FUGRO N.V. 
FY 2020 results
1. Introduction
Highlights 2020 results
■ Revenue decline of 12.4% due to Covid-19 and downturn oil & gas market, partly offset by strong growth in offshore wind
■ Continued diversification; in H2, 59% of revenue was from renewables, infrastructure, nautical and other non-oil & gas markets
■ Decisive response to pandemic with immediate cost reductions, limiting impact of revenue decline
■ Strong free cash flow of EUR 105.4 million
■ Solid 12-month backlog of EUR 866.2 million, 8.0% below a pre-Covid backlog at YE 2019
■ Successful refinancing provides flexibility to deliver on Path to Profitable Growth strategy
Limited y-o-y EBIT decline with recovery in H2
Revenue
Adjusted EBIT2 (margin)
X EUR million 1,631
4.2%
3.5%
FY
2019
2020
2019
2020
5.4%
6.5%
HY
H12019 H2
H1 2020 H2
H1 2019H2
H1 2020
H2
1 growth percentages corrected for currency effect
2 adjusted for specific items: onerous contract provisions, restructuring cost, impairment losses (EBIT only) and certain adviser- and other costs
Diversified revenue with increased exposure to offshore wind
Share of revenue key market segments1,2
oil & gas
infrastructurerenewablesnauticalother
■ In H2 2020, 59% of group revenue was generated in non-oil & gas markets
Revenue growth % 20203
-23
-14
28
4
■ Continued diversification towards markets where Fugro can support & benefit from the energy transition, climate change adaptation and sustainable infrastructure development
1. As of 2018: figures from continuing operations (excl. Seabed)
2. EUR 6 million of Q3 revenue was wrongly attributed to renewables instead of oil & gas, which was corrected in Q4
3. Growth percentage corrected for currency effect
FY 2020 results
Trends in Fugro's markets
▪ Population growth, urbanisation, climate change and technology are the key global developments shaping our world
▪ These result in the following industry trends in Fugro-'2s9%markets: energy transition, climate change adaptation, sustainable infrastructure and digitalisation
▪ In the short term, Covid-19 pandemic has had, and is likely to continue to have, major implications for global economies and energy use
▪ Pandemic has accelerated and intensified the attention to key global developments, most notably climate change
Energy transition
Sustainable infrastructureClimate change adaptation
Digitalisation
Energy transition: high growth renewables
▪ Global drive for renewable energy; expected economic recovery in 2021 supports renewables investments
▪ Oil majors' investment budgets increasingly directed towards renewable sources
▪ In 2022, renewables capex in Europe is forecasted to exceed that of offshore O&G
▪ Despite recovering demand and improving oil price, O&G market expected to remain volatile in 2021
1: Offshore wind capex, excl China. Source: 4COffshore (December 2020)
2: Global OFS (oilfield services) spend. Source: Rystad Energy (January 2021)
Offshore wind capex (EUR bn)1
2019
2020
2021F
2022F
2023F
Offshore O&G market spend2 (USD bn)
2019
2020
2021F
2022F
2023F
AmericasAPACEurope & AfricaMEI
Solutions to support energy transition
Positioning support for installation of world's first semi-submersible floating wind park, WindFloat Atlantic in Portugal
▪ In support of Bourbon's towing, positioning and installation activities
▪ Customised remote positioning system powered by solar and wind, with real-time connection to ROV and support vessel
Triple A services for Suedlink powerline, transporting electricity generated by offshore wind to the south of Germany
▪ multidisciplinary consultancy services for route planning and installation of 106 km of underground power cables
▪ Geo-data acquisition and ground & environmental risk mitigation advice
▪ Fugro appointed as safety coordinator
Sustainable infrastructure: important growth driver
▪ Urbanisation and population growth drive infrastructure development
▪ Increasing awareness of aging infrastructure risks
▪ Quick recovery of sentiment after initial Covid-19 impact
▪ Governmental support to play major role in the recovery
▪ Digitalisation drives effective construction & operations
1. CPMI : assessment of health of construction project pipeline at all stages. Source: Global Data, Jan '21
2. Source: Global Data Construction Intelligence Centre Jan '21, capex/opex for construction services in O&G, electricity & power, rail, road and other infrastructure, excl. China.
Construction Project Momentum Index1
Infrastructure spend (USD bn)2
2019
2020
2021F
2022F
2023F
AmericasAPACEurope & AfricaMEI
Solutions to support sustainable infrastructure
Innovative monitoring of Amsterdam's bridges and quay walls
▪ Using Fugro's innovative TotaLite images, taken from permanently fixed compact cameras to measure deformation
▪ In addition, mobile laser scanning of bridges and quays from the water
▪ Resulting data immediately available for analysis via Fugro's online platform, enabling optimal repair and maintenance planning of bridges and quay walls
Climate change adaptation requires massive investments
▪ Natural disasters due to extreme weather resulted in 475,000 deaths and USD 2.6 trillion damages in past 2 decades
▪ USD 140-300 billion of annual adaptation investments required in developing countries by 20301
▪ New Biden administration launches climate adaptation plans
This is driving the demand for Fugro's solutions in the fields of coastal resilience, flood prevention, drought measures and urban water sourcing
1: UNEP 2016 adaptation gap report
Solutions to support climate change adaptation
Geo-data acquisition for flood hazard and risk maps in Romania
▪ Fugro will provide digital terrain models, surface models and ortho-imagery and will survey around 13,300 cross sections plus 3,500 bridges and hydrotechnical infrastructures.
Projects in Gulf St. Vincent and in Torres Strait under Australian Hydrographic Office Hydroscheme Industry Partnership Program
• Collection of over 1,900 square kilometres of bathymetric data to improve nautical charts.
• Introduction of new technologies, including Fugro Blue Shadow and airborne lidar bathymetric sensor, LADS HD+
Our ambition is to support the transition towards carbon neutrality, sustainable infrastructure and climate resilience
▪ 80% of Fugro's carbon footprint comes from vessel CO2 emissions
▪ Reduction programs underway, targeting significant lower emissions/total operational days by 2025
▪ increasing use of lightly crewed vessels and remote operations
▪ various optimisation tools for more fuel-efficient operations
▪ alternative fuels
Covering all direct and indirect emissions from its operations (Scope 1 and scope 2 emissions).
Key investment highlights
1
World's leading global Geo-data specialist
2
Critical and leading solutions provider in energy transition growth areas
3
Active in climate change adaptation and sustainable infrastructure growth areas
4
Diversified and long-standing client base with limited concentration
5
Global player with local presence
6
Best in class, market agnostic asset base coupled with specialist workforce and strong safety culture
7
Differentiation through innovation and digitalisation
8
Resilient operating model with flexibility to respond to market environment
2. 2020 results
2020 key messages
▪ Modest y-o-y EBIT decline with recovery in H2
▪ Decisive cost measures, growth in offshore wind and improvements in Land drive EBIT improvement in H2
▪ Actions taken to address underperforming land business are yielding results
▪ Strong working capital performance and cash collection resulting in 83 days of revenue outstanding
▪ Free cash flow of EUR 105 million including EUR 50 million divestment proceeds and EUR 20 million Covid-19 related deferred tax payments
▪ Refinancing provides flexibility to deliver on Path to Profitable Growth strategy
Strong cost reductions mitigate revenue decline
X EUR million, excl. specific items
EBIT 2019
revenue declineother income 3rd party costspersonnel expensesother expensesD&AEBIT 2020
On track to realise EUR 130 mn cost savings, in excess of previous target
annualised | P&L impact | P&L impact | ||
savings | 2020 | 2021 | ||
(x EUR | (x EUR | (x EUR | ||
million) | million) | million) | ||
▪ | Reduce workforce by up to 10% | ~60 | ~40 | ~20 |
▪ | Reduce overhead costs | |||
▪ | Implement hiring and salary freeze | |||
▪ | Cut on executive pay | |||
▪ | Minimise use of short-term charters, 3rd party equipment and personnel | ~20 | ~15 | ~5 |
▪ | Price reduction 3rd party cost | ~25 | ~20 | ~5 |
▪ | Discretionary expense (travel, conferences, IT, communication, etc) | ~20 | ~15 | ~5 |
▪ | Footprint rationalisation | ~5 | ~5 | |
~130 | ~95 | ~35 |
P&L impact
Despite double digit revenue decrease, modest FY EBIT decline with recovery in H2
Revenue
- 12.4%1
1,631
FY
Adjusted EBIT
excl. specific items
1,386
2019
MarineLandFX effect
2020
HY
679
H2 2019
MarineLandFX effect
H2 2020
1: amounts in EUR million, revenue growth corrected for currency effect FY 2020 results
45 | -19 18 | 44 |
H2 2019
MarineLandH2 2020
1 growth percentages corrected for currency effect
2 adjusted for specific items: onerous contract provisions, restructuring cost, impairment losses (EBIT only) and certain adviser- and other costs
Land: turnaround measures start to yield results
Revenue
Adjusted EBIT2 (margin)
X EUR million
3.4%
FY
2019
2020
7.6%
HY
H1 2019
H2
H1 2020 H2
▪ Margin of 7.6% in H2 supported by turnaround programme, transaction result on property sale in China
▪ In various countries, negative Covid-19 impacts were mitigated by government support
1 growth percentages corrected for currency effect
2 adjusted for specific items: onerous contract provisions, restructuring cost, impairment losses (EBIT only) and certain adviser- and other costs
Europe-Africa: y-o-y EBIT decline with improved margin in H2
Revenue
2019
▪ Revenue decline in all business lines, particularly in marine asset integrity, which is most exposed to oil & gas market
MarineLandFX
2020
▪ FY EBIT margin reduced y-o-y however H2 EBIT margin improved to 12.8% compared to 10.4% in H2 2019 despite high single-digit H2 revenue decline, supported by growth in offshore wind and cost reductions
Americas: y-o-y stable margin, land restructuring ongoing
2019
MarineLand
Adjusted EBIT (margin)
FX
2020
-11 | -9 |
2019
MarineLand
2020
23 FY 2020 results 1: amounts in EUR million, revenue growth corrected for currency effect
▪ Revenue down in all business lines due to Covid-related postponements/ cancellations and oil & gas downturn. Limited decline in MSC thanks to offshore wind activities
▪ EBIT up from 5.9% loss in H1 to 0.5% in H2, driven by MSC and Land
▪ H2 Land performance improved as result of cost measures and simplification of the organisation
Asia Pacific: ongoing margin recovery
Revenue
2019
MarineLand
Adjusted EBIT (margin)
FX
2020
2019
MarineLand
2020
24 FY 2020 results
1: amounts in EUR million, revenue growth corrected for currency effect
▪ Revenue in MSC declined as result of Covid restrictions and projects being deferred; growth in other business lines
▪ EBIT improved mainly because of better performance in LSC, stringent cost measures and positive transaction result on a property sale in China
▪ Losses due to Covid-19 mitigated by government support
Middle East & India: challenging H2
Revenue
2019
▪ Significant y-o-y revenue decline in marine due to large O&G exposure. LSC up, particularly in UAE
▪ Y-o-y EBIT decline fully driven by H2 due to very significant marine revenue decline
MarineLandFX
2020
▪ Land EBIT improved thanks to increased revenue and positive impact from restructuring measures
Seabed Geosolutions: results severely impacted by Covid-19
Revenue
2019
Adjusted EBITDA
FX
2020
2019
2020
1. amounts in EUR million, revenue growth corrected for currency effect
▪ Activity levels severely affected by Covid-19, including sudden termination of S-79 project and delay of project in Brazil
▪ Work force reduced by around 60%. Restructuring costs amounted to EUR 4.1 million
▪ Specific items of minus EUR 98.9 million in total, of which
• EUR 70.0 million non-cash impairment
• EUR 24.8 million onerous contract provision, bad debt and impairment in relation to S-79 project
• EUR 4.1 million restructuring costs
▪ Adjusted EBITDA improved as result of cost measures, good project execution and gain of around EUR 5 million related to shallow water cable assets
Results impacted by various specific items
x EUR million Adjusted EBIT Specific items EBIT
2020
2019
Finance income
48.2 (28.4) 19.8 2.2
68.0 (42.4) 25.6 3.9
Interest expenses Exchange rate variances Equity accounted investees Income tax expense
(46.0)
(52.1)
(30.2)
(9.6)
7.4
9.2
(25.2)
(13.8)
Gain on non-controlling interests from continuing operations
(2.1)
(2.8)
Net result from continuing operations
(74.0)
(39.6)
Result from discontinued operations of which specific items
(99.8) (86.5)
(98.6) (61.4)
Gain on non-controlling interests from discontinued operations
-
16.7
Net result incl discontinued operations
(173.8)
(108.5)
▪ Specific items:
▪ restructuring costs (EUR 17.6 million)
▪ impairments (EUR 5.9 million)
▪ certain other costs (EUR 4.9 million)
▪ increased losses on exchange rate variances related mainly to US dollar, Singaporean dollar and Angolan kwanza
▪ Increase income tax mainly due to EUR 19.3 million DTA write down in Americas
▪ Result from discontinued operations contains specific items
▪ EUR 70.0 million impairment
▪ EUR 24.8 million onerous contract provision, bad debt and impairment in relation to S-79 project
▪ EUR 4.1 million restructuring costs
Year-on-year working capital improvement
Working capital (as % of revenue)
H1 16
FY16
H1 17
FY17
H1 18
FY18
H1 19
FY19
H1 20
2018 figures have been adjusted to reflect Seabed Geosolutions as held for sale (discontinued)
FY20
▪ Strong cash collection, resulting in DRO of 83
▪ End of June and Dec 2020, working capital favourably impacted by around EUR 20 million deferred tax payments from government support programs
▪ End of December 2019, working capital favourably impacted by EUR 24 million related to Southern Star arbitration (paid in January)
Strong free cash flow
2020 Free cash flow
X EUR million, from continued operations
2019 Free cash flow
X EUR million, from continued operations
86
operating CF before changes working capital
changes working capital
divestment proceeds Global Marine
capexother investing CF
free cash flow
105
58
operating CF before changes working capitalchanges working capital
capex
other investing CF
free cash flow
Refinancing completed in December 2020
■ After EUR 82 million sub-10 equity issue in Q1, Fugro raised EUR 250 million in new equity in Q4 2020
■ EUR 575 million RCF was refinanced with new EUR 250 million RCF and EUR 200 million term loan
■ Fugro bought back a nominal amount of EUR 131 million of 2021 convertible, partially with a discount
■ Following the refinancing and 2:1 share consolidation, Fugro has 103,190,366 shares outstanding
■ Good liquidity with over EUR 400 million in cash and available facilities
1 including Seabed Geosolutions
Maturity profile after refinancing (YE 2020)
450
250
59
0
200
100
0
Oct 2021
2022
Dec 2023
2024
2025
revolving credit facility (no drawings made as per year-end 2020)2021 convertible2024 convertible (with put option in 2022)term loan
Net debt1
Q4 2019
Incl discontinued operations
Q2 2020
Incl discontinued operations, excl impact IFRS 16
Q4 2020
Strongly improved balance sheet ratios
Net leverage
2,1x according to new covenant definition
1,6x excl impact IFRS-16
4Q19
1Q20
2Q20
3Q20
4Q20
Interest coverage
Solvency
4Q19
4Q19
1Q20
2Q20
3Q20
4Q20
1Q20
2Q20
3Q20
1 ratios according to new covenant definitions as per refinancing: post-IFRS16, net debt not including convertible bonds, including Seabed Geosolutions (held for sale)
4Q20
3. Outlook and management agenda
Solid 12-month backlog
8% y-o-y decrease compared to pre-Covid backlog at YE 2019 with growth in Europe-Africa and decline in other regions
Q4 2018
Q1 2019
1 Corrected for currency effect ..FY 2020 results
Q2 2019
Q3 2019
Q4 2019
Q1 2020
Q2 2020
Europe-AfricaAmericasAPACMiddle East & IndiaQ3 2020
Q4 2020
Outlook 2021
▪ Covid-19 pandemic is expected to continue to impact societies and thus economic activity in the coming quarters, although Fugro anticipates a return to more normal market conditions in H2
▪ Offshore wind is anticipated to show continued growth. Growth in infrastructure markets is expected to resume as of 2021, driven by governmental investments. Oil and gas market is expected to remain volatile in 2021
▪ Fugro continues to focus on managing costs and cash flow, and operational and commercial excellence, with the aim of improving the margin
▪ Capex for continuing operations of ~EUR 80-90 million
Management agenda
Manage cost base and cash flow
Further strengthen operational and commercial excellence
Complete turnaround of land business
Enhance service delivery with new market leading digital solutions
Divest non-core interest in Seabed Geosolutions
Accelerate ESG roadmap
Q&A
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Disclaimer
Fugro NV published this content on 19 February 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 19 February 2021 08:39:04 UTC.
