February 22, 2018 / 10:01 AM / a year ago

UPDATE 2-Fugro expects better year after 2017 results miss Reuters poll

(Recasts, Adds analysts’ comment, 2017 guidance)

Feb 22 (Reuters) - Dutch deep-sea energy prospector Fugro posted full-year results in line with its guidance but below consensus expectations on Thursday, and said it expected a better 2018.

Oil services companies have been hit hard by a rout in oil and gas prices starting in 2014, but oil has risen around 45 percent from mid-2017 lows. Fugro was nevertheless cautious about the pace of recovery in the sector.

“All the indications are of a stabilising market ... Exploration budgets are overall even slightly up which is also a good indication,” Chief Executive Paul van Riel said.

“For offshore there still is a lot of over-capacity, that over-capacity needs to work its way out of the market, so I would like to make a cautionary remark that the pace of recovery I don’t think is going to be to be super fast,” he added.

Fugro said it expects revenue to stabilise in 2018 with an improved EBIT margin and positive cash flow from operating activities after investments.

The company reported full-year 2017 core profit (EBITDA), excluding exceptional items, of 100.8 million euros ($123.7 million), down 46.8 percent. Analysts polled for Reuters had expected full-year core profit of 119 million euros, while a company-compiled consensus forecast 112.5 million euros.

The company said the results were “in line with expectations”. Shares were down 1.6 percent at 0947 GMT.

In October the company guided for a double-digit decrease in revenue, a negative low-single digit EBIT margin and negative cash flow from operating activities after investments for the full year.

On Thursday it reported full year revenue of 1.50 billion euros, down 13.2 percent on a currency comparable basis, a negative EBIT margin of 2.1 percent and negative cash flow from operating activities after investments of 50.5 million euros.

“We had expected to see better results in 4Q17, with a larger contribution from the Geoscience segment,” KBC Securities analyst Cedric Duinslaeger said in a note.

Degroof Petercam analyst Luuk van Beek said in a note the full year results were in line with his expectations, and that the company was “on track for recovery”.

“In our view, Fugro is in a strong position to benefit from a market recovery, thanks to its unique expertise, recently optimized structure and reduced cost level,” he added. ($1 = 0.8152 euros) (Reporting by Alan Charlish; Editing by Sunil Nair and Adrian Croft and Jon Boyle)

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