Fugro says it expects a further significant decline in the offshore oil and gas services market in the first half of 2017 before oil companies prepare for new investments later in the year.
Feb 24 (Reuters) - Dutch deep-sea energy prospector Fugro said it expects a further significant decline in the offshore oil and gas services market in the first half of 2017 before oil companies prepare for new investments later in the year.
Fugro is still suffering the impact of a rout in oil prices that have fallen by more than 50 percent from mid-2014 highs, affecting its business as makes it uneconomic to prospect for the hard-to-reach subsea deposits in which it specialises.
"Both the stabilisation of our backlog over the last few months and clear signs that pressure on the oil supply side is beginning to build, indicate that our market may bottom out towards year end," Chief Executive Paul van Riel said in a statement.
The company expects its revenue to fall further in the first half of 2017. It also expects margin pressure to continue in the first half, but sees positive cash flow for the full year. It responded to a tough market by cutting 1,430 jobs during 2016 and reduced capital expenditure by 42 percent to 92.5 million euros. Core profit, while well down on the previous year, came in ahead of forecasts.
"Until the oil and gas market recovers, the company will continue to adjust its resources and cost base in line with activity levels," it said.
Fugro shares rose 3 percent to 14.99 euros by 0810 GMT.
The company reported a 46 percent drop in full-year core profit (EBITDA) to 189.5 million euros ($200.8 million), hurt by pricing pressure and low activity levels in energy market.
Analysts polled for Reuters had on average expected it to report core profit of 182 million euros.
"EBITDA was better than expected. I think mainly on the financial management the company has again made good progress. Net debt was lower than expected, working capital improved again quite significantly," KBC analyst Dirk Verbiesen said.
(Reporting by Alan Charlish; Editing by Subhranshu Sahu and Keith Weir)
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