Full-year results 2016

Transcription

1 Full-year results 2016 Amsterdam, 24 February 2017

2 Ongoing decline oil and gas market continues to impact results Relentless focus on cash flow and strengthening of market leading positions Dealing decisively with third successive year of oil & gas market downturn Continued to adjust capacity and costs to market reality. Focused on winning work. Delivered substantial cash flow and net debt reduction. Building & infrastructure revenue flat and good growth in power market segment While executing Building on Strength strategy Building customer centric, effective and efficient organisation. regrouped into Land and Marine divisions with Site Characterisation and Asset Integrity business lines. Strengthened market leading positions. Delivered on innovation and performance improvement programmes. 2

3 Financial highlights - Substantial cash flow in continuing challenging oil and gas market Revenue decline in line with market Operational result under pressure Revenue 2, % currency comparable 1,776 EBIT (before exceptional items) FY2015 FY % 12-month backlog % currency comparable % 1,323 1,170 9 YE2015 YE Strong cash flow Strengthened balance sheet From operating activities after investments Net debt/ebitda < 3.0x covenant x x

4 Delivery on cost reduction measures Personnel Ongoing restructuring ahead of plan with reduction of 1,430 employees in Since YE 2014, staff has been reduced by 3,007 i.e. 22% of total staff count. Third party expenses Reduced by 27.0% or 24.2% on currency comparable basis; larger than revenue decline. Tangible action being taken across the board to improve EBIT margin Vessel fleet Reduction by 5 vessels in

5 MARKET DEVELOPMENTS 5

6 Oil & gas - spending expected to turn the corner Oil demand now exceeding supply due to reduced investment and OPEC discipline. Increasing demand, higher oil prices and lower cost of oil field services will drive field development. Investment in North American shale is projected to lead the way; offshore will follow with initial focus on near-field areas to leverage existing infrastructure. 6

7 Oil & gas - solid fundamentals due to continued energy demand growth Investment downturn has resulted in lagging reserve replacement ratios, leading to supply constraints in medium to long term. Both shale and offshore oil and gas are essential to fill future supply gap. Energy transition to renewable energy is gaining momentum. Large scale dependency on fossil fuel will only slowly disappear due to sheer scale of energy system and rising energy demand from a growing population and rising GDP. 7

8 Building and infrastructure - continued growth Building Ample opportunities driven by overall growth of population and world economy. Asia Pacific investments expected to focus on India, Indonesia, Vietnam and the Philippines. Investment in China is slowing due to limited property credit and high rate of unoccupied urban residencies. European building market only modest recovery partly due to increasing political uncertainty and Brexit. Latin America (Mexico, Brazil) remains challenging. 8

9 Building and infrastructure - continued growth Infrastructure Market has proven very resilient; particularly for traditional infrastructure projects such as airports, pipelines and water. Trump administration announced intent for large scale infrastructure investments in US. Cities across Asia Pacific engaged in major transportation construction projects, to link suburbs and satellite towns to city centers. Asset integrity management for safe, efficient operation and life time extension is a growth area. 9

10 Power - transition to renewables gaining momentum Shift in investment towards renewable sources of electricity generation gaining momentum. Investment in power transmission and distribution strong to cope with new demand, upgrades and integration of renewable sources. Record low bids for offshore wind in the Netherlands and Denmark drive confidence. Cumulative installation of offshore wind reached 13.8 GW at year end 2016, and growing strongly. 10

11 Mining - commodity prices on upward trend 2016 has seen strong recovery of commodity prices. Demand for base metals is gaining strength; demand for precious metals remains challenged. Strong demand for fertilizer is driving growth in potash and phosphates mining. Productivity improvement remains critical priority for mining companies, with need for site data acquisition and analysis services. 11

12 EXECUTING ON OUR BUILDING ON STRENGTH STRATEGY 12

13 Building on Strength strategy - restoring profitability and financial strength Solidify client focus and market leadership Build customer centric, effective and efficient organisation Strengthen technology leadership and innovation Implement portfolio changes 13

14 LAND MARINE Solidify client focus and market leadership Clients seek integrated services to combine geotechnics, survey and subsea services in a cost effective and sustainable way. Concept & feasability Preliminary siting & routing Permitting & consent Design Construction Operation & maintenance Decommissioning site characterisation asset integrity site characterisation asset integrity 14

15 Building customer centric, effective and efficient organisation Fugro has regrouped its survey, geotechnical and subsea activities, to enhance client focus, service delivery and efficiency: Fugro NV Land Marine Geoscience 5 regions 5 regions Seabed Geosolutions Site Characterisation Asset Integrity Site Characterisation Asset Integrity Innovation & Technology Shared service centers for HR, finance, QHSSE, IT, legal 15

16 Site characterisation services support new developments Determine ground and environmental conditions of building sites and includes geotechnical, survey and environmental data acquisition, analysis and advice. Support safe and sustainable planning, design, engineering and construction of new structures and infrastructure. Support exploration and development of natural resources. Enable clients to lower cost, reduce risks and minimise impact on environment. Nuclear power station UK Hornsea offshore windfarm 16

17 Asset integrity services support management of existing structures Determine the condition of existing structures and infrastructure, including inspection, monitoring, maintenance and positioning services. Enable clients to reduce operational risk, improve utilisation, extend lifetime of existing structures to increase revenue and reduce costs. Virtual model for Network Rail Construction support Hebron oil field 17

18 Building customer centric, effective and efficient organisation Merge operating companies into country organisations. Expand number of shared services centres. Finalise implementation of central fleet management in

19 Actions to implement portfolio changes not yet successful Subsea Services Divestment or partnering for installation and construction activities have not yet succeeded. Inspection, repair and maintenance services are being integrated in Asset Integrity business line in the Marine division. Seabed Geosolutions Continue to be open to opportunities to reduce stake or enter into extended partnership. Fugro Synergy Vessel will be retained and is being optimised for geotechnical operations. 19

20 Strengthen technology leadership innovations Novel XRF-CPT technology to evaluate recoverable ore in mining GeoWing for detection of unexploded ordnance 3Direct to support monopile and jacket installations NorthStar TM to monitor integrity and safety of floating assets 20

21 FINANCIALS 21

22 Financial key take aways FY2016 results EUR 186 million cash flow from operating activities after investments. Cash flow H EUR 67 million and H EUR 119 million. EBITDA* H EUR 99 million and H EUR 91 million. Working capital decrease of EUR 89 million. Days revenue outstanding improved to 92. Proceeds of EUR 111 million from divestment CGG loan and sale & lease back of vessel. Net debt from EUR 535 million to EUR 351 million. Net debt/ebitda 1.1** Fixed charge cover of 2.4 * excluding exceptional items ** net debt for covenant purposes also excludes debt part of subordinated convertible bond 22

23 Substantial cash flow despite difficult oil and gas market Revenue EBIT (margin) excluding exceptional items Capital employed ROCE* excluding exceptional items Cash flow 2, % 1, X EUR million 1,776 1, % 9 3.9% YE 2015 YE % Rev. Currency comparable decline of 22.7% in line with market. EBIT Strong cost reductions could not offset margin decline as consequence of lower activity levels and pricing pressure. Market positions of core activities strengthened. CE Decrease mainly related to non-cash impairments during last 12 months (EUR 189 million after tax), working capital reduction, asset disposals and capex below depreciation. * NOPAT last 12 months (applying domestic weighted average tax rate); capital employed the average of last three reporting periods 23

24 Double digit revenue decline in all divisions Reported Currency comparable Revenue X EUR million % -22.7% 2,363 2, , , ,776-11% -22% -20% -50% 2015 Geotech Survey Subsea Seabed Other Geoscience Geotech Survey Subsea Seabed Other Geoscience 2016 adjusted for currency effect currency effect

25 EBIT decline in particular in Survey due to overcapacity in market EBIT excl. exceptional items X EUR million Geotechnical Survey Subsea Seabed Other Geoscience

26 Continued strong cost reductions, yet not sufficient to compensate for revenue decline EBIT excl. exceptional items variances at 2015 currencies X EUR million EBIT 2015 revenue third party costs personnel expenses depreciation and amorisation other income and expenses FX EBIT

27 Substantial cost savings from additional measures in 2016 Actions in 2016 FTE annualised savings (x EUR million) Geotechnical Survey Subsea Services Seabed Geosolutions and other , Vessel capacity reduction Survey Subsea Services Total 140 Annualised cost reduction related to actions taken in 2016 of EUR 140 million of which ~ 45% was realised in 2016, in addition to EUR 100 million related to actions initiated in Cost reductions mentioned above are a subset of total cost reduction and only relate to FTE and vessel reduction. 27

28 Continued challenging market conditions led to non-cash impairments x EUR million Geotechnical Survey Subsea Services Geoscience Of which Seabed Of which other Total Onerous contract provision - (1) (1) Restructuring costs (7) (9) (3) (3) (3) - (22) Other (4) (1) (1) (12) - (12) (18) EBITDA impact (11) (11) (5) (7) 5 (12) (34) Impairments (97) (4) (40) (52) (36) (16) (193) EBIT impact (108) (15) (45) (59) (31) (28) (227) EBIT impact of exceptional items of EUR 152 million in H and EUR 75 million in H Onerous contract provision release due to better project performance in Seabed. Restructuring costs related to companywide headcount reductions. Other mainly relates to EUR 12 million transaction loss on sale CGG loan and transactional fees. Non-cash impairments on goodwill & intangibles of EUR 75 million. goodwill: Seabed, remaining goodwill Subsea Services and onshore geotechnical Africa activities. intangible assets: profit sharing agreement with Finder and geotechnical software application. Non-cash impairments on property plant & equipment of EUR 118 million. two geotechnical vessels, two subsea vessels and some offshore geotechnical and seismic equipment. 28

29 onshore offshore Onshore geotechnical improved while offshore profitability declined Revenue EBIT (margin) excluding exceptional items Capital employed % 627 X EUR million % YE 2015 YE 2016 Rev. Onshore decline of 6.2% (currency comparable) mainly in the Middle East, Americas, Africa. Offshore decline of 19.8% (currency comparable) mostly in Americas and Europe. EBIT Onshore: low single digit margin, slightly higher than last year. Improved in APAC and Middle East; reduced losses in Africa whilst restructuring is ongoing. Offshore: reduced to low single digit margin, caused by price pressure and lower vessel utilisation, whilst market share remained high. CE Decline mostly related to impairments on 2 vessels, goodwill onshore Africa, some equipment and a software application, and sale & lease back of vessel. 29

30 Survey hit by severe pricing pressure and lower activity levels due to overcapacity Revenue EBIT (margin) excluding exceptional items Capital employed % X EUR million % YE 2015 YE 2016 Rev. Currency comparable revenue decline of 21.6%. Activities in all regions affected by reduced activity levels in constrution support and positioning services and price pressure in geophysical due to excess capacity in market. Survey has strengthened its market position. Growth of activities outside of oil and gas, mostly in renewables. EBIT Significant decline due to overcapacity in market driving price levels down. CE Decline related to lower working capital and capex curtailment. 30

31 Subsea Services strong revenue decline and high operating leverage result in losses Revenue EBIT (margin) excluding exceptional items Capital employed % -13.4% 298 X EUR million YE 2015 YE 2016 Rev. Currency comparable revenue decline of 19.8%. In particular strong decline in North Sea (Europe) and APAC; revenues grew marginally in Brazil and Middle East. EBIT Low utilisation and competitive bidding in combination with high operating leverage caused steep loss in Europe and APAC. Improved positive results in Brazil. CE Decline mainly related to impairments on goodwill and 2 construction support vessels, and capex curtailment. 31

32 Geoscience: Reasonable results Seabed despite steep revenue decline Revenue EBIT (margin) excluding exceptional items Capital employed % 12.0% 175 X EUR million Seabed Other* YE 2015 * Incl. multi-client data library, which was sold per 30 June 2015 and indirect interests (via Finder Exploration) in Australian exploration projects 3 YE 2016 Rev. Seabed: Revenue decline of 49.7% on a currency comparable basis driven by idleness of the two ocean bottom cable crews. EBIT Seabed: improved margin due to solid operational performance, cost reductions and one-off benefit of EUR 11.3 million related to purchase of Hugin vessel. CE Seabed: impairments on goodwill and ocean bottom cables, improved working capital and capex curtailment offset by decreased provisions. Other includes indirect interests in Australian exploration projects with asset value of EUR 21 million, largely offset by other provisions and payables. 32

33 Higher net finance costs despite lower interest expense (x EUR million) Finance income 9 18 Interest expenses (65) (62) Net change in fair value of financial assets (0) (3) Exchange rate variances (15) - Finance expenses (80) (65) Net finance income/costs (71) (47) Interest expenses Y-o-y increase of EUR 17.8 million for large part related to accelerated amortisation of capitalised transaction fees, due to early repayments on US private placement loans. Excluding amortisation, y-o-y reduction by EUR 14.8 million mainly as result of lower average debt and improved mix. Exchange rate variances Mainly relate to devaluation of monetary assets denominated in Angolan Kwanza and Egyptian pound. 33

34 Reduced tax expenses (x EUR million) Profit before tax (292) (289) Tax excl exceptional items (13) (83) Tax on exceptional items 4 13 Total tax (9) (70) Despite losses, effective tax rate of 3% due to: Limited recognition of further deferred tax assets for losses incurred. Partial write-down of previously recognised deferred tax assets due to recoverability risk. Country mix. Goodwill impairments not tax deductible. 34

35 Strong improvement in working capital management Working capital (x EUR million) Working capital of which inventories of which trade & other receivables Working capital improvement Working capital as percentage of revenue improved to 10.9%. DRO reduced to 92 days mainly due to good year-end collection, despite increased pressure to extend payment terms. of which trade & other payables (375) (503) Working capital as % of revenue Days of revenue outstanding 19.0% 17.0% 15.0% 13.0% 11.0% 9.0% 7.0% 5.0% 18.2% 16.4% 15.3% 15.2% 11,9% 10.9% HY2014 FY2014 HY2015 FY2015 HY2016 FY HY2014 FY2014 HY2015 FY2015 HY2016 FY

36 Substantial cash flow due to cost savings, improved cash collection, curtailed capex and proceeds from asset sales X EUR million Operating CF before changes in working capital Receivables Payables Change in working capital Inventories Capex Proceeds sale CGG loan + sale & lease back of vessel Other CF from investing Cash flow from operating activities after investments 36

37 Good balance sheet ratios and strong liquidity Fixed charge cover Debt maturity profile per Dec 2016 (X millions, euro equivalents) > 1.8x covenant private placement loans revolving credit facility subordinated convertible bond * 27 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q * Will be lower than EUR 190 million when bond will be (partly) converted into equity Net debt/ebitda Net debt (X EUR million) < 3.0x covenant Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 4Q14 2Q15 4Q15 2Q16 4Q16 37

38 OUTLOOK 38

39 12 months backlog: Y-on-Y decline, Q-on-Q increase (x EUR million) 12 month backlog Currency comparable growth 4Q15 3Q16 4Q16 Y-on-Y Q-on-Q onshore Geotechnical % 1.3% offshore Geotechnical (28.3%) 8.9% Geotechnical (7.8%) 3.0% Survey (7.9%) 11.9% Subsea Services (6.8%) (0.7%) Geoscience (Seabed) (41.7%) 33.7% Total 1,323 1,055 1,170 (11.6%) 7.3% % definite orders 67% 64% 62% 39

40 Backlog stabilisation during second half of %* 1, , ,341 1, , %* 1,065 1, , Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 Seabed Subsea Services Survey Offshore Geotech Onshore Geotech 40 *: Currency comparable

41 Outlook - general trends During first half of 2017, market for offshore related oil and gas services is expected to show another significant decline. Market is expected to bottom out towards latter part of the year as oil and gas companies move from cost savings mode to cautious preparations for new investments. Recovery is expected to be gradual in this lower for longer environment. Modest growth in building & infrastructure, power and mining markets. 41

42 Outlook 2017 For first half of the year. Further strong decline in revenue, however less severe than in Ongoing pressure on margins. Towards latter part of year, bottoming out of revenue decline, supported by stabilisation of backlog during second half of Ongoing adjustment of cost base to market reality. Positive cash flow from operating activities after investments for full year. Capital expenditure around EUR 100 million. 42

43 THANK YOU