Fugro Cut Costs on Market Downturn

Sales down 2.1 percent, order backlog falls 11 percent.

Dutch marine services company Fugro said on Wednesday it would further cut costs and reduce the number of ships in its fleet in light of the continuing downturn in the oil market affecting its customers.

The company reported a 2.1 percent fall in sales to 594 million euros ($652 million) for the first quarter of 2015 from the same period a year ago. It said its order backlog for the remainder of 2015 has fallen by 11 percent to 1.61 billion euros.

"The drop in backlog however is a clear signal of the continuing downturn in the oil and gas market," CEO Paul van Riel said in a trading update.

"In light of oil and gas market developments and reduced visibility, we have decided to implement additional cost reduction measures," he said.

Shares fell 1.2 percent to 25.60 in morning trading. They are down 46 percent over the past year, compared to a 20 percent rise for the Dutch AMX index of mid-cap companies.

The company set out plans to reduce ships, fleet capacity and staff at various operating units without providing numbers for how much costs the measures will save individually or in total.

Fugro's performance has been under a magnifying glass after last year's poor results..

As of March 20, larger rival Boskalis has gradually built up a 25.1 percent stake in Fugro and attempted to strip its takeover defence mechanisms while denying any intention to launch a full takeover bid.

Boskalis says its interest is strategic, as clients that request Fugro's surveying services are potential customers for the marine construction projects Boskalis carries out.

Fugro has said its customers may be scared away if they think Fugro would pass on information that would help Boskalis in a tender processes.

Reporting by Toby Sterling