- Year-on-year revenue decline of 26.9% or 24.5% on a currency comparable basis in line with the market.
- EBIT margin (excluding exceptional items) decreased to 0.2% due to steep decline in activity and strong pricing pressure.
- Agreement reached to divest the Asia Pacific subsea services business, in line with strategy to focus on core activities.
- Additional measures implemented to reduce third party and personnel costs in line with lower volumes.
- Deteriorated market conditions led to non-cash impairments and other exceptional items of €151.7 million.
- Cash flow from operating activities after investments of €67 million, including proceeds from the sale and lease back of a geotechnical vessel and the sale of the CGG term loan.
- Net debt to EBITDA of 1.8 compared to covenant requirement of below 3.0.
- Outlook 2016: positive cash flow from operating activities after investments, further reduction of cost base and negative low single digit EBIT margin (excluding exceptional items) expected for the full year.
Comment by CEO, Paul van Riel:
“In the first half of this year, budgets of our oil and gas clients again declined significantly, with new projects being deferred or cancelled and strong price pressure as a result of overcapacity. We are continuing to adjust our cost base and capacity to market reality. This enables us to largely counter the lower volumes; the strong rate reductions, however, result in severe margin pressure. The building, infrastructure and power markets continue to provide good opportunities except in the countries that are hit hard by low oil and gas and other commodity prices. I am pleased that we reached an agreement on the divestment of our Asia Pacific subsea business. That fits in our strategy to focus on our core business while the minority stake we obtain in the acquiring entity allows us to participate in the benefits once the market recovers. Our key priorities remain generating positive cash flow to delever the balance sheet and a further strengthening of our market leading positions. The price reductions and efficiency gains throughout the supply chain are significantly lowering the oil price required to justify investments. In combination with increasing evidence that a balance between oil supply and demand will be achieved in the course of next year, this is expected to spur project approvals, also in a lower oil price environment. It is, however, still uncertain when this will have positive impact on our business.”
Adapted from a press release by David Bizley
Read the article online at: https://www.oilfieldtechnology.com/offshore-and-subsea/04082016/fugro-hy-2016-results-hit-by-ongoing-downturn/