Fugro investor presentation

Transcription

1 Fugro investor presentation May 2018

2 Cautionary statement 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 the oil and gas industry 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 in each case 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 Contents 1. Company overview and strategy 2. Markets summary 3. Project examples 4. FY 2017 results 5. Outlook 3

4 Company overview and strategy 4

5 Fugro company overview The world s leading, independent provider of geo-intelligence and asset integrity solutions: Fugro acquires and analyses data on topography and the subsurface, soil composition, meteorological & environmental conditions, and provides related advice With its services, Fugro supports the safe, efficient and sustainable development & operation of buildings, industrial facilities & infrastructure and the exploration & development of natural resources Fugro works offshore and onshore, with around 10,000 people in 65 countries Revenue by market segment Business model Advice Customised consulting covering wide spectrum of geo-engineering and asset integrity Acquisition Specialist data acquisition technology and services to investigate the Earth and assets Analytics Data management, processing, analysis, interpretation, visualisation and data hosting 5

6 Global trends drive demand for Fugro services Over the coming decades, population growth, urbanisation and climate change will increase demand for energy, water, natural resources, buildings and infrastructure. Our purpose is to provide geo-intelligence and asset integrity solutions to contribute to meeting this demand and to create a safe and liveable world. 6

7 Essential data for sustainable construction and operation Geo- and asset integrity data are essential for sustainable development and management of large constructions, infrastructure and natural resources. Fugro is one of the world s largest inspection & consulting engineering companies collecting site information and providing advice to support building and infrastructure development. 7

8 Relevant, reliable, insightful information From conception to decommissioning Our clients needs smart, practical information. Every step of the way, we provide them with geo-intelligence, to help ensure their assets a lifetime of excellent service.

9 Marine and Land divisions organised in uniform business lines Since launch of Building on Strength strategy, Fugro has been transformed from a group of locally managed operating companies into an integrated organisation Fugro now managed through 2 main divisions, Marine and Land, both offering integrated services to clients from uniform site characterisation and asset integrity business lines Plan & Design Build Operate & Manage Decommission Site characterisation Determine ground and environmental conditions of project sites Asset integrity Determine conditions of existing constructions and infrastructure 9

10 resulting in more client centric and efficient organisation Client centric organisation Has strengthened Fugro s ability to effectively provide integrated, standardised solutions across the globe Cost efficient organisation Allows Fugro to capture further synergies by having all marine assets under central management structure; other assets regionally or globally pooled Shared service centres in operation in largest hubs in USA, EU, Middle East, Asia and Australia 50 additional legal entities closed in 2017 Rationalisation of legal entity structure and implementation of shared service centres largely finalised in

11 Organisational structure as of 2017 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 11

12 Market leading positions Clear market leadership in several market segments Capability to deliver complete suite of services from data acquisition, analysis (processing, interpretation, visualisation and hosting) through to advice Independent position, which assures clients of impartial data and advice Vast expertise and experience of staff Local presence throughout the world, with 178 offices located in 59 countries Technology leadership through continuous investment in R&D and innovation Capability to take on large integrated projects and multi-year framework contracts Consistently delivering quality services safely, meeting standards, on time and meeting or exceeding requirements Multi-market exposure, creating resilience against market volatility 12

13 Global network Global network of offices and facilities to offer unified support for large scale projects 10,000 employees 169 offices 16 R&D centres 65 countries 5 regions

14 Increasing importance of non-oil and gas markets 3000 Revenue - % of total Revenue EUR (x million) % 90% 80% 70% 60% Y-o-Y currency comparable revenue growth 50% 40% % 30% 24 20% % 0% FY14 FY15 FY16 FY FY14 FY15 FY16 FY17 + 9% 14 oil & gas building & infra renewables * power nautical * mining other * until 2017, renewables included in power, and nautical in building & infrastructure

15 Fugro s activities across life cycle of offshore oil and gas field Final investment decision Exploration & appraisal Development planning Field development Production & maintenance Decommissioning Geotechnical investigation Geophysical survey Construction support Construction support Positioning Monitoring and forecasting Geoconsulting Inspection, repair and maintenance services Drill support Ocean bottom seismic surveys Drill support Ocean bottom seismic surveys 15

16 Fugro s activities across life cycle of offshore wind farm Final investment decision Site appraisal Design & contracting Construction Operation & maintenance Decommissioning Geotechnical investigation Geophysical survey Construction support Construction support Positioning Monitoring and forecasting Geoconsulting Inspection, repair and maintenance services 16

17 Fugro s activities across life cycle of building and infrastructure project Final investment decision Site appraisal Design & contracting Construction Operation & maintenance Decommissioning Drilling services Cone penetration testing Geophysical surveys Construction support Testing and monitoring Geoconsulting Asset integrity services 17

18 Key priorities 2018 CLIENTS Improve commercial capabilities PEOPLE Increase engagement, training and diversity CASH Cost discipline and positive cash flow EXCELLENCE Standardise & digitalise services and work safely INNOVATION Launch commercially successful innovations 18

19 We are Markets Fugro Summary

20 Key market developments 2018 World economy growth continues Gradual but volatile increase in oil price expected Offshore oilfield services market stabilising Global growth Market forecast annual growth 2018 Brent oil price Offshore OFS expenditure +4% +15% -3% Building & infrastructure investments growing Offshore wind capital expenditure growing Buildings & Infrastructure expenditure Offshore wind capital expenditure Metals & minerals price index +7% +10% +1% 20

21 Global demand for energy growing World economy continues to grow, impacting world energy demand Demand for all energy sources expected to grow, except coal Additional investments needed to meet energy demand growth Energy demand: thousands Mtoe World energy demand and GDP GDP: USD trillions e 0 Coal Gas Renewables Oil Nuclear World GDP output (RHS) Source: IEA World Energy Outlook 2017, 14 November 2017; IEA World Energy Investment 2017, June

22 Offshore oil and gas competitive with shale Large volumes of US shale oil available around US$ 55 / barrel Cumulative peak oil production with range of breakeven for new developments Shale is important factor for oil demand/supply balance as production can be developed in short time frame Non-shale offers many lower cost opportunities but with higher upfront cost and longer lead times Many oil companies continue to develop offshore opportunities Source: Goldman Sachs Top Projects 2017, 25 May 2017 Brent oil price as per 19 February

23 Onshore oilfield services growing, offshore stabilising Onshore OFS expenditure growth driven by shale Offshore OFS expenditure stabilising in 2018 USD billions Onshore OFS expenditures Increase in sanctioned offshore FIDs in 2017 and 2018, expected to result in OFS growth from 2019 onwards e 2018f Conventional Shale Oil sands USD billions Sanctioned offshore FID capex e Subsea tie back Fixed Floater Source: Rystad Energy UCube / DCube analysis, 19 February USD billions 600 Offshore OFS expenditures e 2018f Exploration Development Production Decommissioning

24 Growth building & Infrastructure market Buildings & Infrastructure construction expenditure by region 12 USD trillions e 2018f Americas Europe & Caspian Africa Asia-Pacific Middle East & India Source: Construction IC / Infrastructure IC Custom data report, 15 February

25 Growth in offshore wind farms Main markets for offshore wind are North-West Europe and China, and are expected to grow Fugro involved in first North American, Taiwanese and Indian offshore wind farms Offshore wind farms getting larger in terms of generation capacity, turbines increasing in size Source: 4C Offshore Project Opportunity Pipeline, 2 February 2018 EUR billions Annual offshore wind capital expenditure vs. annual capacity entering construction Annual offshore wind turbine foundations entering construction Europe North America Asia 5 Europe North America Asia Capacity (Annual) GW 25

26 Increasing investment in power plants and infrastructure Global power demand is growing strongly, resulting in increasing power plant and infrastructure investments Nuclear dominates power generation projects pipeline Electricity and power plants expenditure Growing investments in electricity networks, driven by need to integrate new renewables-based generation, improve system reliability and replace ageing assets e 2018f Americas Europe & Caspian Africa Asia-Pacific Middle East & India USD billions Power generation projects pipeline up to Source: Construction IC / Infrastructure IC Custom data report, 15 February

27 Project examples

28 Safe realisation and operation of tunnel in urban area Rotterdamsebaan tunnel, the Hague Monitoring of buildings and surface during construction One of the largest monitoring systems ever developed in the Netherlands GeoRiskPortal presents results in real-time to client and contractors Broad use of Fugro s capabilities: acquisition, analytics and advice Client benefits During construction: real time assessment of risks, more rapid decision making During operation: reduces maintenance costs, extends life time, detects failure risks Real time 5,000 sensors GeoRiskPortal so far been used in 70+ projects world wide 28

29 Optimisation of foundation design for one of world s tallest buildings Dubai Creek Tower Fugro performed one of the most comprehensive geotechnical site investigations ever in the region Additional load testing of proposed foundations Client benefits During design & construction: optimised foundation design, reduced construction costs and risks During operation: monitor behaviour of foundations through fibre optic sensing Optimisation Anticipated height: 928 metres 36,300 tons: world record for deep foundation testing load, applied on a single barrette 29

30 3D solution for precise and safe installation of offshore wind farm Beatrice wind farm Fugro supported installation by acquiring data with real time analysis in specialised decision support survey system Allowing the client to install the piles precisely and efficiently, and to support smooth installation of the jackets Efficient & Accurate Client benefits Cost and risk reduction of pile and jacket installation Enhanced safety by remote monitoring of installation Successful installation of 344 piles on 86 locations Using approximately 50 sensors on installation frame 30

31 FY 2017 results

32 Key take-aways FY 2017 results in line with expectations Strong progress strategic agenda: activities regrouped into Marine and Land division, with uniform business lines more client centric and efficient organisation divestment non-core marine construction and installation business growing in other markets Measures to reduce costs and improve performance on track and mostly implemented Oil and gas market stabilising after challenging 2017; growth in other markets Results expected to improve in

33 Financial highlights FY 2017 FY 2017 results Continued revenue decline Q-o-Q backlog growth 12-month backlog -13.2% * -7.3% * +9.1% * 1,776 1,497 1,776 1,497 1, Dec Sept Dec Low single digit EBIT loss Negative cash flow after investments EBIT margin (before exceptional items) 0.5% x 1.9 x % excl. proceeds asset disposals 2017 * Revenue growth corrected for currency effect; 2017 backlog corrected for currency effect and for portfolio changes related to marine construction and installation activities 33

34 Another difficult year due to double digit decline in offshore oil and gas Revenue EBIT (margin) excluding exceptional items Capital employed ROCE ** excluding exceptional items Cash flow %* 75 X EUR million 1,776 1,497 1,341 1, % % - 0.7% - 3.3% excl. proceeds asset disposals Revenue (currency comparable) Declines of 11.3% in Marine, 3.0% in Land and 55.7% in Seabed Geosolutions EBIT (margin) excluding exceptional items Low utilisation APAC, price pressure and incidental operational issues in Marine division Improved profitability in Land division Low activity level Seabed Geosolutions Capital employed Reduced due to lower working capital, capex below D&A, impaired deferred tax assets and exchange rate differences Cash flow Cash generated from operating activities insufficient to support 2017 investment level * Currency comparable * * NOPAT last 12 months (applying domestic weighted average tax rate); capital employed average of last three reporting periods 34

35 EBIT decline in Marine and Geoscience divisions, Land improved excl. exceptional items X EUR million One-off operational benefit One-off operational benefit Marine Land Geoscience

36 Strong cost reductions, yet insufficient to offset revenue decline excl. exceptional items X EUR million EBIT FY 2016 Revenue Third party costs Personnel expenses Depreciation + amorisation Other income and expenses FX EBIT FY

37 Measures to reduce costs mostly implemented Finalisation active involvement in marine construction & installation business cable laying and trenching business divested early termination of long-term charters of the 2 remaining construction and installation vessels Significant improvement in charter terms 2 IRM vessels Retirement of 2 old vessels in Q4 Headcount reduction in 2017 by 486 employees to 10,044 at year-end EUR 20 million of financial benefit realised in H2 2017, EUR million will contribute to 2018 EBITDA improvement 37

38 Additional measures to restore profitability mostly implemented At H results, measures with annualised contribution to EBITDA of EUR million were announced EUR 20 million has been realised in H EUR million will contribute to 2018 EBITDA improvement x EUR million annualised EBITDA impact 2017 realisation 2018 additional benefit Total Vessels Fleet management Head count Total

39 Marine results impacted by low utilisation APAC, operational issues in Europe and price pressure Revenue EBIT (margin) excluding exceptional items Capital employed 1, %* X EUR million Asset Integrity % - 4.6% Site Characterisation Revenue Site characterisation revenue decreased by 15.2% at constant currencies Asset integrity revenue declined by 8.3% Vessel utilisation better than last year; higher in asset integrity and stable in site characterisation EBIT Increased loss in site characterisation in particular in APAC (low utilisation), price pressure in all regions and (incidental operational issues) Europe Asset integrity low single digit positive margin compared to small loss in 2016, mainly due to better results in Europe and Middle East CE Decreased significantly due to lower working capital, depreciation and currency translation * Currency comparable 39

40 Improved profitability of Land division driven by growth in building & infrastructure and power Revenue EBIT (margin) excluding exceptional items Capital employed %* * 476 X EUR million Asset Integrity % Site Characterisation % One-off operational effect Revenue Strong decline oil and gas related revenue largely offset by growth other markets Site characterisation flat at constant currencies; higher revenue in Europe, Middle East and APAC offset by finalisation large LNG projects in USA Asset integrity decreased by 12.5% as a consequence of reduced oil and gas infrastructure activity EBIT Improvement reflects improved profitability in Middle East, Europe and APAC; reduced losses in Africa; and positive one-off operational effect of EUR 6.1 million Site characterisation mid single digit EBIT margin, slightly better than prior year; asset integrity improved from high single digit loss to breakeven CE Slight decrease due to improvement working capital * Currency comparable 40

41 Seabed results impacted by low utilisation, despite good project performance Revenue EBIT (margin) excluding exceptional items Capital employed %* * X EUR million Seabed Other * * 12.0% One-off operational effect % Revenue Seabed: Low utilisation, with only two crews active during 1HY and idleness from June to November EBIT Seabed: despite exceptionally low utilisation, loss contained by robust operational project performance and further cost reductions Seabed: Last years EBIT included positive one-off operational benefit of EUR 11.3 million, related to conversion of vessel charter into lease and purchase agreement CE Seabed: higher working capital due to the later start of Lula project Other: includes EUR 22.5 million for indirect interests in Australian exploration projects, partly offset by other provisions and payables * Currency comparable * * Indirect interests (via Finder Exploration) in Australian exploration projects 41

42 Continued good working capital performance Working capital (x EUR million) YE 2017 YE 2016 Working capital of which inventories of which trade & other receivables Working capital improvement Days of revenue outstanding reduced to 85 mainly due to improved billing and cash collection of which trade & other payables (343) (375) Working capital as % of revenue Days of revenue outstanding 19% 17% 15% 13% 11% 9% 7% 18.2% 16.4% 15.3% 11.9% 15.2% 10.9% 12.6% 11.0% % HY14 FY14 HY15 FY15 HY16 FY16 HY17 FY17 80 HY2014 FY2014 HY2015 FY2015 HY2016 FY2016 HY2017 FY

43 Well within covenants and good liquidity Fixed charge cover Debt maturity per December 2017 (X millions, euro equivalents) 387 revolving credit facility subordinated convertible covenant bond 2016 subordinated convertible bond * 100 * 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q * Will be lower than EUR 290 million when bond will be (partly) converted into equity Net debt/ebitda Net debt (X EUR million) covenant Q Net debt 198 Net debt for covenant purposes* 2Q15 4Q15 2Q16 4Q Q Q q Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 * Difference between net debt and net debt for covenant purposes relates to debt component of convertible bonds

44 Q trading update & outlook

45 Financial highlights Q First year-on-year revenue and backlog growth since 12 quarters Offshore oil and gas market stabilising Non-oil and gas markets, mostly building & infrastructure and offshore wind, continue to develop positively Margin improvement still limited due to oversupply and consumption of down cycle backlog Continued focus on price improvement, cost control and positive cash flow generation Results 2018 expected to improve compared to

46 Backlog: first year-on-year increase after 12 quarters of decline 12 month backlog Comparable growth* (x EUR million) 1Q17 4Q17 1Q18 Y-on-Y Q-on-Q Site characterisation Marine % 18.5% Asset integrity Marine % 4.4% Marine % 9.9% Site characterisation Land (16.7%) 2.2% Asset integrity Land % (0.9%) Land (12.2%) 1.4% Geoscience (Seabed) % (0.9%) Total 1, % 6.1% 1, , , , , , , , %* %* Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 Marine Land Geoscience * Corrected for currency effect (of around 9% year-on-year) and for portfolio changes related to divestment of marine construction & installation activities in

47 Outlook 2018 General market developments stabilising oil and gas environment continued growth in building & infrastructure and renewables markets Fugro outlook 2018 revenue growth improved EBIT margin positive cash flow from operating activities after investments capex of around EUR 80 million 47

48 Questions? CONTACT CATRIEN VAN BUTTINGHA, DIRECTOR IR: