Half Year 2026 Fugro NV Earnings Call Transcript
Key Points
- Fugro NV (FUGRF) reported a 4.1% improvement in EBIT margin for the first half of 2026, with second-quarter revenue growth of 11% and an EBIT margin of 7.9%, up from 4.3% in the prior year.
- The company saw a 22% growth in its oil and gas business, driven by strong demand in regions like Asia Pacific, the Middle East, and the Americas, which helped offset weakness in offshore wind.
- Fugro NV (FUGRF) is making significant progress with its new Ground IQ technology, which has already secured 27 projects in the first half of 2026, up from 22 in all of 2025, offering faster, cheaper, and more comprehensive subsurface data.
- The company is actively managing its cost base through a EUR 50 million annualized savings program, including fleet rationalization, charter reductions, and vessel lay-ups, to align with current market conditions.
- Free cash flow improved significantly in the first half of 2026, with operating cash flow rising to EUR 85 million from EUR 58 million, and capital expenditure was reduced by EUR 87 million year-over-year.
- Fugro NV (FUGRF) is expanding into new growth markets, including critical minerals, coastal resilience, and security/surveillance, with new projects in Saudi Arabia and a strategic investment in Dutch data fusion company Detect.
- The company's asset integrity business is strengthening, particularly with the Petrobras contracts in Brazil now fully operational, providing steady income for the coming years.
- Fugro NV (FUGRF) withdrew its earlier margin improvement guidance for 2026 due to elevated uncertainty from the Middle East conflict and continued weakness in the offshore wind market, making the full-year outlook less optimistic.
- The company's offshore wind revenue dropped another 24% in the first half of 2026, following a 45% decline in 2025, and the backlog for wind projects fell a further 47%, indicating a deeper and longer downturn than previously expected.
- The Middle East conflict had a direct impact of EUR 50 million on the bottom line, primarily due to GPS jamming and spoofing in the UAE and Qatar, which limited operational days and increased fuel costs.
- Fugro NV (FUGRF) reported a net loss of EUR 62 million for the first half of 2026, driven by EUR 36 million in impairments on geophysical vessels and a EUR 41 million derecognition of deferred tax assets.
- The company's backlog declined by 13.9%, with half of the drop attributed to the completion of a large project in Indonesia and the other half to the continued decline in offshore wind, creating near-term revenue uncertainty.
- Net debt increased to EUR 473 million from EUR 383 million at year-end 2025, and net leverage rose to 1.7 times, above the company's self-imposed target of 1.5 times, despite a focus on cash generation.
- Fugro NV (FUGRF) faces intense pricing pressure in the market, with clients requesting multiple 'best and final offers' and competitors becoming more aggressive, which is squeezing margins and adding to operational uncertainty.
Welcome everyone. Good morning, good afternoon, good evening to some of you with the half year results presentation for 2026, first half of this year.
This year will be slightly different as we're still in the full process of recruiting our new next CFO.
So I will present the whole deck today. And I'm very much supported here by our interim CFO, Kiersten Ouden, who is here, but also our group controller, Marine Fedes. So if there are questions that are going at a bit more depth that I cannot answer, then I always have these support lines. But I will do the presentation myself.
So.
If we start with looking at the first half of the year, we have an EBIT margin that was 4.1% higher than last year.
However, we have to also say that we are looking at a challenging second-half of the year. So improvements on the EBIT line as well as the cash flow for the first half of the year. But I'll come back to talk about the second part of the year, as we see in the backlog, a development that we feel that needs to get some
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