Mark Heine, CEO: “The year 2024 is off to a good start. We are capturing a significant part of site characterisations in the offshore wind market, which continues to be buoyant as a result of the energy transition in numerous countries. Many governments are demonstrating their commitment to carbon reduction roadmaps, for example by responding swiftly to recent delays in several offshore wind projects by increasing prices for the energy that the owners of these developments generate. At the same time, our revenue was supported by the infrastructure and water markets.
In this typically low winter season, we reported a strongly improved EBIT margin of 8.8% driven by an overall robust performance in Marine, fueled by excellent operational execution, operating leverage and improved terms & conditions; despite still increasing cost levels.
The implementation of our new strategy, Towards Full Potential, is getting underway. Ongoing investment in our people, technology and execution excellence is key. Despite tight labour markets, we are successful in attracting the people we need to support our clients. In the first quarter, we hired over 500 people, and voluntary staff turnover declined to 8%. Also, the conversion of Fugro Resilience and Fugro Resolve to geotechnical vessels is nearing completion, further boosting our earnings capacity.
While carefully navigating macro-economic and geopolitical uncertainties, we are well-positioned to benefit from the energy transition, massive infrastructure investments and urgently needed climate change adaptation.”
Review Q1 2024
Revenue in the first quarter increased by 9.0% on a currency comparable basis. In Marine, revenue grew by 13.8%, enabled by the expansion of the geotechnical fleet. Overall, vessel utilisation was 65% versus 68% in the comparable period last year, due to scheduled maintenance and lower utilisation of the geophysical fleet. While infrastructure revenue increased, Land declined by 3.5% overall due to a lower number of nearshore LNG projects in the US.
Despite the typically slow first quarter, Fugro reported an 8.8% EBIT margin, driven by an overall strong Marine performance, most notably in Europe-Africa, as a result of excellent project execution and improved terms & conditions.
Operating cash flow before changes in working capital increased by EUR 24.0 million to EUR 66.2 million. As expected, working capital increased compared to an exceptionally low level at year-end 2023 (at 8.9% of revenue), by EUR 91.4 million in total. As a percentage of 12-months revenue, working capital was 12.8% compared to 13.2% a year ago. Capex amounted to EUR 32.7 million. On balance, free cash flow decreased by EUR 73.6 million to negative EUR 58.0 million. Net debt amounted to EUR 198.6 million compared to EUR 110.5 million at year-end 2023 mainly due to higher working capital. Net leverage amounted to 0.5x.
The 12-month backlog was up in both Marine and Land, as a result of double-digit growth in Europe-Africa and Asia Pacific.
Outlook 2024
In line with the new strategy Towards Full Potential and related mid-term guidance, Fugro expects:
- Continued revenue growth, primarily driven by the energy markets
- EBIT margin within mid-term target range of 11-15%
- Ongoing investments in assets, technology, people and execution excellence
- Capex of around EUR 250 million.
Recent project awards
- Europe-Africa region: Detailed geotechnical surveys for Dogger Bank South for RWE and Masdar off the northeast coast of England; a geophysical unexploded ordnance identification and clearance project for TenneT on their 2GW offshore grid connection projects offshore Germany; a fully remote pipeline inspection in the North Sea under a 3-year framework agreement using Fugro’s newest Blue Essence® uncrewed surface vessel; and geotechnical investigation to support the design of a hydrogen-ready gas-fired power plant for RWE in Germany to help achieve the phasing out of coal.
- Americas region: AUV survey contract in the Gulf of Mexico for BP to deliver deepwater geophysical data for Tiber and Kaskida projects; a geotechnical site investigation for an upstream operator in Trinidad to support foundation engineering for offshore infrastructure; geotechnical services for T.Y. Lin International Group to support the design of the Ile d’Orleans Bridge in Canada; and a remote sensing and mapping project to assess 3,900 km transmission corridor for a US-based power company.
- Asia Pacific region: Significant survey contract on INPEX’s Abadi LNG and carbon capture and storage project in Indonesia; geotechnical investigations for four offshore wind developments in Japan, South Korea and Taiwan; positioning and construction support services at Yunlin Offshore Wind Farm in the Taiwan Strait; and an award from Singapore’s Land Transport Authority for the supply, installation and monitoring of instruments during construction of West Coast Station and tunnels on the Cross Island Line.
- Middle East & India region: Comprehensive programme of geophysical, geotechnical, and ROV crossing services for ADNOC’s Hail & Ghasha project; deployment of LiDAR buoy for India’s National Institute of Wind Energy off the Tamil Nadu coast; various site characterisation and asset integrity operations for Technip in relation to the Dorra gas field; and onshore ground investigations for various NEOM infrastructure developments.
