Fugro N.V. (FUR) Earnings Call Transcript & Summary

Welcome to Fugro's analyst call in relation to the first quarter trading update, which was published today. [Operator Instructions] Today's conference is being recorded. Mark Heine, Fugro's CEO; and Paul Verhagen, CFO, will start today's call with a short introduction. Thereafter, there will be time for questions. At this time, I will turn the conference over to Mr. Heine. Please go ahead.

Yes. Thank you very much for participating in this call. I'm Mark Heine, CEO of Fugro. And I'm also here with Paul Verhagen, as said, CFO of the company; and Catrien van Buttingha from Investor Relations. As usual, first, to present a few slides, that should probably take us 10 minutes. Paul will say a few words there as well. And afterwards, we're happy to take your questions. So let's start. Next slide, please. This quarter, our revenue was again strongly affected by the pandemic, and this is evident in the comparison with the first quarter of 2020 when the initial COVID impact became visible only towards the end of the quarter. This resulted in a revenue decline of 17.2%, fully driven by the impact of the pandemic and a strong related decline in oil and gas activities, but partly offset by revenue growth in the other market segments. At the same time, our results demonstrate once again our resilient operating model and increasingly diversified portfolio. We're able to slightly improve our EBIT and EBIT margin, and this was largely due to the comprehensive cost reduction program, and we'll talk about that in more detail in the next slides. In line with our 2021 management agenda, we have recently announced the divestment of Seabed Geosolutions, as you know, and we expect to complete this transaction mid-2021. The next few slides will be presented by Paul Verhagen. Obviously, maybe good to mention that this is the last time for Fugro after a period of 7 years with great contribution to Fugro. So Paul, over to you.

Yes. Thanks, Mark. In the next page, so EBIT up in marine and land despite strong revenue decline. From the page, you can see that the full revenue decline is in marine, both in marine site characterization and in marine asset integrity. As Mark already said, steep decline in oil and gas activities, to a large extent, of course, related to COVID. In addition, we had to face other COVID challenges, logistic challenges. We faced some project postponements. We faced some delayed awards. And on top of all that, as you most likely can recall, we also had to face some extreme weather both in Europe but also in the U.S. And yes, you all know, Q1, we are very dependent, can sometimes be better, sometimes be worse. But this quarter, we've seen quite some weather impact in combination with the other points I just mentioned. Nevertheless results somewhat improved though still negative. One of the reasons for that is the vessel management and the utilization of owned vessels, which increased from 52% to 67% despite the steep revenue decline. And that was all due to a significantly lower number of charters. As you recall, last year, we were still preparing for growth. We had also margin growth in Q1. We had more charters in Q1, of course, at that moment of time than we have today, although we still managed also last year to get rid of a few short-term charters immediately when COVID started. But obviously, this year, we had significantly more time to adjust the charter base, which we've done. And that has resulted, of course, again, in an improvement in EBIT in marine despite this steep revenue decline. Also good to see that land continued to improve. We saw the first improvement, as you know, end of last year. Revenues slightly up, but also they're impacted, of course, by COVID. But yes, again, we see the benefit from the turnaround plan. We see the benefits from the portfolio rationalization, so at least, although small, a year-on-year improvement in land as well. Maybe to the next slide, the cost reduction program. That is -- pleased to say that is completed by now. We initiated this program immediately after COVID. As you know, the initial target was EUR 120 million. We're now at, yes, EUR 130 million, fully, fully implemented. So you see the savings in personnel expense adding up to EUR 60 million; this quarter, close to EUR 20 million, so fully, fully implemented. We talked already about the short-term charters, of course, where we have reduced significantly, but they will come back if and when, of course, volume starts to grow again. Third-party cost reduction. We did successful reduction last year. And also this year, we expect further reductions in third-party costs. Discretionary expense, we're still in COVID mode, so still, yes, not a lot of travel, still a lot of online meetings instead of physical meetings, no marketing conferences, none of all that, only project-related travel. Lower utility costs because offices are basically barely used partially. That will come back, of course, once COVID is coming to an end, hopefully pretty soon. Hopefully, the vaccinations will do their work. And footprint rationalization was already completed last year. So this EUR 130 million is the gross saving. We also discussed last year where that part of this will come back, as I mentioned. We will have some salary increases now in this year, which will partially offset these savings. And of course, certain costs that are variable with revenue will also come back once revenue starts to grow again. Next slide, free cash flow. You see here minus EUR 45 million free cash flow in the first quarter, resulting in a more or less similar increase in net debt. Last year was minus EUR 21 million. It's pretty simple to explain. One, in last year's cash flow numbers, there was a EUR 10 million benefit, the balance between proceeds that we got related to the divestment of Global Marine and, on the other hand, settlement payment that we did. But net-net, that resulted in a EUR 10 million positive free cash flow, which is included in this minus EUR 21 million. But more important, last year, at year-end, we had a very strong DRO, 83 days. Q1 performance was not so good. Typically, as you know, we're at 90 days, plus or minus 5. We're at 97 days here, so slightly above the range. That's not good, so we will definitely work to get that down again. Maybe to put it in perspective, last year, at the same time this year, we were at 98 days. So it doesn't necessarily mean that the rest of the year will be bad. It's just a matter of, of course, being on top of our customers and trying to collect the money that they owe us. Liquidity is good, close to EUR 400 million in cash and available facilities. All covenants are met, which, of course, is also good. And here, you see net debt increased from EUR 296 million to EUR 351 million. Back to you, Mark.

Yes. Thank you, Paul. It's always good to look at a few recent contract awards and especially because we want to emphasize obviously our diversification, which is fully aligned also to see and have a look at the growth -- in the new growth area, so to say, aligned with our strategy. So first, maybe top left there is the energy island, the Danish Energy Island. This is a contract part of Energinet's studies to build, yes, the world's first hub-and-spoke energy scheme. That's an island 80 kilometers off the coast of Denmark, and it should act as the transmission center for hundreds of wind turbines. And Fugro performed the geophysical and unexploded ordinance magnetometer surveys, which will be obviously to prepare and integrate the geological and geotechnical soil model for the foundation, which they obviously will use in the future during the build as well. Maybe another example is top right there is the, yes, the Tyrrhenian cable project. It's all related to Italy's national grid company, Terna, which has contracted Fugro for a multidisciplinary survey in relation to the construction of the Tyrrhenian link power cable, the connection between Italy Peninsula and Sicily. So it's also a nice example of what we do now in new growth areas. Another example there, and it's good to see that we're also involved in the latest and the nearest developments on the offshore wind side, the floating wind development in South Korea. That's the first project there in Asia, a floating wind project. We're involved there in the site characterization as well. And then the bottom right there is a good example of what we can do there with Geo-data solutions, a contract that we have there for Texas Department of Information Resources to support the, yes, the strategic mapping program that they have there on the board to map the whole area, to plan it better, which is obviously building on our decades of long experience that we have there in providing LiDAR and imagery mapping services to the Texas authority there, which is also important for post-hurricane flood assessment, which is obviously in that area quite important. Then we have a quick look to the next slide to the various markets, the key markets of Fugro. First, the oil and gas market there, we expect a gradual recovery. And Rystad's outlook -- and I always say as a caveat there that these reports are nice to look at, and they give you trends, but you have only uncertainty, and that is -- that it will certainly be wrong, but it gives you a good indication. But the outlook from Rystad, as shown on this slide, is slightly more positive than we showed you before at the end of last year or when we presented the full year results. You see a slightly larger growth there in 2021. It does, however, mean the same growth over multiple years. But it's, I think, important to take note of this. We have seen the oil price obviously strengthening, and we also expect and market watchers expect that as well, a higher spending for 2021. During the course of the year, that must be said, and therefore, we have also made the statement that we see the first early signs of an improvement in this oil and gas market. The next slide, please. Then we look at the offshore wind, which is obviously there presented based on the information from 4C Offshore. And this is their information, so to say. They now present a 30% growth for the upcoming years, a CAGR of 30%, which is, again, also slightly higher than what we presented to you before. This is a rapidly growing market, very clear. We see that in multiple areas, again, a very buoyant market in Europe. We also see a lot of activity over the last couple of years in the Americas, where we're very active working for multiple parties there. And then we see also now more and more coming up in Asia, and we do expect that to really take off in 2022. But there's just great potential for this market. This will continue to grow. What is maybe good to say is that they very much concentrate on, especially in Europe and the Americas, on the high-season activity because these areas are prone to be very windy and, therefore, also very effective in rough, yes, rough weather and high waves in the off-season, in the winter period. So a lot of the activity starts and is really focused around the summer months. So we go to the next slide, please. And then we have a look at the infrastructure market. That is also for 2021 already positive outlook. We do expect that market to grow in the upcoming years. It has been growing also pre-COVID. Obviously, there's a stagnation due to COVID, but now we expect this to be picked up again specifically because governments are obviously, yes, putting in stimulus packages. And the U.S. is a good example there, investing probably $600 billion plus in infrastructure and fixing a lot of things there that have been on the board for many, many years. And they will accelerate these projects. So Fugro also will get their fair share of activity there. Then we go to the next slide, please, very briefly about the outlook of 2021. First, a small recap. So for offshore wind, as I said already, we have a good position and based on many years of work that we have done, good reputation, strong reputation and a strong position there. And it's anticipated that this market will continue to grow. We have also seen that last year that it grew quite a lot even during the COVID period, and we expect that to be visible very much already during the second quarter this year. Growth in the infrastructure market, as mentioned, is expected to resume this year, and that's fully based on, yes, the investments that governments will make to fuel the economy. And then there are early signs of recovery in the oil and gas market. But that is very much dependent on, obviously, the further development of -- and the impact of the pandemic on the society and the economy and how much demand for energy there will be. So for the full year, Fugro anticipates a return to -- or not for the full year, but we expect a return to revenue growth in the course of the second quarter, which will be particularly driven by renewables, the offshore wind area. And for the full year, Fugro expects a modest margin improvement, and we still guide for CapEx for the continuing operations between EUR 80 million and EUR 90 million. Next slide, please, which is my last slide as well, and then we open up for questions. This is the management agenda. Just a repetition of what we have also presented to you before or in line with what we presented to you before. Obviously, we'll continue to focus very much on cost and also the cash flow generation, which is obviously key for Fugro in the upcoming period, also to benefit from the operational leverage when we start to grow again. We want to complete the turnaround of the land business. We have made, yes, some very good progress there, and that's also visible in the numbers last year, in the second half of the year, but also beginning of this year again. We will complete that in the upcoming months. And then we expect land to better contribute also to the bottom line of Fugro. We will continue to focus on strengthening the operational and commercial excellence but also the employee engagement. Very important especially after such a difficult COVID period that we focus also on the people that form the basis of the knowledge that Fugro has and the services that we offer to our end clients. Furthermore, we will enhance our service delivery with new market-leading digital and remote solutions. We have indicated that very clearly that this is a focus area for Fugro. We have a nice program in place, and we're executing that, which is going well. And we will continue to do so. Also very much focused on integrating the Geo-data solutions there. And then last but not least, we also continue to implement our ambition to achieve net zero emissions in 2035, which we announced at the presentation of the annual results of 2020. With that, I come to the end of the presentation, and we would like to open up for questions.

[Operator Instructions] We will now take our first question from Thijs Berkelder from ABN AMRO.

Yes. Congratulations on the results despite harsh weather and congratulations, Paul, for the last call. Question, can you give an indication on, let's say, margins or EBIT development year-on-year comparison in the U.S. and also for Europe? And then maybe specifically weather-related but what, in your view, has roughly been the impact?

Yes, maybe I'll take this one, Thijs. What we've seen in the U.S. in Q1, I'm not going to guide you for the year, we guide for the group. We've given already more guidance than we did at year-end. But at least, what we've seen in the U.S. is that result in Q1 is very similar to last year. We have differences per business line. So that in itself is not too bad. Unfortunately, we didn't see an improvement, but to a large extent, that was, of course, yes, for the reasons mentioned, the COVID but also, of course, the weather, the extreme weather we've all seen in the month of February that didn't really help us. So that is for Q1, but they still manage at least to keep the results similar to last year. APAC is down year-on-year on the back of a steep revenue decline also in, yes, fully almost in marine, both business lines, marine site characterization and marine asset integrity. And the latter one is partially by design because we do more and more work there with, let's say, smaller assets, remote work, autonomous work, et cetera. Still the bulk, of course, is with assets, but we do see a shift already, which, of course, has lower revenue numbers but better margin numbers. Now for the full year for the group, as Mark already said, we do expect a modest margin improvement in combination with, yes, back to growth in the course of Q2, which is positive. You've seen the market outlook. Everything, of course, still a little bit related to COVID and oil and gas because in Q1, we've seen a significant decline in oil and gas. I have seen growth in the combined other market segments, which is positive. But that's what I can say now about, yes, about the guidance going forward.

Okay. And a question for Mark. In your outlook statement, you're clearly pointing towards the order intake in Q2 so far. And you're -- also, you're stating that you expect revenue growth to come in, in the course of Q2. Does it mean that Fugro's order book right now in the year-on-year comparison is better than exactly a year ago?

So Thijs, we basically state a couple of things. First and foremost, the order book compared to last year, once again, that was at the end of Q1 2020, which was largely still not affected by COVID. We are now, yes, let's say, in line with a small deviation of 0.9% and in line with that from last year. So for the order book -- and you know that the order book is filled with primarily work that is 3 to 6 months out because we have a relatively short backlog cycle. Obviously, there are some longer work and some things that will stretch out for longer periods. But the majority is 6 to 9 months away, and that gives us the indication that -- and the comfort to say that the growth will come during the course of the second quarter. That's what we can say here.

But that specifically mean in the month of April, you mentioned the recent contracts?

Yes. We gave some insight in the recent contracts to give you an indication of what kind of work we are picking up also outside of oil and gas because people need to be educated a little bit what is Fugro doing more than, yes, the traditional work there. So that's why we want to emphasize that a little bit. That is not all work that is executed now immediately in April or May. That's coming up in the upcoming period. I don't even know exactly when we start executing or will be completed with that work. We obviously don't give specific guidance on certain months. That, we cannot do. So...

Maybe to build on that, Thijs. I mean, the good thing -- as Mark already said, last year, and I just want to make that clear, in January and February, we said that we had exceptionally good order intake. March, of course, we fell a bit clearly because of COVID. That was significantly lower, but the first 2 months because we were still in this growth trajectory after the 2018-'19 improvement. So the fact that now the backlog is more or less in line, yes, 0.9%, with, yes, to a large extent, pre-COVID period, is actually not bad. And we're very pleased to see that. And yes, that's just to underline once more what Mark actually said.

And it is the first time that it now gets close to the 0 point, so to say, because end of last year, we were still negative 8 -- 8% negative. So you see that the turning point coming up, and that's why -- and also with the backlog indications that we have right now, we can get back to a growth mode.

Clear. And then maybe a small question. There is potentially a big on-site survey for Arctic LNG 1 coming up soon. Is Fugro acting in Russia, in Siberia and interested in that big potential project? Or it doesn't pop up on your mind?

So Thijs, I don't know any specifics about this project. My apologies for that. I will look into it. Having said that, Russia is always, and I have to be a little bit careful what I say there, sensitive if you talk about very specific services and technology that is being offered in those areas. So there are sanctions related to also the oil and gas area and the technology that companies like Fugro would offer. So before, we have had situations where we could not offer certain services there. So it could well be -- especially if it's high-tech that is required, that we will not be involved.

We will now take our next question from Luuk Van Beek from Degroof Petercam.

Yes, I have 2 questions. First of all, about the attitude of the oil companies, recently, there's a lot of talk about the terminal decline of oil and stranded assets and so on. So do you see a different approach towards investments by oil and gas companies? And the second is on wind, which is obviously the new promising market and has especially promising prospects in U.S. and Asia. I know that you have the right assets in Europe to service this market. But if the U.S. and Asia also become much bigger, is your fleet in those 2 regions also adequate to service that market? Or would you do new additional investments?

Yes. Thank you, Luuk. You may need to explain a little bit what you meant with your first question. I have an idea, but I'm not 100% sure. Could you explain that once again?

Yes. So basically, if oil companies now want different types of services from you because they may invest less in finding new assets, for example, or new reservoirs and if they are really shifting their budgets towards more new renewable energy, so if you see any structural change in their attitude.

Yes. Okay, okay. Understood. Okay. Yes, there's obviously a lot happening on the energy company side. I need to call them now energy companies because they all want to be very active, almost all very active in the renewable sphere. And even some of the traditional companies that are not looking at these things in the past, they are also now making a move in that direction. So some of the work that we do in the offshore wind, which also refers to your second question, is actually for these energy companies, the Shells, the Enis, the Equinors of this world. They are investing a lot of money in offshore wind right now, and they move quite fast there, as you can imagine. Obviously, they also look at other things like capture and carbon storage elements. So that is also a steep incline in requests and projects that they have on the board for pilots in this field. So we're also looking at that and have a team on it. So there are some structural changes, I would say, in the energy company world, where they actually, yes, form a whole new leg in their company focusing on, yes, the different renewable energy side and obviously also solar. And floating solar is popping up more and more as well. So there's definitely a development there. Having said that, also, the areas, and we have spoken to some of these oil majors or energy companies quite recently myself as well, you see that they are quite optimistic about the investments that they have lined up again for the oil and gas developments. Oil and gas is not out of the world. It will be important for decades to come. They obviously need to replace the, yes, the depletion of these fields. That is obviously ongoing and actually moving quite fast, so they have to find new areas to develop. We are not so much involved anymore in that, obviously, as you know, because we divested the seismic investigation a long time ago. And now we do the same with Seabed Geosolutions, so we will definitely not be in seismic, deep seismic anymore. But you see that they are still very interested there, and that will -- that activity will pick up again or much more focused in particular areas where they're already working. So they're not shooting with [ heel ] and develop projects all around the world. They are very much focused on certain areas where they might already be active and expanding there with subsea wells or tiebacks and so on or areas that they have a huge potential like Guyana as a good example for some energy companies. So you see a structural change. But they also indicate right now already that they might have a little bit more budget to spend this year or next year than what they had on the board originally. So you see that there is something happening, and that is also, yes, building on the early signs that we see in the market where there's more tenders coming out for projects there on the site characterization side, particularly for the second part of the year. Then to go to your question on wind and the fleet and the capacity that we have, we have a global wind team. We have a team that actually focuses on wind and the activities there and developing wind. They work very closely with the regions. They discussed that on almost a weekly basis what is happening there. So they see what is coming up, and they move assets around. And we have even, over the last couple of years, moved quite a lot of assets from Europe to the Americas to help them and support them for the, yes, the development that was required there on the East Coast. So we will continue to do that. And the team there on the wind side and on the geotechnical and geophysical investigation that is required is continuously talking to each other to see how we can deploy the assets in the best way. So -- and sometimes you see one region to drop a little bit, and then you can move an asset to the other side of the world. You don't do that too easily for 1 or 2 small projects, but you have to make a conscious decision when you start moving assets, especially the smaller assets around the world. In the future, and then there's the modular solutions that we have, the mobile drill rigs that we're also building and expanding on, that we can mobilize on vessels of opportunity. So we're also looking at being much more flexible and agile in shipping equipment around the world and picking up assets of opportunity in a particular area, so that we don't have to always have our own asset in the neighborhood where the project is. So I hope that, that answers your question.

Yes, that's clear.

We will now take our next question from Quirijn Mulder from ING.

Yes. Quirijn here. I, first, would like to make a remark here. I would like to thank Paul for his 7-year service at Fugro, for all the work he has done for this company. So I wish you good luck at the next challenge. Two questions from my side. My first question is about -- you said, okay, last year in January and February, we were -- we had a good order book. We are completely prepared for growth, which did not materialize at the end. And now you expect growth in the second quarter to resume, in fact. Are you prepared for that as well? Because it looks to me that your fleet is a leaner [ means ]. So are you ready for -- to pick up charters, et cetera, if the work is really coming back? And my other question is about the cash flow. You have a minus EUR 45 million. The numbers look fine. If I look at last year, it was operationally, without Global Marine, et cetera, about EUR 32 million negative, now EUR 45 million. So can you explain to me the last EUR 13 million difference in that cash flow? If I'm looking at the DRO, it's -- that is not a difference there, so maybe you can explain that. That were my 2 questions.

Okay. Yes. Paul, you want to start with the last one? I can answer the first.

Well, first, the cash flow question, you're right, Quirijn. But at year-end, we had 83 days DRO and now we're 97. With today's revenue, 1 day is around EUR 3 million of working capital. So from 83 to 97 is 14 days times EUR 3 million. So that's the increase already in your accounts receivable position that you have, offset by some higher payables, et cetera. But that causes the swing in cash flow. You have to look from, not last year Q1 to this year Q1 for the change in working capital, but from year-end to end of Q1. That determines the swing in working capital and the swing in cash flow. So we go from 83 days to 97 days, and that's around EUR 40 million.

Okay. Then your first question, Quirijn. So indeed, last year, we have indicated good order intake in January, February, in particular; obviously, March, not, which Paul already referred to. So -- and now we're at the same level roughly as we were last year. So yes, we were ready to start the growth there. And obviously, it would be quite foolish not to be ready this year to pick up growth. So that has been discussed extensively in the group, how they're going to do this. And obviously, we focus much more on the high utilization of our own assets because we know that, that will drive the margins in a better way and, where required, will pick up also charters. And as an example, yes, in the U.S., for instance, we have now 5 -- 9 vessels operational, whereas in the first quarter of this year, it was only 2 vessels. So we have already picked up and mobilized 7 additional assets in the last month in the Americas, which was also the case last year, by the way. So we have seen, yes, a pickup in activity obviously when the summer months start. And we are ready to do that. In actual fact, we are more ready now than we were last year. Last year, they made quite a few mistakes there in the Americas, and that was also causing some leakage. This year, we have said, well, we have so many mobilizations ongoing, we need to have a dedicated team to run the efficiencies on the mobilization and not to make the same mistake in some ways what we have seen in last year, where we had too much ongoing at the same time. So we learned as well, continuous improvement there. And I think we are ready to certainly tackle the upcoming months. And we obviously monitor very closely what is happening with the order intake so that we're also ready if it would grow even further from here onwards. I hope that answers your question, Quirijn.

Yes, yes. That's fine, yes.

Maybe also good to emphasize there, Quirijn, is that the charters are still readily available, so there are still many vessels around there. So if we need something, we can still find them. That will obviously change in the years to come, no doubt about it, if it becomes a bit more difficult. And then you will see that prices will further increase obviously when there's more tightness in the market.

[Operator Instructions] We'll now take our next question from Andre Mulder from Kepler.

Two questions. First question, looking at the development of [indiscernible] in Q1, your statements on the backlog, expecting growth to resume in the second quarter. Would you still feel that you can match the sales level of last year? Or should we brace for, let's say, a small decline or so? Next question on the share of renewables, the offshore wind in the total. So maybe somebody asked that question before. What is the share of renewables in sales in Q1? And what is it currently in the backlog?

Yes. Okay. First, on the growth, the future growth of our order book, so to say, backlog, we will not guide on. So that will be also very difficult to do right now. So we have given you an indication how we look at the markets and the market developments. That is not different on the offshore wind side than last year, so that gives you at least an indication what we can expect there. And we have given some guidance on the other markets as well, which were obviously stagnated at some point in time last year due to COVID. So we have been, I think, quite specific about what we can expect or in some ways for the remainder of the year. But more than that, we can't really state, and we are not specifically guiding very clearly on what the revenue will do for the full year, so if you were looking for that. So if I then go to your next question, and that will be another disappointment for you, is -- and we stated that also at the announcement of our full year results, is that from now on, we will only give the specifics on the various market segments on a half year basis. And the reason for that is that we see quite a lot of fluctuation between the various quarters, and we don't feel that this is very useful to look at on a 3-month basis. So we will issue that only half year and end of the year. We have actually given some indication there. We saw a strong decline, very strong decline compared to last quarter -- year's quarter -- first quarter in oil and gas. And we saw growth in organic growth even compared to a pre-COVID or partly pre-COVID quarter in 2020 of the non-oil and gas activities. So that gives you already an indication that, yes, the diversification of Fugro and the shift towards non-oil and gas is further continuing. And we also see that in the order book. That's what I can say as well.

We will now take our next question from Thijs Berkelder from ABN AMRO.

Thijs Berkelder, ABN AMRO, ODDO BHF nowadays.

Oh, it's you. Okay.

Also long sentence, difficult. A question on the order intake, you are now looking at how the Danish Energy Island is clearly a brand-new project, for instance. But for the rest is -- are -- the orders being won, are they leased primarily, let's say, delayed orders from last year, which now are coming into harvest? Or is it primarily new work? Secondly then, Biden's American Jobs Plan. Does that announcement already make you as departments more easy and willing to hand out contracts now already even before having the final approval? Then third question is I think you maybe have a vessel available in Indonesia and ready to search for Indonesian submarine. And fourth, carbon capture and storage, can you maybe shortly explain how you see Fugro's role in future CCS projects?

Yes. Thanks, Thijs, for all these questions. Yes, so on the order intake, obviously, there are no doubt projects that clients pushed out and are about to hand out to the market again this time. We have that obviously also in a situation where we have to win those projects. And that could be delayed projects. There is a small share of projects also in the order book that has been pushed out from last year from ourselves that we already want. That is not necessarily the majority. We also see that there's a lot of newer project work that we have actually reeled in by winning tenders there. So there is maybe a couple of examples in the presentation, but there are many more examples to give. And we have also sent out some news releases on some of them. But yes, we have new work. Sometimes it's maybe new work for us but old work for the clients. Or it's completely new projects that they have scheduled already for this year to hand out. So it's a bit of a mix, but it's -- the majority is new projects there. Then on your question on the U.S. initiatives and the program that they have on the board there of, I think, USD 1.9 trillion program to invest in the economy, which is obviously a mixture and a breakdown on where they're going to spend it on. And I was asking also the U.S. team recently what this is going to be and how that will help us. There are some chunks, as I mentioned already, the $600-plus billion that is related to, yes, transportation infrastructure-related things. So it's charging stations, modernizing bridges, highways, roads, public transit, all these kind of things, railway infrastructure, climate resilience, infrastructure, and Fugro can play a large role in that. Also in land waterways and ports, airport upgrades, so these are all related to the, yes, the $600-plus billion that they want to spend on transportation infrastructure. Then they have a $650 billion related to quality of life at home, which is obviously a bit more difficult for Fugro to do projects in. But sometimes, we probably will be involved with water infrastructure, improving electric grid, clean energy, maybe generation. So there is maybe also some work in that sphere. And then there's, yes, another $500 billion related to research and development and manufacturing, which is probably not for Fugro to take work on. So there's a nice mixture. We have not a lot of details there because they don't release a lot what they're exactly going to do. Having said that, we were already in contact with the transition team of Biden and have active discussions with the local governments that obviously we normally work for. So we do expect to benefit from that. That will, yes, probably happen more towards the second part of the year where we see things maybe handed out to the market slowly. So that's what I can say there. Then your submarine, in actual fact, I was already in contact with our Asian group there this morning about that missing submarine in Indonesia. They are, in fact, talking to some governments, for instance, the Royal Australian Navy, to see how they can help. So that is always a discussion that is required there. So I don't know yet the answer, but we are definitely also talking to various parties there to see if we can help and be involved. And then CCS, yes, there's a number of things that Fugro can do there with the knowledge that we have, especially our consulting knowledge on the subservice and the shallow subservice for the carbon storage. And there's also a whole infrastructure obviously required there, that they -- or infrastructure that is there that they want to use, and there's modifications required. There's sometimes inspection required. There's quite a lot of Fugro service that can be offered in this field. There are still a lot of pilot projects now going on before it really takes off. But it's a way, yes -- I shouldn't say that, but it's almost the way to greenwash the carbon activities that these energy companies have on the board. It's important to them to also start off and kick off CCS projects. And it is actually being discussed all around the world now. So it's really something from the last few months that this takes off. And it's not 100% clear how much we will be involved, but there is definitely opportunities for Fugro.

We will now take our final question from Quirijn Mulder from ING.

Yes. Two additional questions. In your text of the first quarter, you stated there was a good order intake in Asia Pacific. If I look at your order position in Asia Pacific, it's down by 18%. So maybe you can explain me some on what is happening in Asia Pacific. And the other question is about the cash flow again. With regard to repayments, government support, et cetera, do you expect them to be material in 2021? That were my questions.

Thanks, Quirijn. I will take both questions. Indeed, if you look at the year-on-year backlog, it might look that the order intake in APAC is not very strong. Actually, it was. It is also with a large project -- impacts the project in Indonesia that was delayed by a year that were still sitting in our backlog. That is pushed out. We don't know if and when it comes back. That's still to be seen. If you adjust for that, then you get suddenly a very different picture. So there's a very specific reason for that. But overall, new order intake was really good. On your second question, government support, at year-end, there was still EUR 20 million deferred tax payments basically supporting last year's cash flow, which was EUR 105 million. We expect that half of that amount in the course of this year will be paid back at the end of Q1. Almost nothing was paid back of that, so there was still close to EUR 20 million deferred. But at the year-end, we expect that around 50% will have to be paid back, and the remaining 50% will then most likely to be paid back in 2022. I hope this answers the question.

Okay. And when did you -- exactly. And when did you -- my last question is then, when did you remove Abadi from the order book? Is that -- it was the second quarter already, yes?

No, I don't think it's the second quarter. I think it was a little bit later.

We need to come back to you. It could be Q2 or Q3 because for quite some time, it was really uncertain. And at least one of the parties wanted to continue. The other one was more doubtful because of COVID and everything that was going on in Indonesia. So I'm not sure, Q2, Q3, but Catrien will come back to you, Quirijn.

Yes.

Thank you. That will conclude our Q&A session. I will now turn the call back to your host, Mark Heine, for closing remarks.

Yes. Maybe before we go to Mark, I would also like to thank you guys for all the interactions that we had, the zillions of questions that you have launched, which was always nice, by the way. Really enjoyed it, keeps us sharp. Also enjoyed the face-to-face interactions. This is my last call indeed for Fugro. I will have another call in Q2 but then for ASM, of course. As you know, Fugro, in the period that I've been here, has been transformed, I think, in all aspects that you can think of. It was an intense journey, but a very nice journey. And yes, I wish Mark, of course, all the best, also my successor, Barbara, assuming she will be appointed on May 12, but that's almost certain. I wish a lot of success to hopefully step into a new phase after 7 pretty challenging years. But again, thank you all. I really enjoyed it. And maybe we still speak to each other in, yes, in different occasions. It's a small world after all. So thank you.

Okay. Thanks, Paul, for those words as well. I think it's obviously also from our side definitely the situation that we will say in an appropriate manner goodbye to Paul. So we're not going to do that on this call, but I certainly thank Paul for all his contribution and the pleasant cooperation and obviously, yes, together, answering the questions that you brought up. So thank you very much, Paul, already here, but we will do that once again in an appropriate manner. But I would like to thank everybody on the call for your questions and attendance, and I wish you a nice day. Thank you very much.

Ladies and gentlemen, that will conclude today's conference, and you may now disconnect.