Fugro Nv · EURONEXT:FUR
Fugro Nv — FY2018 Earnings Presentation
37 slides from Fugro Nv's earnings presentation, Feb 25, 2019
Slide 1: Fugro 2018 results
Fugro 2018 results 25 February 2019
Slide 2: Safe harbour
Safe harbour 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 the ass
Slide 3: Agenda
Agenda Highlights results, recap strategy and market update Financial update Q&A 3
Slide 4: 1. Highlights results, recap strategy & market update
1. Highlights results, recap strategy & market update 4
Slide 5: 2018 key messages
2018 key messages 1. 2018 is the turning point in Fugro’s results. 2. Markets are supportive and continue to grow. 3. Outlook 2019: Continued revenue growth, EBIT margin improvement and positive cash flow. 4. Top management structure will be simplified. 5
Slide 6: Financial highlights 2018: turning point in Fugro's results
Financial highlights 2018: turning point in Fugro’s results Strong revenue growth Double digit growth 12 month backlog +19.2%1 +11.6%1 1,650 1,042 1,497 928 2017 2018 2017 2018 EBIT margin turns positive Cash flow negative but improved excl. exceptional items 0.8% -33 -51 -2.1% 2017 2018 2017 2018 1
Slide 7: Revenue growth in key markets, lower dependence to oil & gas
Revenue growth in key markets, lower dependence to oil & gas Total revenue Revenue growth in key markets Share of key market segments X EUR million % of total revenue1 2017 2018 renewables 139% oil & gas 20% 66% 57% 57% 78% 74% 1,497 1,650 infrastructure 6% 22% power -42% 24% 21% 12% 16% 7% 10% naut
Slide 8: 'Path to Profitable Growth' strategy: recap
‘Path to Profitable Growth’ strategy: recap 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 i
Slide 9: Changes top-management structure
Changes top-management structure ▪ Top-management structure will be simplified to create more focus on strategic and operational priorities. ▪ Land and Marine divisions will be integrated at top-level ▪ Instead of 2 divisions represented in 5 regions, there will be 4 integrated regions, directly rep
Slide 10: 2018 key projects examples
2018 key projects examples Ocean Wind Heathrow Airport Site characterisation Site characterisation Port of San Francisco Sea wall risk assessment Woodside Energy Asset integrity 10
Slide 11: 2018 project: offshore wind farm site characterisation
2018 project: offshore wind farm site characterisation ▪ Client: Ørsted. ▪ New Jersey, USA. ▪ First major US offshore wind project. ▪ Integrated ‘triple A’ project. ▪ Client benefit: risk reduction and accelerated project schedule. 11
Slide 12: 2018 project: site characterisation for airport expansion
2018 project: site characterisation for airport expansion ▪ Client: Heathrow Airport. ▪ London, United Kingdom. ▪ Integrated data acquisition and analysis to support airport expansion. ▪ Innovative digital delivery (Gaia). ▪ Improved optimised design to minimise risks. 12
Slide 13: 2018 project: seawall risk assessment
2018 project: seawall risk assessment ▪ Client: Port of San Francisco. ▪ California, USA. ▪ Site investigation of seawall and consultancy. ▪ Multi-hazard risk assessment and recommendation on remediation measures. 13
Slide 14: 2018 project: asset integrity IRM framework contract
2018 project: asset integrity IRM framework contract ▪ Client: Woodside Energy. ▪ North West Shelf Australia. ▪ Remote ROV operations from control centre Perth. ▪ Reduced HSE exposure and cost efficient solution. 14
Slide 15: Market update summary
Market update summary ▪ Robust outlook for energy and infrastructure. ▪ Oil & gas market recovery despite short term volatility. ▪ Continued expected strong growth in global offshore wind. 15
Slide 16: Key market indicators – growth forecast 2019 vs. 2018
Key market indicators – growth forecast 2019 vs. 2018 Brent oil price Offshore O&G project Offshore oil field services final investment decisions expenditure -8% +4% +21% Source: Rystad DCube, Pareto Jan Source: Rystad Dcube Jan 2019 2019 Source: forecasts of ABN AMRO, EIA, HSBC, IMF, Morgan Stanley
Slide 17: New investments needed to meet growth energy demand
New investments needed to meet growth energy demand World energy demand Demand1 +52% 15.4 14.5 13.6 12.8 11.5 10.1 2000 2005 2010 2015 2020 2025 Coal Oil Natural gas Nuclear Renewables 1. (X million tonnes of oil equivalent) Source World Energy Demand; Source: IEA World Energy Outlook; https://www.i
Slide 18: 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) Market2 (X EUR billion) Market3 (X USD billion) +14% +7% 353 27 804 26 751 301 702 +6% 21 654 20 615 608 241 246 552 541 573 222 228 207 196 205 15 11 11 8 5 14 15 16
Slide 19: Upturn in offshore field services spend
Upturn in offshore field services spend Number FIDs Oilfield services1 OFS spend (X USD billion) 104 86 353 61 301 +6% 241 246 222 228 2017 2018 2019 207 196 205 Total FID capex commitments 217 (X USD billion) 109 102 14 15 16 17 18 19 20 21 22 Europe APAC Americas Africa Middle East & India 2017 20
Slide 20: Continued strong outlook for offshore wind
Continued strong outlook for offshore wind Total spend1 (X EUR billion) +14% 27 26 20 21 15 11 11 8 5 14 15 16 17 18 19 20 21 22 Europe APAC1 Americas Middle East & India 1. CAPEX and OPEX excluding China. Source: 4C Offshore Feb 2019. 20
Slide 21: Robust growth in onshore energy & infrastructure
Robust growth in onshore energy & infrastructure Construction spend1 (X USD billion) +7% 804 751 702 654 615 608 552 573 541 14 15 16 17 18 19 20 21 22 Europe APAC Americas Africa Middle Est & India 1. Construction services spend per region in Oil & Gas, Electricity & Power, Rail, Road and Other Inf
Slide 22: 2. Financial update
| B Financial update 22 to
Slide 23: Financial key take-aways
Financial key take-aways FY 2018: Strong revenue growth and EBIT improvement. Improved H2 performance compared to H1: ▪ Revenue growth of 22.0% (H1: 16.6%). ▪ EBIT margin 1.1% (H1: 0.5%), excluding exceptional items ▪ Marine: strong improvement site characterisation ▪ Land: lower result mostly in as
Slide 24: Strong revenue growth and improved EBIT
Strong revenue growth and improved EBIT Revenue EBIT margin (Return on) capital Free cash flow employed +19.2%1 1,650 1,184 1,208 1,497 0.8% 0.2% -3.3% -33 -51 -2.1% 2017 2018 2017 2018 2017 2018 2017 2018 ▪ Revenue growth in all business lines, except Land asset integrity, driven by growth in key m
Slide 25: Revenue growth in all divisions
Revenue growth in all divisions Strong year-on-year revenue growth1 Revenue growth in all divisions X EUR million +19.2%1 40 30% 29% 30 242 7 27 1,773 1,650 1,497 - 123 20 11% 13% 15% 10 3% 0% -2% 0 -3% -1% -12% -13% -10 -16% -20% -20 -23% -22% -20% -21% -30 -30% -26% 2017 Marine Land Geoscience 201
Slide 26: EBIT improvement driven by early cyclical MSC
EBIT improvement driven by early cyclical MSC Improved EBIT due to Marine division EBIT recovery in MSC, not yet in MAI (excl. exceptional items) Normalised EBIT -5 -13 -11 13 100 64 -32 1H16 2H16 1H17 2H17 1H18 2H18 Marine site characterisation (MSC) 2017 Marine Land Geoscience One-offs 2018 Marine
Slide 27: Marine 2018 – strong year-on-year EBIT improvement
Marine 2018 – strong year-on-year EBIT improvement Revenue EBIT (margin) Capital employed +27.4%1 1,086 947 522 557 1.9% 844 821 390 564 -4.6% 21 Asset Integrity Site Characterisation -43 2017 2018 2017 2018 2017 2018 ▪ Site characterisation revenue up 48.2% up; asset integrity up 10.9%. ▪ Vessel ut
Slide 28: Land 2018 – EBIT below last year
Land 2018 – EBIT below last year Revenue EBIT (margin) Capital employed +1.5%1 476 467 4.5% 105 99 62 2.1% 219 223 371 368 15 10 Asset Integrity Site Characterisation 2017 2018 2017 2018 2017 2018 ▪ Site characterisation revenue up 2.8%; asset integrity revenue down 3.2%. ▪ Site characterisation EBI
Slide 29: Geoscience 2018 – significantly impacted by project execution issues in Q4
Geoscience 2018 – significantly impacted by project execution issues on 2 contracts in Q4 Revenue EBIT (margin) Capital employed +35.7%1 97 145 141 74 -13.8% -18.5% -10 -18 52 2017 2018 2017 2018 2017 2018 ▪ Revenue up 35.7%, driven by higher activity level in Seabed’s ocean bottom node business. ▪
Slide 30: Significantly reduced losses
Significantly reduced losses x EUR million 2018 2017 ▪ Reduced interest expenses due to lower average interest rates, following early repayment of USPP loans in 2017. EBIT 9 (52) ▪ Negative exchange rate variances mainly related to Finance income 6 5 devaluation Angolan Kwanza. Interest expenses (40
Slide 31: Increased working capital in line with revenue growth
Increased working capital in line with revenue growth Working capital as % of revenue Days of revenue outstanding 15.3% 15.2% 102 14.6% 99 99 11.9% 12.6% 92 92 11.6% 88 10.9% 11.0% 85 86 HY15 FY15 HY16 FY16 HY17 FY17 HY18 FY18 HY15 FY15 HY16 FY16 HY17 FY17 HY18 FY18 Working capital Working capital i
Slide 32: Positive free cash flow excluding impact higher working capital
Positive free cash flow excluding impact higher working capital Cash flow from operating activities after investments Excl. impact of higher working capital, cash improved but still negative, due to increased flow was positive and significantly above 2017. working capital in line with revenue growth
Slide 33: Good liquidity
Good liquidity Net debt Debt maturity per Dec 2018 (X EUR millions) (X millions, euro equivalents) 734 458 535 502 506 467 434 430 351 277 254 190 253 198 187 100 0 0 0 0 2Q15 4Q15 2Q16 4Q16 2Q17 4Q17 2Q18 4Q18 2018 2019 2020 2021 2022 2023 2024 revolving credit facility subordinated convertible bon
Slide 34: Well within covenants
Well within covenants Fixed charge cover ≥ 2.0 covenant Solvency ≥ 33.3% covenant 2.9 3.1 2.8 2.8 2.7 2.8 42.2% 43.8% 41.3% 42.5% 43.0% 40.9% 39.1% 2.5 2.6 2.5 38.5% 37.5% 34.9% 35.3% 2.4 2.3 2.3 2.3 34.7% 34.4% 2.2 1.9 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 4Q15
Slide 35: 3. Outlook
3. Outlook 35
Slide 36: Strong growth in order intake and backlog in Q4 2018
Strong growth in order intake and backlog in Q4 2018 Order intake1 Backlog (next 12 months) (next 12 months) X EUR million X EUR million +34.2%2 +11.6%2 544 1,052 1,042 971 964 943 928 917 458 440 867 365 382 362 348 655 619 355 606 545 588 578 556 508 263 318 285 232 245 227 232 151 284 120 341 274
Slide 37: Outlook 2019
Outlook 2019 ▪ Continued revenue growth. ▪ Further improvement of EBIT margin. ▪ Positive cash flow from operating activities after investments. ▪ Capex of around EUR 90 million. ▪ Implementation of IFRS 16 will have upward impact ▪ of EUR 45 – 50 million on EBITDA. ▪ of EUR 5 - 10 million on EBIT.