Fugro Nv · EURONEXT:FUR
Fugro Nv — FY2015 Earnings Presentation
44 slides from Fugro Nv's earnings presentation, Feb 26, 2016
Slide 1: Full-year results 2015
Full-year results 2015 Amsterdam, 26 February 2016
Slide 2: General highlights: Improved cash flow in continued challenging oil and gas market
General highlights: Improved cash flow in continued challenging oil and gas market Fugro is dealing decisively with downturn in oil and gas market reducing capacity, operating cost and investments focusing on winning work, strengthening leadership positions and executing well on projects deliv
Slide 3: Financial highlights FY15
Financial highlights FY15 Improved operational result Strong cash flow EBIT margin (before exceptional items) From operating activities after investments 315 4.8% 3.2% 42 2014 2015 2014 2015 Strengthened balance sheet Revenue decline in line with market Revenue net debt/EBITDA 2,572 2,363 - 8.1% rep
Slide 4: Reducing costs and capacity to align Fugro with market
Reducing costs and capacity to align Fugro with market 2015 headcount: reduced by 1,577 compared to initially planned reduction of 750 third party cost: reduced by 18.0% (or 27.4% currency comparable), before exceptional items geotechnical vessels: from 11 to 7 vessels 18.1 18.8 survey vesse
Slide 5: Market developments
MARKET DEVELOPMENTS 5 www.fugro.com
Slide 6: Macro drivers
Macro drivers Over the coming decades, population growth, urbanisation and climate change will increase demand for energy, water, food, raw materials and infrastructure 6 Annual results 2015 www.fugro.com
Slide 7: Fugro's market segments and clients
Fugro’s market segments and clients Oil & gas Building & infrastructure Revenues by segment Building & infrastructure 16% Power 6% 2% Mining 2015 2% Other Oil & gas 74% Power Mining Revenues by client type Governments Major oil 15% 17% companies Other Independent 12% 13% oil 2015 companies Contracto
Slide 8: Oil & gas market: high volatility, low visibility
Oil & gas market: high volatility, low visibility Strongly declined oil price resilience of US shale production in face of lower income continued high output OPEC to protect market share looming higher Iranian exports slow down of demand growth; concerns over Chinese economy Leading to lower
Slide 9: Supportive long term trends oil & gas market
Supportive long term trends oil & gas market Energy from fossil fuels will continue to dominate for years to come Market will eventually rebalance and new field developments will be required continued global demand growth – albeit at slower pace than before (e.g. China) reduced investments in sh
Slide 10: Building and infrastructure fundamentals steady in most regions
Building and infrastructure fundamentals steady in most regions Good opportunities overall, except in countries strongly dependent on oil and mineral resources income in many key economies in Africa, lower spending on infrastructure slowdown expected in Middle East General trends shift fro
Slide 11: Power: low carbon agenda gathering momentum
Power: low carbon agenda gathering momentum Increasing importance of low-carbon energy, resulting in increased investments Strong commitment of countries to lower carbon emissions (UN climate conference) Leading to opportunities for Fugro offshore wind cost of offshore wind is continually
Slide 12: Regional overview
Regional overview Europe North Sea O&G continues to be in downturn Decommissioning market offers opportunities Infrastructure spending flat but growing European economies should support Americas increased spending Asia Pacific O&G market expected to be soft as New exploration areas (Mexico
Slide 13: Building on Strength strategy
BUILDING ON STRENGTH STRATEGY 13 www.fugro.com
Slide 14: Collecting essential data for sustainable construction
Collecting essential data for sustainable construction Geo- and asset integrity data is essential for sustainable development and management of large-scale construction, infrastructure and natural resources Reliable, accurate geodata about the earth and environment is starting point for any cons
Slide 15: Geo-intelligence & asset integrity solutions
Geo-intelligence & asset integrity solutions Transforming acquired data into information which is crucial to our clients’ large-scale construction and infrastructure By being involved in all stages of the asset life cycle, from data acquisition to consulting, we are a true partner to our clients
Slide 16: Why are we the market leader?
Why are we the market leader? Position as independent service provider is key to offering impartial data and advice Delivering services around Leading position in the globe in challenging offshore survey and environments geotechnical New technologies and Local presence to serve processes to create g
Slide 17: Focus on client needs (1) – Technology leadership & innovation
Focus on client needs (1) – Technology leadership & innovation Clients driving for innovation to reduce costs on their projects Smarter, more efficient solutions through Leading to improved decision making innovation, integration and standardisation and cost reduction for the client OARS: cost effec
Slide 18: Focus on client needs (2) – Site Characterisation
Focus on client needs (2) – Site Characterisation Combining geophysical survey and offshore geotech activities into one integrated proposition • to provide insight into environmental and ground conditions of building sites • allowing clients to lower cost of design, construction and operation, and e
Slide 19: Focus on client needs (3) – Project examples
Focus on client needs (3) – Project examples Site investigation for Fehmarnbelt Link tunnel Three year extension of construction support between Denmark and Germany services contract with McDermott Middle East Ocean bottom cable seismic project for Site characterisation for Alaska LNG: largest Pemex
Slide 20: Organisational improvements on track
Organisational improvements on track Create country shared services Consolidate legal entities Implement group wide IT system covering commercial-, project-, purchasing- and financial processes Focus on performance improvement programmes Strengthen technology leadership by strong R&D and i
Slide 21: Financials
FINANCIALS 21 www.fugro.com
Slide 22: Financial highlights 2015
Financial highlights 2015 EUR 315 million cash flow after investments improved EBIT driven by Seabed cost reductions capex curtailment lower working capital divestment multi-client sale & lease back of 2 geotechnical vessels* Net debt from EUR 801 million to EUR 535 million Improved cove
Slide 23: Key financials
Key financials X EUR million Revenue EBIT (margin) Capital employed ROCE* Cash Flow excluding exceptional items excluding exceptional items 2,572 2,363 2,231 315 1,690 4.8% 3.2% 3.9% 42 81 113 1.3% 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 Rev. Reported decline of 8.1% or 17.3% currency co
Slide 24: Revenue decline in all divisions except Seabed
Revenue decline in all divisions except Seabed Reported Currency comparable X EUR million - 8.1% -17.3% 2,572 -35 2,572 -108 -52 -185 -120 119 -56 2,363 236 2,363 -222 61 -56 2,127 2014 Geotech Survey Subsea Seabed multi-client 2015 2014 Geotech Survey Subsea Seabed multi- 2015 currency 2015 100% cl
Slide 25: EBIT improvement driven by turnaround Seabed
EBIT improvement driven by turnaround Seabed excl. exceptional items X EUR million +39% 9 113 119 81 -22 -23 -51 2014 Geotechnical Survey Subsea Seabed Other Geoscience 2015 incl. multi-client 25 Annual results 2015 www.fugro.com
Slide 26: EBIT: revenue decline offset by cost reductions
EBIT: revenue decline offset by by cost reductions at constant currencies and excluding exceptional items X EUR million + 39% 15 113 72 2 81 75 -445 313 2014 revenue third party costs personnel depreciation + other income and FX 2015 expenses amortisation expenses 26 Annual results 2015 www.fugro.co
Slide 27: Substantial cost savings
Substantial cost savings Compared to YE14 annualised savings (x EUR million) FTE Geotechnical - 564 36 Survey - 500 34 Subsea Services - 432 45 Seabed Geosolutions - 81 11 - 1,577 126 Vessel capacity Geotechnical -4 56 Survey -6 45 Subsea Services -2 23 124 Total 250 Annualised cost reduction of EUR
Slide 28: Deteriorated market outlook leads to non-cash impairments
Deteriorated market outlook leads to non-cash impairments Full year Geotechnical Survey Subsea Geoscience Total x EUR million Services Of which Of which Seabed other* Onerous contract provision (2.4) (0.9) 0.5 22.1 22.1 - 19.3 Loss on sale multi-client library - - - (1.1) (1.1) (1.1) Restructuring c
Slide 29: Geotechnical offshore margin in line with prior year, onshore weak
Geotechnical offshore margin in line with prior year, onshore weak X EUR million Revenue EBIT (margin) Capital employed excluding exceptional items 7.1% 780 775 740 627 offshore 323 267 4.4% 55 onshore 452 473 33 2014 2015 2014 2015 2014 2015 Rev. Onshore decline of 6.4% (currency comparable) main
Slide 30: Survey margin holding up reasonably well despite double digit revenue decline
Survey margin holding up reasonably well despite double digit revenue decline X EUR million Revenue EBIT (margin) Capital employed excluding exceptional items 12.6% 622 888 590 836 10.7% 112 90 2014 2015 2014 2015 2014 2015 Rev. Currency comparable revenue decline of 13.5% Lower oil and gas rela
Slide 31: Subsea Services steep revenue decline and high operational leverage result in losses
Subsea Services steep revenue decline and high operational leverage result in losses X EUR million Revenue EBIT (margin) Capital employed excluding exceptional items 3.3% 579 608 20 424 -7.3% 298 -31 2014 2015 2014 2015 2014 2015 Rev. Currency comparable revenue decline of 36.5% compared to relati
Slide 32: Geoscience: strong improvement in Seabed results
Geoscience: strong improvement in Seabed results X EUR million Revenue EBIT (margin) Capital employed excluding exceptional items 22 363 23 251 19 301 -1 -10 87 76 175 344 -96 225 164 Seabed Other* -106 2014 2015 2014 2015 2014 2015 * Incl. multi-client, which was sold per 30 June 2015 Rev. 27.2%
Slide 33: Increased net finance costs
Increased net finance costs (x EUR million) 2015 2014 Interest expenses Finance income 18 12 higher interest rate and amortised fees mainly related to 2014 covenant Interest expenses (62) (36) amendment: ~EUR 9 million effect or ~1% Net change in fair value of (3) (11) of gross outstanding debt ex
Slide 34: Increased tax expenses
Increased tax expenses (x EUR million) 2015 2014 Profit before tax (289) (593) Tax excl exceptional items (83) (36) Tax on exceptional items 14 81 Total tax (70) 45 Relatively high tax charge jurisdictions where Fugro realised a profit (effective tax rate of approx. 20%) income tax paid EUR 30 m
Slide 35: Working capital reduction initiative delivers ahead of plan
Working capital reduction initiative delivers ahead of plan Working capital Working capital improvement programme (x EUR million) 2015 2014 Programme now covers ~95% of outstanding receivables and work in progress Working capital 282 423 Despite increased client pressure on of which inventories
Slide 36: Strong capex discipline
Strong capex discipline Capex will be further reduced until market conditions improve Necessary maintenance and project based capex will not be compromised As per 2016, only 1 new vessel under construction (Fugro Venturer, Survey division) 280 187 Replacement + 160 expansion capex ~100 91 ~30
Slide 37: Strong cash flow due to lower working capital, curtailed capex and asset sales
Strong cash flow due to lower working capital, curtailed capex and asset sales 217 - 80 6 - 161 152 -1 315 -196 182 119 Operating Receivables Payables Inventories Capex Proceeds Other CF from Cash flow Cash flow Change CF before sale investing from from financing in net changes multi-client operatin
Slide 38: Improved balance sheet ratios and strong liquidity
Improved balance sheet ratios and strong liquidity Fixed charge cover Debt maturity profile (YE 2015) private placement loans 356 3.1 3.1 revolving credit facility 2.9 2.9 2.8 227 > 1.8x covenant 185 Q4’14 Q1’15 Q2’15 Q3’15 Q4’15 31 Net debt/EBITDA 2016 2017 2018 2019 2020 2021+ < 3.0x New EUR 500
Slide 39: Dividend
Dividend Policy Pay-out of 35% to 55% of net result Shareholders have choice between cash or shares Dividend 2015 Due to the negative result, no dividend proposed 39 Annual results 2015 www.fugro.com
Slide 40: Outlook
OUTLOOK 40 www.fugro.com
Slide 41: Backlog next 12 months: decline in line with market
Backlog next 12 months: decline in line with market 12 month backlog Currency comparable growth (x EUR million) 4Q14 3Q15 4Q15 Y-on-Y Q-on-Q onshore Geotech 306 270 304 (6.3%) 10.8% offshore Geotech 180 115 131 (31.0%) 11.2% Geotech total 486 385 435 (15.5%) 10.9% Survey 586 494 473 (22.9%) (6.4%) S
Slide 42: Outlook 2016: challenging market continues
Outlook 2016: challenging market continues In 2016, we will continue to reduce costs, headcount and vessels in line with activity levels Pressure on EBIT margin as cost reduction measures cannot fully compensate for anticipated loss in revenue and continued price pressure Focus on strengthening our
Slide 43: Contributing to a liveable world
Contributing to a liveable world We differentiate ourselves by providing unique package of integrated geo-intelligence and asset integrity solutions our market leadership our position as independent services provider innovation by delivering our work on time, on budget and safely, anywhere
Slide 44: Thank you
THANK YOU