Fugro 2018 results. 25 February 2019

Transcription

1 Fugro 2018 results 25 February 2019

2 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 assumptions underlying them). Forward-looking statements necessarily involve risks and uncertainties. The actual future results and situations may therefore differ materially from those expressed or implied in any forward-looking statements. Such differences may be caused by various factors including, but not limited to, developments in Fugro s key markets and related markets, currency risks and unexpected operational setbacks. Any forward-looking statements are based on information currently available to Fugro s management. Fugro assumes no obligation to make a public announcement where there are changes in information related to, or if there are otherwise changes or developments in respect of, the forward-looking statements in this presentation. 2

3 Agenda Highlights results, recap strategy and market update Financial update Q&A 3

4 1. Highlights results, recap strategy & market update 4

5 2018 key messages 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

6 Financial highlights 2018: turning point in Fugro s results Strong revenue growth +19.2% 1 Double digit growth 12 month backlog +11.6% 1 1,497 1, , EBIT margin turns positive Cash flow negative but improved excl. exceptional items -2.1% 0.8% Corrected for currency effect (of around - 4% on revenues and +1% on backlog) and for portfolio changes related to divestment of marine construction and installation activities in

7 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 revenue renewables 139% 1,497 1,650 oil & gas infrastructure 20% 6% 78% 74% 66% 57% 57% power -42% 24% 22% 21% nautical 41% 12% 16% 3% 6% FY14 FY15 7% 10% 9% 7% 4% 4% 5% FY16 FY17 FY18 oil & gas infrastructure renewables power nautical other 1. until FY2017, renewables included in power, and nautical in infrastructure. 7

8 Path to Profitable Growth strategy: recap Purpose Together we create a safe and liveable world Vision Be the world s leading Geo-data specialist Unlocking valuable insights from Geo-data to help our clients design, build and operate their assets safely and sustainably Strategy Capture the upturn in Energy & Infrastructure Differentiate by integrated digital solutions Leverage core expertise in new growth markets Enablers Best people Client focus Operational excellence Value-driven innovation 8

9 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 reporting to the Board of Management Within each region, the current business line structure will be maintained: marine site characterisation land site characterisation marine asset integrity land asset integrity

10 2018 key projects examples Ocean Wind Site characterisation Heathrow Airport Site characterisation Port of San Francisco Sea wall risk assessment Woodside Energy Asset integrity 10

11 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

12 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

13 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

14 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

15 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

16 Key market indicators growth forecast 2019 vs Brent oil price Offshore O&G project final investment decisions Offshore oil field services expenditure -8% +21% +4% Source: forecasts of ABN AMRO, EIA, HSBC, IMF, Morgan Stanley, Sparebank, Rystad Energy and World Bank Source: Rystad Dcube Jan 2019 Source: Rystad DCube, Pareto Jan 2019 Global growth Offshore wind expenditure Infrastructure expenditure +3.5% +32% +7% 16 Source: IMF World economic outlook Jan 2019 Source: 4C Offshore POP Sep 2018 Source: Globaldata Construction Jan 2019

17 New investments needed to meet growth energy demand World energy demand Demand 1 +52% Coal Oil Natural gas Nuclear Renewables 1. (X million tonnes of oil equivalent) Source World Energy Demand; Source: IEA World Energy Outlook; 17

18 Near term growth expected in key markets Offshore oil & gas Offshore wind Onshore energy & infrastructure OFS 1 spend (X USD billion) % Market 2 (X EUR billion) % Market 3 (X USD billion) % OFS: Oil Field Services. 2. CAPEX and OPEX excluding China. 3. Construction services spend in mid/downstream Oil & Gas, Electricity & Power, Rail, Road and Other Infrastructure, excluding China. Source: Rystad Jan 2019 (base case scenario), 4C Offshore Feb 2019, Global Data Construction Intelligence Centre (CIC) Jan

19 Upturn in offshore field services spend Number FIDs Oilfield services Total FID capex commitments 217 (X USD billion) OFS spend (X USD billion) % Europe APAC Americas Africa Middle East & India 1. Reduced estimated growth rate (compared to November 2018 ) as result of project delays due to short term volatility. Source: Rystad DCube Jan 2019 (Rystad base case scenario). 19

20 Continued strong outlook for offshore wind Total spend 1 (X EUR billion) +14% Europe APAC 1 Americas Middle East & India 1. CAPEX and OPEX excluding China. Source: 4C Offshore Feb

21 Robust growth in onshore energy & infrastructure Construction spend 1 (X USD billion) % Europe APAC Americas Africa Middle Est & India 1. Construction services spend per region in Oil & Gas, Electricity & Power, Rail, Road and Other Infrastructure excluding China. Source: Globaldata Construction Jan

22 2. Financial update 22

23 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 asset integrity Seabed: significantly impacted by project issues in Q4. Positive cash flow of EUR 11 million (H1: minus EUR 44 million). Days of revenue outstanding of 86 (H1: 88). Well within covenants with net debt/ebitda of

24 Strong revenue growth and improved EBIT Revenue +19.2% 1 EBIT margin (Return on) capital employed Free cash flow 1,497 1, % 1,184 1, % % % Revenue growth in all business lines, except Land asset integrity, driven by growth in key markets oil & gas, offshore wind, infrastructure and nautical. Strongly improved EBIT of early cycle Marine site characterisation while asset integrity is down. Land site characterisation stable 2 and asset integrity down. Seabed impacted by execution issues on two Q4 contracts. ROCE turns positive thanks to profitability improvements and controlled capex. Negative cash flow, though improved versus prior year, due to higher working capital given revenue growth. 1. Corrected for currency effect (of - 4% on revenues and +1% on backlog) and for portfolio changes related to divestment of marine construction & installation in Excluding the EUR 6.1 million one-off in

25 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 Revenue growth in all divisions Strong year-on-year revenue growth % 29% % 13% 10 3% 0% -2% 0-3% -10-1% -12% -16% -13% -20% % -22% -21% % -26% -20% 15% 1,497 X EUR million Revenue growth in all divisions +19.2% , , Marine Land Geoscience 2018 corrected for FX and portfolio effect FX and portfolio effect Corrected for FX effect (and 2018 also for the divestment of marine construction & installation activities in 2017). 25

26 EBIT improvement driven by early cyclical MSC Improved EBIT due to Marine division (excl. exceptional items) EBIT recovery in MSC, not yet in MAI Normalised EBIT H16 2H16 1H17 2H17 1H18 2H Marine Land Geoscience One-offs 2018 Marine site characterisation (MSC) Marine asset integrity (MAI) H starting point (100) 1. One off 2018 (sale of spare cable assets in Geoscience division) minus one-off 2017 (contractual settlement in Land division). 26

27 Marine 2018 strong year-on-year EBIT improvement Revenue EBIT (margin) Capital employed +27.4% , % 1.9% Asset Integrity Site Characterisation Site characterisation revenue up 48.2% up; asset integrity up 10.9%. Vessel utilisation of 73% compared to 69% last year. Site characterisation EBIT improved significantly to low single digit positive margin compared to double digit negative margin last year, driven by improved asset utilisation and better pricing. Asset integrity EBIT marginally positive reflecting sustained global over-supply of IRM. 1. Corrected for currency effect of around - 4% and for portfolio changes related to divestment of marine construction and installation activities in

28 Land 2018 EBIT below last year Revenue EBIT (margin) Capital employed +1.5% % % Asset Integrity Site Characterisation Site characterisation revenue up 2.8%; asset integrity revenue down 3.2%. Site characterisation EBIT margin at mid-single digit, in line with 2017 when excluding one-off. Increased profitability in Europe and Americas offset by lower result in Middle East. Asset integrity EBIT margin was mid-single digit negative and below last year due to poor weather conditions in USA, impacting road business, and postponed rail awards in Europe. 1. Corrected for currency effect of around -3% includes EUR 6.1 million one off 28

29 Geoscience 2018 significantly impacted by project execution issues on 2 contracts in Q4 Revenue EBIT (margin) Capital employed +35.7% % -18.5% Revenue up 35.7%, driven by higher activity level in Seabed s ocean bottom node business. Q4 EBIT significantly impacted by project execution issues on the contracts in Gulf of Mexico and UAE. Impact continues over full project duration, with 2019 impact mainly in Q Corrected for currency effect of around -3% EBIT of EUR million includes EUR 5.2 million one off. 29

30 Significantly reduced losses x EUR million EBIT 9 (52) Finance income 6 5 Interest expenses (40) (48) Exchange rate variances (19) (28) Share of profit in equity accounted investees 9 5 Income tax expense (20) (47) Gain on non-controlling interests 4 0 Net result (51) (165) Reduced interest expenses due to lower average interest rates, following early repayment of USPP loans in Negative exchange rate variances mainly related to devaluation Angolan Kwanza. Share of profit in equity accounted investees includes joint venture with China Oilfield Services Limited, and Fugro s stake in Global Marine Holdings. Lower tax expense mainly driven by recognition of previously unrecognised deferred tax assets of EUR 9.6 million write down of deferred tax assets of EUR 16.4 million in

31 Increased working capital in line with revenue growth Working capital as % of revenue Days of revenue outstanding 15.3% 15.2% 14.6% % 10.9% 12.6% 11.0% 11.6% HY15 FY15 HY16 FY16 HY17 FY17 HY18 FY18 HY15 FY15 HY16 FY16 HY17 FY17 HY18 FY18 Working capital x EUR million Working capital of which inventories of which trade & other receivables of which trade & other payables (376) (343) Working capital improvement Improved to 11.6% of sales, due to timely billing & good collection. Absolute increase in working capital resulting from strong revenue growth. 31

32 Positive free cash flow excluding impact higher working capital Cash flow from operating activities after investments improved but still negative, due to increased Excl. impact of higher working capital, cash flow was positive and significantly above working capital in line with revenue growth. Free cash flow Free cash flow excl impact working capital

33 Good liquidity Net debt (X EUR millions) Debt maturity per Dec 2018 (X millions, euro equivalents) Q15 4Q15 2Q16 4Q16 2Q17 4Q17 2Q18 4Q Net debt Net debt for covenant purposes 1 revolving credit facility subordinated convertible bond 2016 subordinated convertible bond Difference between net debt and net debt for covenant purposes relates to debt component of the convertible bonds 33

34 Well within covenants Fixed charge cover 2.0 covenant Solvency 33.3% covenant % 43.8% 41.3% 42.5% 43.0% 40.9% 39.1% 38.5% 37.5% 34.9% 35.3% 34.7% 34.4% 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 Net debt/ebitda covenant Changes in covenants as per 2019 Solvency ratio amended to > 27.5% until maturity of revolving credit facility for more headroom. Fixed charge cover should be at least 2.5 as of March Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 34

35 3. Outlook 35

36 Strong growth in order intake and backlog in Q Order intake 1 (next 12 months) Backlog (next 12 months) X EUR million X EUR million +34.2% % , , Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Marine Land Geoscience Marine Land Geoscience 1. Revenue in the quarter + change in signed 12 month backlog in the quarter. 2. Corrected for FX effect and divestment of marine construction & installation activities in

37 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 million on EBITDA. of EUR 5-10 million on EBIT. 37