Fugro Nv · EURONEXT:FUR
Fugro Nv — FY2014 Earnings Presentation
39 slides from Fugro Nv's earnings presentation, Feb 27, 2015
Slide 1: Annual results 2014
Courtesy of French Ministry Of Culture and Communication / Immadras Annual results 2014 Amsterdam, 27 February 2015
Slide 2: General highlights
General highlights Fugro to focus on its core geotechnical and survey activities Restructuring Seabed Geosolutions in progress and Fugro actively seeking options to reduce its stake Process underway to find a partner to create a strong subsea services player. Options include a divestment of (p
Slide 3: Financial highlights 2HY 2014
Financial highlights 2HY 2014 Revenue of EUR 1,385 million, + 5.6% at constant currencies (compared to 2HY 2013) EBIT margin, excl. impairment and write-offs, improved from 2.1% in 1HY 2014 to 4.1% in 2HY 2014 9.3% EBIT margin, excl. impairments and write-offs, for Geotechnical, Survey and Sub
Slide 4: Financial highlights 2014
Financial highlights 2014 Revenue of EUR 2,572 million; + 5.9% Y-o-Y at constant currencies EBITDA, excluding impairments and write-offs, of EUR 373 million EBIT margin, excluding impairments & write-offs, of 3.2% compared to 11.0% in 2013 Impairments & write-offs of EUR 630 million Workin
Slide 5: Market developments
MARKET DEVELOPMENTS 5 www.fugro.com
Slide 6: Oil and gas market under pressure
Oil and gas market under pressure Oil and gas market (78% of revenue) Rapid decline of oil price in 2HY14 to < $50/barrel (Brent) with recent wavering rebound to $ 60/barrel E&P spend outlook 2015 by major international oil companies down by 15%. NOCs spend outlook 2015 largely flat* North Ame
Slide 7: Infrastructure and other markets growing
Infrastructure and other markets growing Infrastructure and building (12%) Infrastructure spend generally follows regional GDP growth Growth concentrated in emerging markets, still slow in OECD countries Climate change will drive water services for protection against floods and fresh water Sus
Slide 8: Strategy and portfolio
STRATEGY AND PORTFOLIO 8 www.fugro.com
Slide 9: Leadership in providing essential earth and engineering data
Leadership in providing essential earth and engineering data Global market leadership in offshore survey and geotechnical markets built on impartial and independent service provision Full range from data acquisition, processing, interpretation, visualisation, data management to consultancy and a
Slide 10: Diversified revenue base 2014
Diversified revenue base 2014 Diversified revenue base Revenues by segment Geoscience Other 12% 10% Geotech Building 30% and infra- structure Subsea 12% 24% 2014 2014 Oil and gas 78% Survey 34% Revenues by geography Revenues by client type in oil and gas Europe Other 5% Americas Super 42% Private oi
Slide 11: Exposure across full oil and gas field life cycle
Exposure across full oil and gas field life cycle Final investment decision Exploration Development Field Production Abandon & & appraisal planning development & maintenance decommission Site investigation Survey Construction support Positioning signals & serv. Positioning signals & serv. MetOcean S
Slide 12: Strategic priorities rebalanced to reflect changing market environment
Strategic priorities rebalanced to reflect changing market environment Portfolio Fugro to focus on its core geotechnical and survey activities Restructuring Seabed Geosolutions in progress and Fugro actively seeking options to reduce its stake Process underway to find a partner to create a s
Slide 13: Independence and confidentiality drive market leadership
Independence and confidentiality drive market leadership Fugro strategy and leading position based on: Providing impartial and independent advice in best interest of clients Confidentiality of sensitive data Access to all parties in the market 13 Annual results 2014, 27 February 2015 www.fugro
Slide 14: Cost reduction measures and performance improvement
COST REDUCTION MEASURES AND PERFORMANCE IMPROVEMENT 14 www.fugro.com
Slide 15: Fugro: cost reduction measures and performance improvement
Fugro: cost reduction measures and performance improvement EBIT margin1 Actions Headcount reduction of around 6% for total Fugro (750 employees) mostly implemented by Q1 2015 ⱱ Group wide salary freeze implemented with exception of high inflation countries Working capital reduction initiative:
Slide 16: Geotechnical: cost reduction measures and performance improvement
Geotechnical: cost reduction measures and performance improvement EBIT margin1 Actions Fleet reduction of 25% (from 12 to 9 vessels): ⱱ 1 charter has been terminated in Q3 2014; 2 more charters will be terminated early 2015 ⱱInvestment programme reduced significantly by postponing 2 new ves
Slide 17: Survey: cost reduction measures and performance improvement
Survey: cost reduction measures and performance improvement EBIT margin1 Actions ⱱ Geospatial (Aerial mapping) restructuring to asset light model complete: Reduction 5% of survey division personnel Aircraft fleet reduced from 26 at the end of 2013 to 7 by the end of January 2015 18.8 Eight l
Slide 18: Subsea Services: cost reduction measures and performance improvement
Subsea Services: cost reduction measures and performance improvement EBIT margin1 Actions Downsizing diving activities in Brazil underway ⱱ Downsizing stand-alone ROV fleet operations in Asia Pacific in Q4 2014 These measures will contribute to EBIT improvement of EUR 20 million Tangible action
Slide 19: Seabed: cost reduction measures and performance improvement
Seabed: cost reduction measures and performance improvement EBIT margin1 Actions ⱱLeadership changes ⱱProject management strengthened significantly with new senior project -38.3 management -42.8 -50.3 -48.2 Overhead cost reduction target of 30% Improved and highly selective tendering with fo
Slide 20: Financials
FINANCIALS 20 www.fugro.com
Slide 21: Reasonable growth considering challenging oil and gas market
Reasonable growth considering challenging oil and gas market Revenue X EUR million + 6.1% + 6.1% 105 -51 22 2,572 5 143 2,572 34 72 -12 2,424 -22 2,424 2,402 FY13 Geotech Survey Subsea Geoscience Geoscience FY14 FY13 Deconsolidation FY13 Organic Exchange Acquisitions FY14 Seabed other (mainly COSL a
Slide 22: Market decline and performance issues reduce profitability
Market decline and performance issues reduce profitability Revenue EBIT (margin) Capital employed ROCE adjusted for impairments and one-off write-offs 2,572 11,0% 2,424 2,639 8.3% 2,231 3.2% 1.3% 2013 2014 2013 2014 2013 2014 2013 2014 Rev. Reported growth 6.1% or 5.9% currency comparable EBIT Year-
Slide 23: Non-cash impairments and one-off write-offs
Lower than expected results & deteriorated market outlook lead to non-cash impairments and one-off write-offs (x EUR million) Geotechnical Survey Subsea Geoscience Total Services multi- Seabed other client Goodwill 38 174 2 214 Intangibles multi-client data library 176 176 Property, plant and equipm
Slide 24: Geotechnical division: onshore solid, offshore weak
Geotechnical division: onshore solid, offshore weak with good improvement in H2 Revenue EBIT (margin) Capital employed adjusted for impairments and one-off write-offs 13.9% 780 775 offshore 703 675 323 282 7.1% 98 onshore 421 452 55 2013 2014 2013 2014 2013 2014 Rev. Onshore growth of 7.3% (curren
Slide 25: Survey division: under-utilisation and price pressure
Survey division: under-utilisation, price pressure and unfavourable mix in geophysical drives result down Revenue EBIT (margin) Capital employed adjusted for impairments and one-off write-offs 900* 18.5% 632 622 888 12.6% 166 112 2013 2014 2013 2014 2013 2014 Rev. Currency comparable revenue -1.0%
Slide 26: Subsea Services division: good performance construction support
Subsea Services division: good performance construction support Revenue EBIT (margin) Capital employed adjusted for impairments and one-off write-offs 3.3% 584 579 608 574 2.3% 19.8 12.9 2013 2014 2013 2014 2013 2014 Rev. Increase of 6.0% or 5.1% adjusted for currencies, mainly driven by Great Wes
Slide 27: Geoscience division: Seabed with continued losses
Geoscience division: unacceptable performance Seabed with continued losses Revenue EBIT (margin) Capital employed adjusted for impairments and one-off write-offs 301 747 19 248 76 11 26 -105 1 360 -10 117 -55 225 251 Other* -96 -10 348 87 120 Multi-client 151 Seabed 39 13 2013 2014 2013 2014 2013 20
Slide 28: Increased interest expenses and limited tax benefit
Increased interest expenses and limited tax benefit from impairments and one-offs Net finance costs Tax expense (x EUR million) 2014 2013 (x EUR million) 2014 2013 Interest income 10 15 Tax before impairment and (36) (51) Interest expenses (36) (27) write-offs Tax on impairment and write-offs 81 Net
Slide 29: Working capital reduction initiative delivers ahead of plan
Working capital reduction initiative delivers ahead of plan Working capital 2014 Working capital initiative Encouraging results from working capital (x EUR million) 2014 2013 initiative: Working capital 423 411 DRO from 109 to 103 days; delivering EUR 45 million cash collection improvement of wh
Slide 30: Capex slightly above last year
Capex slightly above last year Capital expenditure Vessel delivery schedule (x EUR million) 2014 2013 Maintenance capex 93 79 Capex major assets (incl assets 187 174 under construction) Total capex 280 253 Majority of capex is related to Geotech and Survey divisions Mainly for vessels, equipment
Slide 31: Positive cash flow before financing despite disappointing performance
Positive cash flow before financing despite disappointing performance 30 -274* 307 -64 43 42 -55 -74 -87 operating CF working capital capex acquisitions other CF from cash flow dividend share CF before before working investing before repurchase other financing capital financing activities *differenc
Slide 32: Strong liquidity end of 2014
Strong liquidity end of 2014 ~ 80% of debt matures 2018+ Full compliance with covenants EUR 620 million undrawn under committed Agreement with lenders on revolving credit facility (RCF) temporary additional headroom adjustment of definitions 465 Test date net leverage fixed charge coverage E
Slide 33: Dividend policy
Dividend policy Due to weak results and to strengthen the balance sheet no dividend for 2014 Dividend payment in 2016 (over the year 2015) conditional on covenant compliance at original levels 33 Annual results 2014, 27 February 2015 www.fugro.com
Slide 34: Outlook
OUTLOOK 34 www.fugro.com
Slide 35: Oil and gas market to remain weak short term
Oil and gas market to remain weak short term Oil price will continue to be under pressure until supply-demand balance is restored Oil service activity will be challenged in short-term as result of reduced E&P spending and capex discipline Already sanctioned deepwater field developments will co
Slide 36: Backlog decline in line with market developments
Backlog decline in line with market developments Currency comparable decline by 14.8%: Reported Currency growth comparable Onshore Geotechnical strong growth - 8.6% - 14.8% Offshore Geotechnical and Survey decline in line 1,723.5 1,575.4 with market developments 495.5 486.1 - 8.3% Strong dec
Slide 37: Outlook 2015
Outlook 2015 We expect the oil and gas market to remain challenging for some period of time In 2014 Fugro started to implement cost reduction measures and accelerates its performance improvement programmes for its oil and gas activities. Capex is curtailed strongly Contingency plans are in place to
Slide 38: Key take-aways
Key take-aways Fugro to focus on its core geotechnical and survey activities Restructuring Seabed Geosolutions in progress and Fugro actively seeking options to reduce its stake 18.1 18.8 11.8 11.4 10.7 Process underway to find a partner to create a strong subsea services player. Options inclu
Slide 39: Thank you
Courtesy of French Ministry Of Culture and Communication / Immadras THANK YOU