Strong performance: steep growth and ongoing result improvement Delivering on mid-term targets
- 32.6% revenue growth driven by successfully capturing high client demand, mainly in the energy markets
- 86% increase in EBIT resulting in 16.0% margin; all regions report higher results
- Operating cash flow up by 95% to EUR 134.7 million; offset by higher working capital due to high revenue growth, resulting in EUR 66.9 million free cash flow for the quarter
- 12-month backlog continues to be robust with 14.5% increase after steep growth during previous quarters
- In November, Fugro will unwind the sale and leaseback of Fugro Scout and Fugro Voyager vessels
- Outlook full-year 2023: ongoing strong revenue growth, EBIT margin and return on capital employed within mid-term target range, and positive free cash flow
- Intention to resume dividends with pay-out of EUR 0.40 per share as of FY 2023, subject to shareholder approval
Mark Heine, CEO: “I am excited to report another strong set of results. All regions contributed to significantly higher margins, in particular the Americas and Europe-Africa. Overall, better contracting conditions, high activity levels and good project execution led to a very strong performance especially in marine site characterisation.
We again realised substantially higher revenue in renewables, to one third of group revenue year-to-date. Despite recent news flow around delays in several offshore wind projects, we anticipate continued growth going forward, supported by the recent launch of the ‘Wind Power Package’ in the EU. While the energy transition is underway, the world needs reliable and affordable energy. Therefore, we also expect further growth in traditional energy, especially in the gas market, where Fugro’s solutions continue to enable our clients to operate safely and efficiently.
Over the past years, we have successfully transitioned into a diversified company with a sizeable position in renewables and significantly improved results. We are ready for the next phase and will update the market on our strategy and mid-term targets at our Capital Markets Day on 14 November 2023.”
Review Q3 2023
Revenue was up by 32.6% on a currency comparable basis, by successfully capturing high client demand in all regions, most notably in renewables and oil & gas. In Marine, revenue increased by 46.6%, supported by an increase in the number of paid vessel days, enabled by a larger geotechnical fleet and higher pricing. Overall, the utilisation rate of Fugro’s owned and long-term chartered vessels was 75%. Land revenue was in line with last year.
The group’s profitability continued its upward trajectory. All regions reported higher margins as a result of top line growth in combination with operational efficiencies. Driven by an outstanding performance in marine site characterisation, the EBIT margin amounted to 16.0% compared to 10.9% in the third quarter of last year and 11.8% in the second quarter of this year.
Following steep growth during the previous quarters, the 12-month backlog continues to be robust with an increase of 14.5%; all business lines report a higher backlog.
Driven by a significantly higher EBITDA of EUR 135.9 million, operating cash flow before changes in working capital increased to EUR 134.7 million. This increase was offset by higher working capital as a result of high revenue growth. The working capital position is expected to be partially unwound in the fourth quarter, in line with previous years. At the end of September, working capital as a percentage of revenue amounted to 15.6% compared to 14.6% per September last year. Capital expenditure was EUR 31.7 million (compared to 29.1 million last year). As a result, free cash flow amounted to EUR 66.9 million, in line with last year. Net leverage declined to 0.7x at the end of the quarter.
Outlook 2023
Fugro expects ongoing growth in the energy markets, in particular renewables, resulting in strong revenue growth for the full year. The EBIT margin and return on capital employed will be within the mid-term target range of 8-12% and 10-15% respectively, and free cash flow is anticipated to be positive.
In the fourth quarter, Fugro will unwind the sale and leaseback arrangement for the Fugro Scout and Fugro Voyager. Enabled by its strong liquidity, Fugro will take early delivery of the vessels instead of extending the financing arrangement, resulting in a further reduction of gross debt and financing costs. The cash consideration, net of deposits, of USD 39 million will be financed from existing cash resources.
Total capital expenditure for 2023 is estimated at around EUR 200 million, excluding the reclassification of the Fugro Scout and Voyager from right-of-use assets to fixed assets.
In conjunction with benefiting from further opportunities in the market, Fugro will amend its dividend policy to 25-45% of net result. For full-year 2023, Fugro intends to resume dividends with a pay-out EUR 0.40 per share subject to shareholder approval.
Analyst call
At 10:00 CET, Fugro will host an analyst call. The dial-in numbers are +31 20 708 5073 or +44 33 0551 0200; please quote Fugro when prompted by the operator. This call can also be followed via audio webcast: https://www.fugro.com/investors/results-and-publications
About Fugro
Fugro is the world’s leading Geo-data specialist, collecting and analysing comprehensive information about the Earth and the structures built upon it. Adopting an integrated approach that incorporates acquisition and analysis of Geo-data and related advice, Fugro provides solutions. With expertise in site characterisation and asset integrity, clients are supported in the safe, sustainable and efficient design, construction and operation of their assets throughout the full life cycle.
Employing approximately 10,000 talented people in 57 countries, Fugro serves clients around the globe, predominantly in the energy and infrastructure industries, both offshore and onshore. In 2022, revenue amounted to EUR 1.8 billion. Fugro is listed on Euronext Amsterdam.
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