The Netherlands: Fugro’s Revenue Grows as Expected
The growth in revenue that commenced in the second half of 2010 continued, as expected, in the first months of 2011.
This was despite somewhat lower utilisation of the vessel fleet due to such factors as a higher number of planned dry dockings for regular maintenance and the unexpected cancellation of a large offshore project in Asia (several tens of millions Euros), resulting in idle time for vessels such as the Fugro Synergy.
Demand for services is good, but the start-up time for projects is still short in some segments such as marine seismic. This has made optimised planning of available capacity difficult. The start of some new ROV-projects in Brazil is delayed as the vessels, which are to be delivered by third parties to their client, will arrive later than planned. As a consequence they will only shortly be able to render their services on board of these vessels.
The onshore activities were impacted by extreme weather circumstances in a number of regions, like the United States and Northeast Australia.
The events in Japan following the earthquakes and in the Middle East/North Africa because of the political unrest, have so far had limited effect on Fugro’s activities.
The backlog remains at a good level and is expected to further increase in the coming (summer) months.
The demand for exploration related work in the oil and gas sector is improving. However, this is to a great extent absorbed by the worldwide excess capacity in the seismic fleet, leading to a laborious price recovery in this segment. Activities in the Gulf of Mexico are gradually being resumed. New regulations related to work on the seabed will lead to additional and more intensive survey work in this region.
Infrastructure and building-related activities are under pressure in Europe and the western part of the United States. Elsewhere they see a healthy activity level.
They expect that the exploration activities for the mining industry will continue to improve. However, the award of regional investigations by governmental organisations can be a prolonged process.
The demand for wind farm related work continues in Northwest Europe. Notwithstanding the fact that increased competition for this shallow water type of work is resulting in price pressure, this type of project creates good opportunities for optimising fleet utilisation since project execution periods are flexible.
They have taken delivery of the two new build (owned) vessels scheduled for this year. This concerns the Fugro Galaxy (Survey) and the Fugro Symphony (Subsea Services), which are being immediately put to work in the North Sea.
Compared to the beginning of the year the staff level increased by 350 persons as a result of recent acquisitions and now amounts to 13,800 employees.
In the first months of the year they finalised the following acquisitions:
* TSmarine Group Holdings Pty Ltd (Australia), active in specialised marine construction support and survey activities. Annual revenue EUR 90 million.
* Bluestone Offshore Pte Ltd (Singapore), offshore geotechnical investigations. Annual revenue EUR 15 million.
* JDR Cable Systems Holdings Netherlands BV. This company is specialised in the design and production of cables for operating marine equipment.
Annual revenue EUR 25 million.
In addition they reached agreement in principle with Kelman Technologies (Canada) for taking over their seismic processing business. The acquisition is expected to be finalised in the next few weeks. The annual revenue is EUR 9 million.
The above-mentioned acquisitions fit Fugro’s strategy to expand services in existing market segments and offer good opportunities for further growth.
Fugro’s financial position remains healthy with an equity of more than EUR 1.4 billion and interest-bearing debt of about EUR 1.0 billion.
Cashflow and credit facilities are amply sufficient to finance scheduled investments and potential further acquisitions.
The price of a barrel of oil is currently around USD 100, which supports continued investment by the oil and gas sector. These investments are expected to increase in 2011 by some 12%-15% compared to the previous year.
Based on good demand for services, Fugro expects, barring unforeseen circumstances and strong fluctuations in currencies, revenue over the first half of 2011 to be more than EUR 1.2 billion (HY1 – 2010: EUR 1.04 billion) and net profit over the first half of the year to be about EUR 100 million (HY1 – 2010: EUR 101 million).
This includes the fact that the current lower rates of exchange of for in particular the US dollar and the British pound have had a negative impact on both revenue and net result over the first half of the year.
About one third of the growth in revenue results from completed acquisitions.
The expected revenue and net profit will result in a net profit margin for the first half year of some 8.3% (HY1 – 2010: 9.7%). The decrease in the net profit margin is mainly due to the earlier-mentioned causes, such as lower utilisation of a part of the vessel fleet in the first few months of the year and the delayed start of projects. It is expected that the effect of these issues will fade in the coming months as utilisation improves.
Fugro will publish the results over the first six months of 2011 on Friday 12 August 2011. As in previous years, they will then give the outlook for expected profit for the full year 2011.
Source: fugro, May 10, 2011;