Fugro Report Mixed Fortunes in First Half 2014

Fugro report first half-year revenue of EUR 1,186.9 million compared to EUR 1,167.9 million in first half of 2013. Year-on-year revenue growth at constant currencies of 6.2% or 7.9% excluding multi-client seismic surveys.

Highlights

• Non-cash impairments and one-off write-offs of EUR 346.6 million due to weak results and the more challenging oil and gas market outlook. This was mostly related to the Geoscience division.
• EBIT margin, excluding non-cash impairments and one-off write-offs, was 2.1% which is significantly below last year. This was mainly due to poor performance across all divisions in the first quarter and continued losses in the Geoscience division in the first half year.
• Significant improvement of adjusted margin in the second quarter compared to the first quarter to the low-teens in the Geotechnical division and mid-teens in the Survey division.
• Excluding two exceptional incidents, the underlying margin in the Subsea division continues to develop positively.
• Performance improvement measures are in place and ongoing initiatives expedited.
• In the strategy implementation priority is being given to profitability and return on capital employed, whilst protecting market share.
• Cash flow generated from operating activities amounted to EUR 93.4 million.
• Financial position healthy with net debt/ EBITDA of 2.32.
• Backlog for the remainder of the year at EUR 1,210 million continues to be strong and is up 14.3% at constant currencies.

Paul van Riel, CEO:  'The particularly poor first quarter was followed by a much stronger quarter for the Geotechnical and Survey divisions. In the Subsea division, we are seeing a continued positive development of the margin when discounting for two exceptional incidents.

In the second quarter the main disappointment were the high losses in the Geoscience division due to a weakened market and mobilisation delays in Seabed Geosolutions. A positive in the period was that Fugro further strengthened its position in emerging economies by completing the acquisition of two companies in Africa.

We are facing a weakened oil and gas market, related to delays in large capital projects, and hence we have stepped up cost reduction and performance improvement initiatives at underperforming parts of our business. In our strategy implementation we are focusing on creating shareholder value by giving priority to margin and return on capital employed.

The actions currently being taken should further improve margin levels in the coming quarters and will position Fugro well to resume our growth initiatives when reserve replacement starts to come back on the agenda of the oil and gas companies.'