Fugro benefits from offshore wind expansion in first half of 2023

Fugro has presented its financial results for the first half of 2023 today. The company reported a 24.1% revenue growth compared to the same period last year. The growth is said to be due to continued high client demand in energy markets, in particular for offshore wind site characterisation solutions and related nearshore activities.

In the first half of 2023, revenue went up from EUR 833.0 million H12022) to EUR 1,018.3 million, on a currency comparable basis, based on double digit growth in all regions. Marine booked a revenue of EURO 748.4 million, up 30.9%, mainly driven by site characterisations for offshore wind farms and increased activity levels in the oil & gas markets. Vessel utilisation was 73% compared to 67% in the comparable period last year. Revenue in land increased by 8.6% (EUR 269.9 million), supported by nearshore activities for offshore wind and LNG developments.

Overall, as a result of more mature energy transition roadmaps in an increasing number of countries, renewables grew by 60%. Renewed interest in traditional energy sources resulted in a 36% growth in the oil and particularly gas market. Infrastructure revenue showed a decline of 11 %, primarily caused by reduced land revenue in the Middle East and business rationalisations in Europe-Africa. Water also showed a decline, of 20 %. As Fugro’s revenue in the water market is still limited, the sales development may vary.

Fugro’s EBIT margin improved strongly, to 8.9% from 4.6% a year ago. As a result of top-line growth and operational efficiencies, all regions reported better margins, mainly the Americas and Europe-Africa. Overall, in particular the marine site characterisation margin was significantly higher compared to last year as a result of better contracting conditions, increasing vessel utilisation and better operational performance. The marine asset integrity margin increased as well. Results in Land business were slightly lower, caused by slippage of a large project and downtime of a jack-up platform in the Middle East.

Free cash flow increased by EUR 85.0 million, mainly as a result of EUR 59.4 million higher operating cash flow before working capital thanks to higher profitability. In addition, thanks to strict working capital management, working capital as a percentage of 12-months revenue declined to 14.1% compared to 15.7% a year ago, while days of revenue outstanding declined to a relatively low level of 82. Capital expenditure was EUR 71.8 million, including the delivery of the first of the two geotechnical vessels planned for this year. Net debt amounted to EUR 266.3 million compared to EUR 207.4 million at year-end 2022 due to an increase in leases. Net leverage amounted to 1.0x compared to 0.9x at year-end 2022, and 2.0x a year ago.

The 12-month backlog increased by 21.3%, supported by the marine business lines in all regions. The land backlog declined, mainly as a result of business rationalisations in Europe-Africa.

Outlook 2023

Fugro expects ongoing growth especially in the energy markets, in particular renewables, resulting in strong revenue growth for the full year.

“IOn the back of this set of results, the strength of our markets and our unique positioning, we are confident that we will deliver on our mid-term targets this year. To remain successful in capturing the market opportunities and secure controlled growth, we continue to invest in our people and asset base. At our capital markets day on 14 November 2023, we will update the market on our strategy and future targets.”

Mark Heine, CEO

The EBIT margin and return on capital employed are anticipated to be within the mid-term target range of 8-12% and 10-15% respectively, and free cash flow is anticipated to be positive. As previously indicated, capex is estimated at EUR 200-225 million, including the acquisition of two geotechnical vessels, and investments in Fugro’s uncrewed vessel strategy and net zero roadmap. Image: Fugro Brasilis © Fugro

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