Fugro Suffers Larger Than Expected 2015 Net Loss on Oil Downturn

Reuters

AMSTERDAM, Feb 26 (Reuters) - Dutch marine engineering company Fugro reported a larger-than-expected net loss for 2015 but maintained strong cash flow, and said it would focus on paring back costs and cutting capacity in response to low oil prices.

The company made a net loss of 372.5 million euros ($411.61 million) in 2015, compared to a 261 million euro net loss forecast by analysts polled for Reuters. Revenues, at 2.4 billion euros, and core earnings at 353 million euros, were in line with expectations.

Cash flow leapt to 315 million euros from 42 million in 2014 because of higher margins and lower working capital costs as well as the sale of data and the sale and the leasing back of a vessel, the company said in a statement.

Fugro managed to cut debt during the year with the ratio of net debt to core earnings before interest, tax, depreciation and amortisation falling from 2.2 to 1.6.

Fugro, whose fleet of sounding vessels and deep submersibles help energy companies prospect for deep-sea fields that are uneconomic at low oil prices, has been cutting costs, selling assets, and laying off staff as oil prices have fallen.

It laid off 1,577 staff last year, or 12 percent, and cut its vessel fleet substantially.

In a media call, Chief Executive Paul van Riel said that with oil and gas markets weakening further, Fugro would need to make further cost savings in 2016, which could include staff layoffs, but said he hoped cuts would be on a smaller scale than in 2015.

While he said he expected the oil and gas market to recover eventually, in the long-run he said other business areas, including infrastructure, building and energy, would grow to exceed the oil and gas business in size.

"In our industry we are winning market share," he said, adding that Fugro would be able to grow back capacity relatively quickly when the oil and gas markets recovered.

He said the company would continue as an independent service provider, despite stake-building last year by rival engineer Boskalis, which now owns around a quarter of the company.

(Reporting By Thomas Escritt; Editing by Christian Schmollinger)

Copyright 2016 Thomson Reuters. Click for Restrictions.

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