CGG for 3D data  with TGS for 2D data  Limited investment going for

  75. Slide 75: Key takeaways - Multi-client library

    Divisional highlights – Multi-client library Key takeaways  No change in strategic direction for multi-client library  Nu guidance due to uncertainty in the market 75 www.fugro.com

  76. Slide 76: Key Takeaways

    KEY TAKEAWAYS Paul van Riel 76 www.fugro.com

  77. Slide 77: Key takeaways

    Key takeaways  Compelling long-term potential but challenging mid-term market conditions  Geotech and Survey continue to provide a sound core  Building on our strengths to restore margins, improve ROCE and sustain strong cash flow generation  Tangible action being taken across the board to impro

  78. Slide 78: Fugro Proteus

    a= e FUGRO PROTEUS

Fugro — Investor Day (October 2014) on 6ix