Fugro Aquarius
Platform supply vessel Fugro AquariusFugro

Fugro lowers full-year core profit margin outlook as renewables plays backfire

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Dutch geological data specialist Fugro on Friday lowered its full-year margin for earnings before interest and taxes (EBIT) to eight to 11 per cent from 11 to 15 per cent earlier from headwinds due to persistent macroeconomic uncertainties.

The company's stock slid 13 per cent at 07:11 GMT and is down 25 per cent​ so far this year.

Its adjusted earnings before interest, taxes, depreciation and amortisation, or EBITDA, fell around 55 per cent to 63.6 million euros ($72.6 million) in the second quarter ended June 30.

Sales for the company, which provides geotechnical, survey, subsea and geosciences services, fell 22 per cent to 454.8 million euros in the quarter.

Market volatility and a lack of new US offshore wind projects weighed on earnings, pushing the group to reduce its US workforce and scale back operations.

The uncertainties caused industry-wide project delays and scope reductions, especially in the offshore wind market, the group said, noting it does not expect new offshore wind energy projects under the current US administration.

US President Donald Trump ordered a suspension of offshore wind leasing on his first day in office in January, calling wind power ugly and expensive.

The second quarter was "very challenging and disappointing", coming in, "further down than we initially expected," CEO Mark Heine said, and warned it would be, "very difficult to catch up on what the group has lost in the first half."

Fugro had reported a sales drop in the first quarter, confirming a profit warning it had issued.

"First-half was marked by geopolitical and economic uncertainties, causing significant headwinds across our industry, resulting in clients reassessing their projects," Heine said.

However, Fugro said it expects a "strong recovery" in the second-half, supported by the roll-out of its cost-saving programme and improved fleet utilisation.

The company announced on Friday it launched a cost reduction programme aimed at generating annualised savings of between 80 million euros ($91 million) and 100 million euros.

It reiterated its 2027 mid-term targets of 11 to 15 per cent EBIT-margin and free cash flow and return on capital employed of at least 15 per cent. However, it stated that the revenue outlook of three billion euros to 3.5 billion euros for the period is likely to be realised at a later stage.

(Reporting by Anna Peverieri; Editing by Mrigank Dhaniwala and Janane Venkatraman)

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