Highlights[1] Q3
▪ Rapid deterioration of the oil and gas market.
▪ Mid-single digit EBIT margin for the third quarter, which was slightly above the second quarter and significantly below the same quarter last year. The combined margin of the Geotechnical, Survey and Subsea Services divisions was in the low teens; continued losses in the Geoscience division.
▪ Expected non-cash impairments and one-offs, in the range of EUR 200 - 250 million, mainly in the Geoscience division.
▪ Growth in the backlog for the coming 12 months has flattened and stands at EUR 1,700 million, or 1% below last year at constant currencies.
▪ Outlook 2014: due to deteriorated market conditions resulting in project delays, postponements, cancellations and price pressure in its oil gas and gas markets, Fugro expects to achieve a mid-single digit EBIT margin (excluding impairments and one-offs) for the combined Geotechnical, Survey and Subsea business in the second half of the year. For Seabed Geosolutions Fugro expects continued losses around the level of the first half of the year. For multi-client visibility is very low.
▪ Due to the poor results and in order to strengthen the balance sheet, Fugro does not expect to pay a dividend over the year 2014.


Highlights strategy update and action plan
▪ Compelling long-term potential but challenging mid-term market conditions
▪ Geotechnical and Survey divisions continue to provide a sound core
▪ Updated strategy ‘Building on Strength’ to restore margins, improve ROCE and sustain strong cash flow generation
o improvement in EBIT margin by 5 – 6 % points over the next 2 years, with the majority of the improvement actions to be finalised in 2015
o reduced expansion and replacement investments and M&A by EUR 125 - 225 million annually
o EUR 50 – 100 million working capital improvement in 2015
▪ Strategy adjusted to reflect new reality in the oil and gas market
▪ For Subsea Services, focus increasingly on client opex and consider partnerships to build a global IRRM market leader
▪ For Seabed Geosolutions, full focus is on the turn-around and exploring strategic alternatives
▪ Fugro mid-term targets have been updated.


Paul van Riel, CEO:
This quarter we have been faced by a rapid deterioration of our oil and gas markets resulting in project delays, postponements and cancellations, as IOCs and large independents continue to cut back on investments, exacerbated by the significant drop in oil price. The poor results and the further weakening of the market outlook are triggering additional impairments.

We have stepped up our cost reduction and performance improvement initiatives to focus on restoring margin and cash flow. We are cutting back on capex and acquisitions and will improve working capital to ensure positive free cash flow. We expect no dividend payment over 2014.

We have reviewed our portfolio. The Geotechnical and Survey divisions continue to provide a sound core. We are transforming Subsea Services to focus on inspection, repair, replacement and maintenance (IRRM), and will consider partnerships to build a global opex focused IRRM leader. In Seabed Geosolutions full focus is on the turn around, while in parallel we will explore strategic alternatives.

I am confident we can weather this storm by our actions to align the organisation to the current oil and gas market reality. We anticipate a weak oil and gas market for some time while our infrastructure markets provide good opportunities. In the oil and gas market, rising depletion and demand growth will at some point bring reserve replacement back on the agenda. Fugro is well positioned for such a return due to the business improvements we are implementing and our strong leadership positions.
--------------------------------------------------------------------------------[1] All results unaudited.

tijd 11.00
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