Fugro reduces its full-year core margin forecast as macroeconomic uncertainty persists
Fugro, a Dutch provider of geological data, reduced its margins for the full year before interest and tax (EBIT) from 11%-15% to 8%-11% on Friday due to macroeconomic uncertainty.
The adjusted earnings before taxes, depreciation, and amortization, or EBITDA fell by around 55% in the second quarter ending June 30, to 63.6 millions euros ($72.6million).
The company's sales, which include geotechnical and survey services, as well as subsea, geosciences, and surveying, dropped 22% in the third quarter to 454.8 millions euros.
The group's earnings were impacted by market volatility and the lack of new offshore wind projects in the United States. This led to a reduction in its U.S. staff and operations.
The group noted that the uncertainty caused project delays and scope cuts across the industry, particularly in the offshore market. It also stated it did not expect any new offshore wind projects to be undertaken under the current U.S. Administration.
On his first day as president in January, Donald Trump suspended offshore wind leasing. He called wind power ugly and costly.
Mark Heine, CEO of the company, said that the second quarter had been "very challenging and disappointed", and was "further behind than we originally expected". He warned it would be very difficult to make up for what the group lost in the first-half.
Fugro reported a drop in sales for the first quarter. This confirms a profit warning that it had previously issued.
Heine stated that the first half of 2016 was marked by geopolitical, economic and financial uncertainties. These headwinds caused significant challenges for our industry, which led to clients reevaluating their projects.
Fugro, however, said that it expected a "strong" recovery in the second half, backed by its rollout of cost-saving program and improved fleet utilization.
The company announced Friday that it had launched a program to reduce costs. It aims to generate annualised savings between 80 million and 100 million euro. ($1 = 0.8758 euro) (Reporting and editing by Mrigank Dahniwala, Janane Venkatraman).
(source: Reuters)
