Oil and gas market adversely affects FugroCompany News // May 3, 2017
In a first quarter 2017 trading update, Fugro said it experienced a year-on-year revenue decline of 14.6 per cent or 16.3 per cent on a currency comparable basis compared with the first quarter in 2016, which was less severe than the same period last year, but reflects continued under-investment in the offshore oil and gas market. Net debt/EBITDA of 1.3 was well below the company's covenant requirement of under 3.0.
Fugro said its backlog for the next 12 months has stabilised, but compared to the same quarter last year, backlog decreased by 12.9 per cent.
For the first half 2017 Fugro continues to anticipate a significant decline in revenue, however it will be less severe than in the same period of 2016, and a negative low single digit EBIT margin (excluding exceptional items).
Revenue decline is expected to bottom out towards the latter part of the year. Full year cash flow is expected to be positive.
Paul van Riel, Fugro's CEO, said: "When we released our full year 2016 results we said we expected a tough first half of 2017. In line with this, we experienced a seasonally weak first quarter which was further impacted by work
volume reduction and price pressure due to continued underinvestment in the offshore oil and gas market.
"We are addressing these challenging market circumstances by continuing to reduce our cost base, improve efficiency, differentiate our service offering and invest in innovation to improve our competitive position.
"In combination with our strong global presence and technological capabilities this allows us to expand our market leading positions.
"Our revenue in the building and infrastructure market grew, supported by a strengthening global economy. We are also benefiting from our very strong position in the growing offshore wind market, which has begun to expand globally from its North Sea nucleus.
"We are pleased to see that the backlog is stable since mid-2016. This indicates the decline of revenue from the oil and gas market may bottom out towards year end."