I am pleased with the solid improvement in our margin and
operating cash flow, while we are investing in further growth to
benefit from the significant opportunities in our markets.
Ongoing high client demand for solutions in support of the
energy transition, sustainable infrastructure and climate change
adaptation, is resulting in a further diversification towards
structural growth markets. Our sixty years of expertise and
experience come together in our specialist workforce, leading
market positions, global footprint, market agnostic asset base,
and innovative digital solutions.
The margin expansion was driven by all regions. We realised a
step change in the operational performance of the land business
and, through improved pricing, we are mitigating the impacts of
unprecedented inflationary pressures and supply chain
challenges, in particular in the offshore environment. On the
back of the 10% equity raise as part of the comprehensive
sustainability-linked refinancing in July, our net leverage
improved strongly, which will enable us to benefit from the
opportunities in the market.
ENERGY TRANSITION AND ENERGY SECURITY
Carbon reduction ambitions plus a growing need of many countries
to reduce their reliance on imported fossil fuels are driving a
sharp acceleration in many governments’ ambitions regarding
renewable power. Our Geo-data solutions play a key role in the
energy transition, in particular through our site
characterisation solutions for offshore wind farms; a market in
which we have already been leading for 25 years. In 2022,
related revenue was up by 42%, driven by numerous projects in
Europe, the Americas and now Asia as well. Our unique
positioning is emphasized by clients seeking to secure capacity
also beyond the coming 12 months.
Whilst the energy transition is gathering speed globally, this
is a complex process which requires long term planning, huge
investments and resources in times of scarcity against a
backdrop of uncertain geo-political and macro-economic times.
Therefore, fossil fuels, in particular gas, will remain an
important part of the energy mix for years to come. We have for
example recently been contracted in relation to several LNG
projects in the US and Mexico, and a deepwater gas development
in Brunei. Still, the largest part of our revenue in the
traditional energy markets is related to inspection services,
enabling clients to keep their existing facilities operating
safely and reliably.
CLIMATE CHANGE ADAPTATION AND SUSTAINABLE INFRASTRUCTURE
Considering the increasing number of extreme weather events and
rising temperatures globally, climate change is by now a real
threat. In 2022, the world for example witnessed the devastation
caused by extreme flooding in Pakistan and cyclone Ian in
Florida. Coastal systems and low-lying areas are particularly at
risk, signaling an increasing need for coastal zone management
and flood protection measures. In 2022, we were awarded coastal
resilience surveys in diverse geographies such as India’s Andra
Pradesh region, Papua New Guinea, the US Gulf of Mexico and
Ireland. Climate change is also negatively impacting
biodiversity and our oceans. I am proud to say that we are
committed to ‘the blue economy’ by assisting in the building of
a digital ecosystem, encompassing all types of ocean science
data, amongst others through our strategic partnership with the
Intergovernmental Oceanographic Commission of UNESCO.
With our capabilities and experience we can also contribute to
urban resilience. In the past year, we have been involved in
various projects around the globe, for example through site
surveys for the development of artificial islands in Hong Kong’s
Central Waters and long-term contracts for 3D modelling of
electricity network in New Zealand, UK and Denmark. We are
uniquely positioned to take on large asset projects, and we aim
for our digital ground models and subscription-based portals to
become the backbone of clients’ Geo-data decisions throughout
the life cycle of their assets, with the ultimate goal of
reducing overall costs of development and long-term operation.
HOW WE DO IT
Apart from driving our positive impact through the solutions
that we offer, we are implementing our ambitious net zero carbon
reduction roadmap. By now, we are in the final stages of
submitting science-based targets regarding our absolute CO2
emission reduction ambitions. In 2022, we became signatory of
the UN Global Compact, and we are further engaging with our
suppliers about ESG topics. In light of the significant number
of suppliers across the large number of countries in which we
operate, this will entail a risk and impact-based engagement
approach.
As the world’s leading Geo-data specialist, we are committed to
remain the most innovative Geo-data company. Our digitalisation
and innovation agenda revolves around four themes: robotics,
remote operations, analytics and insights. In 2022, we
introduced several innovations, such as Fugro Blue SnakeTM,
optimising geotechnical investigation for offshore wind cable
routing; the 3D subsurface screening solution SWANS® which
significantly accelerates site investigations on land, and
TotaLite®, a continuous asset monitoring solution. We also
opened our next generation remote operations centre in Australia
and made further progress with the digitalisation of our
Geo-data processing.
PEOPLE ARE AT THE HEART OF FUGRO
Ultimately it is not our technology or equipment; it is the sum
of our people’s collective talents, efforts, commitment and
ability to work in teams which provides the foundation of our
success. We invest in their development and careers, amongst
others through technical, functional and leadership training
programmes so they can understand new technologies, tools and
business practices and thus build a sustainable future for
themselves as well as for Fugro. In today’s tight labour
markets, we remain successful in attracting talented people who
feel connected to our values and purpose and who are dedicated
to discovering and applying knowledge to meet the global
challenges we are facing. We have a comprehensive diversity,
equity and inclusion policy and related roadmap in place, which
includes various groupwide initiatives such as unconscious bias
training and the further roll-out of our female leadership
programme.
The challenging environments in which we work put health and
safety at the heart of everything we do. Despite the large
number of new colleagues that have joined us in 2022 and high
activity levels, we were able to maintain our safety performance
with significant improvements in certain areas, including a
steep reduction in the number of driving incidents following
defensive driving trainings. We continued with our ‘3S Together’
safety programme and to date, already close to 3000 colleagues
have participated in half day in person workshops.
MANAGEMENT PRIORITIES AND OUTLOOK
For 2023, we are well positioned to make further progress
towards our mid-term targets. At the same time, we want to
capture the exciting opportunities in our markets, as our
clients continue to rely on us for the execution of their
current and future projects. Supported by a strong backlog at
improved price levels, we are stepping up our investment levels.
In the second half of the year, we plan to update the market on
our ambitions and roadmap for the next phase for the company.
In light of the high activity levels and tight labour markets,
we continue to focus on improving project execution, our safety
performance, as well as retention and people development.
We can look back on 2022 and be proud of what we have
accomplished. In the year of our 60th anniversary, we have
demonstrated that our purpose of creating a safe and liveable
world is more relevant than ever. I am particularly thankful for
the unwavering enthusiasm, commitment and flexibility of Fugro’s
employees to delivering high quality services to our clients. I
want to thank all my colleagues for all their hard work and a
job well done. A special word of thanks for the colleagues that
have been managing Fugro’s tangible support for our Ukrainian
colleagues and their families throughout this year.
In the year of our 60th anniversary, our purpose of creating a
safe and liveable world is more relevant than ever before.
Mark Heine
Chief Executive Officer