Geo-data specialist Fugro looking for more capital to diversify its business
Dutch multinational Fugro intends to issue EUR 250 million worth of shares in order to strengthen its financial position. An expiring credit facility of EUR 575 million will be refinanced for EUR 425 million. The plans are to help the company move away from the oil and gas industry.
By contributing part of its equity, Fugro is able to reduce its debts and limit the cost of its credit facilities. A number of major shareholders and new investors will support these plans.
This support indicates that the shareholders have confidence in Fugro’s strategic plans, says CEO Mark Heine. These plans provide for further diversification to reduce the company’s dependence on the oil and gas industry. The company wants to move towards markets where it ‘can both support and benefit from the energy transition, climate change adaptation and sustainable infrastructure development’.
As a result, in the third quarter the company already generated almost a third of its revenue from offshore wind farm research. Furthermore, Heine expects the demand for coastal mapping and soil investigation for infrastructure projects to increase further in the coming years.
Although turnover fell by 15.8 per cent to EUR 360.7 million in the third quarter, this was to be expected as a result of the corona crisis and the difficult situation in the oil market. The strong growth in the offshore wind farm market, where revenue was 42 per cent higher than in that sector a year earlier, provided some counterbalance. Moreover, cost savings in the spring helped Fugro to achieve a higher gross profit margin than a year earlier. This was 11.2 per cent compared to 9.5 per cent in the third quarter of 2019.
The operating result (EBIT) itself amounted to EUR 34.6 million, more than 5 million less than in the third period of 2019. Fugro still has EUR 841.8 million of work on the shelf for the next 12 months.
For the whole of this year, Fugro is now counting on an adjusted EBIT of around EUR 40 million. The company also anticipates a positive cash flow.