Fugro Hit by O&G Downturn, Offshore Wind Softens the Blow

Fugro today reported a net loss of EUR 309 million and 1,430 jobs lost in 2016, due to low activity in the oil and gas sector. The company’s revenue amounted to EUR 1.8 billion, a 22.7% decline from the EUR 2.4 billion reported for 2015. However, offshore wind has brought several projects to the company last year.

The company reduced its workforce by 1,577 people in 2015, which now rings the number of laid off workers at Fugro to over 3,000.

Paul van Riel, Fugro’s CEO, said: “The downturn in our largest market, oil and gas services, continued unabated in 2016. We had to take the painful decision to cut yet more staff positions. We reduced capacity and cost and at the same time we succeeded in strengthening our market positions. This could however not offset increased price pressure. In our building and infrastructure and power market segments we achieved reasonable results.”

The company’s survey unit saw a decline in revenue, but its activity levels outside of oil and gas increased and were significantly contributed by the geophysical work for offshore wind farms.

Offshore revenue of Fugro’s geotechnical division decreased by 19.8% at constant currencies to EUR 210.2 million, with investigation work on offshore wind farms in North West Europe and the first offshore wind farm developments in the USA and Taiwan partly offsetting the reduction in oil and gas revenues.

In 2016, the company carried out geotechnical surveys at two offshore wind sites in the US: DONG Energy’s Bay State Wind and Vineyard Power and OffshoreMW’s (now Vineyard Wind) offshore wind project site, both in Massachusetts.

Furthermore, Fugro has been awarded geotechnical site investigation at the Hollandse Kust Zuid (South) Wind Farm Zone, following a contracts for geophysical survey and metocean monitoring at the same site.

The company has also been performing UXO survey works at the Beatrice offshore wind farm in the UK.

Fugro’s subsea services business, which also reported a revenue decline in 2016, marked its last year’s offshore wind activity by completing the first phase of the Rampion offshore wind farm gig.

Fugro expects further decline in revenue in H1 2017, although less severe than in 2016, but the company said it anticipates modest growth within the offshore wind market. Towards the latter part of the year, the company said it sees revenue bottoming out.

“We anticipate that, for the first half of 2017, the offshore oil and gas market will continue to decline significantly. Both the stabilisation of our backlog over the last few months and clear signs that pressure on the oil supply side is beginning to build, indicate that our market may bottom out towards year end,” van Riel said.

Offshore WIND Staff