Operational review
The general downturn in the oil and gas market has resulted in pressure on work volume and pricing for oil services companies. This has negatively impacted revenue, except for Seabed Geosolutions. At Seabed Geosolutions, revenue increased strongly. The lower volumes in oil and gas were partly offset by a higher workload in other market sectors.
To counter the downturn in the oil and gas market and to protect margin, a series of measures were announced and implementation is on track. The year-on-year margin improvement was driven by the turnaround at Seabed Geosolutions, due to a higher level of activity, good execution and lower costs as the result of the restructuring efforts. The Survey and offshore Geotechnical margins were slightly higher. At Subsea Services, the steep revenue decline, in combination with high operating leverage, has resulted in a loss despite the positive impact of the cost reduction and performance improvement measures.
Notwithstanding the positive EBIT development, the higher interest expenses and relatively high income tax expenses, have resulted in a small net loss.
Cost reduction measures and performance improvement
The cost reduction and performance improvement measures, which were stepped up in the course of the first half year, are on track. Highlights are:
? The headcount reduction program is on schedule, with a gross reduction of 755 employees in targeted
areas (compared to the end of 2014) partially offset by hires in specific growth areas, such as the Middle
East, resulting in a net reduction of 616.
? The vessel fleet reduction is progressing in line with plan. The geotechnical fleet has been reduced by one
vessel and will be further reduced at limited costs to seven by year-end. Before year-end, the survey fleet capacity will be further reduced by 10-15% compared to December 2014. In the first half of the year the Subsea Services division successfully terminated 1 long-term charter early, with another reduction of
1 charter anticipated before year-end.
? Capital expenditure was curtailed to EUR 87.6 million from EUR 134.2 million in the comparable period last year, in line with the 2015 target of just below the mid-term range of EUR 175 – 225 million.
? The working capital reduction initiative launched last year resulted in a reduction in days revenue outstanding to 99 days from 108 in the same period last year and 103 days at the end of 2014.
? The turnaround at Seabed Geosolutions is progressing ahead of plan.
As the market has become more challenging in the second quarter, additional measures are being implemented:
? Further headcount reduction of 200 employees in the coming half year, in particular in the Subsea
Services and Geotechnical divisions.
? An expedited transition of the remaining 30% of Fugro’s vessels to central fleet management will result in
additional cost savings and operational performance improvements from standardisation, cost efficient crewing and central procurement.