Fugro Anticipates Profit Increase for 2008
Fugro expects to realise a revenue of more than EUR 2.1 billion (2007: EUR 1.8 billion) for the full year 2008. Barring unforeseen circumstances the net result is expected to be at least EUR 275 million (2007: EUR 216 million), which means an increase of more than 27% compared to last year. This leads to an increase of the net profit margin to more than 13% (2007: 12%).
The increase in revenue of nearly 20% compared to last year is largely the result of organic growth. Despite the recent increased rate of exchange of the US Dollar, the foreign currency effect over the full year will be approximately 7% negative as a result of the on average lower rates of exchange of the US dollar and the UK pound against the Euro. This will partly be compensated by an increase in revenue from acquisitions by approximately 4%. All three divisions are contributing to the growth in revenue and result, with the strongest increase being in the Geoscience division.
As in the first half year, the demand for Fugro’s services remained strong during the past few months. This is also reflected in a strong order backlog for the coming period. In volume, the order backlog has increased by 20% compared to one year ago.
It is expected that in the event of continuing lower prices for oil and minerals, some smaller clients (in the oil and gas sector as well as in mining) which operate on the basis of external financing, may delay projects or reduce their activities. On the other hand Fugro’s most important group of clients, being National Oil Companies and large international players, has indicated they intend to continue with investments in new prospects targeted for future production. In this regard the further decline of production in existing oil and gas fields is an important consideration. Moreover the development of new fields takes several years. Fugro is focused on being involved in several phases of such development through its broad range of services.
The market for large infrastructure (20% of revenue) shows a mixed picture. In a number of countries a certain hesitation with respect to starting up new projects is noticeable, while in other countries governments are initiating measures to support this sector, as for example, in China. Fugro’s new ROV support vessel, Fugro Saltire, started her operations at the end of August and has orders for work until well into 2009. In December three new vessels will commence operation on projects, two for marine seismic (Geo Caribbean and Geo Natuna) and one for offshore surveys (Fugro Solstice).
Fugro has reached agreement to acquire GEO LLC, based in Anchorage, Alaska, United States. The company specialises in offshore geophysical surveys, as well as in geotechnical investigations for new oil and gas fields offshore, especially in the arctic regions such as the Chukchi and Beaufort Seas. GEO LLC has an annual revenue of EUR 7 million.
Fugro’s activities in Brazil are developing very successfully with recent awards of orders for Petrobras:
- a three year extension of a contract for two ROVs to execute IRM (installation, repair and maintenance) work in the Santos and Campos basins in up to 3,000 metres water depth;
- six ROV rig support contracts for a period of two to five years;
- a three year extension of a contract to perform air diving activities for maintenance work.
Together with the earlier announced contracts for Petrobras and for some international oil companies for performance of various offshore activities, the above mentioned contracts represent a value of over EUR 270 million for work to be executed in the coming years in Brazil. Meanwhile Fugro operates 17 ROVs in Brazil and will add more in the coming year.
Fugro will publish its annual figures for the full year 2008 on March 6, 2009.