While the weak environment impacts the oil & gas activities, the company maintains its strategic shift towards the renewables. The company will take the name of its current renewables division (Dolfines) and spin off its audit & inspection division. This should make the company more visible in the offshore wind market, which is now looking to develop its floater in partnership with a larger player.
FY19 preliminary sales are lower than our expectations (7.2m), so we will subsequently adjust them. We will also lower our estimates for 2020, as the environment is particularly weak for the oil & gas industry. Exploration and production companies will revise their capex spending with a $35 oil, affecting services companies negatively. However, the audit & inspection division should be more resilient than the pure exploration activities (e.g. seismic).
Dietswell/Dolfines will spin off the audit and inspection division (Factorig), in what could be a first step before a divestment. Operationally, the factorig division seems to be autonomous and we do not see a loss of synergies with such a transaction.
The focus remains on the offshore wind market. Dolfines now aims at co-developing the proprietary floater (Trussfloat) with a larger player.
Lastly, note that the company still expects to divest its Sedlar rig, as an outright sale, lease or provision with a maintenance contract.
We will adjust our estimates following this release.