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

Okay. Welcome, everyone. Good morning, good afternoon, good evening to some of you with the Half Year Results Presentation for 2026, first half of this year. This year will be slightly different as we're still in the full process of recruiting our new next CFO. So I will present the whole deck today, and I'm very much supported here by our Interim CFO, Cees den Ouden, who is here, but also our Group Controller, Marijn Feddes. So if there are questions that are going in a bit more depth that I cannot answer, then I always have these support lines. But I will do the presentation myself. So, if we start with looking at the first half of the year, we have an EBIT margin that was 4.1% higher than last year. However, we have to also say that we are looking at a challenging second half of the year. So improvements on the EBIT line as well as the cash flow for the first half of the year, but I'll come back to talk about the second part of the year as we see in the backlog, a development that we feel that needs to get some attention. The volatility in general of the current market conditions has reduced the near-term visibility beyond of what we would normally expect at this stage of the year, making the earlier expected margin improvement for the full year unlikely. And we continue to focus on what we can control ourselves, including the rationalization of our fleet to rightsize our cost base to the current market conditions. Targeting also an annualized saving on top of the earlier savings of EUR 50 million with obviously a continued focus and emphasis on cash generation. We will remain committed to our execution of the Towards Full Potential strategy to benefit from the structural demands that underpin our markets, while also obviously adapting to the operational current environment. And I will share a few examples later in this presentation to give you an idea of what we're working on. Maybe one of the first reasons that the first half of the year is affected is the impact of the war in the Middle East. We have been explicit about that. That impact is on the bottom line, EUR 15 million, and that is partly split in the direct impact in the region as well as for the rest of the organization. The impact in the region was 2/3 of this EUR 50 million and relates to, yes, spoofing, jamming of our GPS signals, GNSS, Global Navigation Satellite Systems. Those are blocked in war zones and then you cannot work because you cannot position your assets, your vessels. And this had impact primarily in the UAE and Qatar and obviously limited our operational days. And there are several knock-on effects, as I said, as well for the rest of the organization in the rest of the world with higher costs, specifically around fuel. And obviously, we can recharge clients for our fuel cost, but there's always a bit of a bandwidth and some of it will end up in our own cost and own risk. So we do see that this conflict is continuing. Unfortunately, nobody knows where this is going over time. We do expect this effect to also continue to impact us. However, we have also installed some different equipment, so having less effect on the jamming and spoofing of our navigation signals. And we also know a little bit better how to work and operate in this environment currently, but the effect will still be there, and we will have to follow that very closely. If we look at the markets, and I will first talk about offshore wind. And obviously, a lot of people will have questions around what is happening in the offshore wind environment. One of the key reasons why Fugro is also affected in general in this current environment. We do in the first half of the year, EUR 213 million of wind work. That is, yes, for a large part covered by Europe, Africa and a small part is covered by Asia Pacific. And these are the regions, obviously, you also see colors of Africa. We don't do wind work in Africa or in China, but these are simply representing the regions. And then the Americas has no wind work whatsoever at the moment, which is no surprise to anyone. If you look at the bottom left picture, and I think that is a very clear picture of what is happening in the market right now, you see '26, '27 being down. And this is actually common knowledge that there is currently a phase in this market where there is a reset ongoing, especially in Europe, but also in Asia. But in Europe, they're looking at different contract setups, contract for difference. We spoke about that before. And this takes time before these new contracts are brought to the market. There are good signals, as we spoke about in the past. So most of the markets in Europe and countries -- key countries there are developing these new licenses and the new license rounds. And you see a few things listed here. In France, there is, yes, a lot happening at the moment. It's coming to the market, several blocks there for 10 gigawatts, but also in Denmark, in the Netherlands, they're talking about bringing this large area 6, 7 to the market. And this is for, yes, more than 20 gigawatts of wind power in the years to come. But if this tender comes to the market, let's say, in September or in the latter part of this year, it will take 6 to 8 months with the European tender before the first vessels go out to the market to do some survey work or geotechnical work as we do in Fugro. So this is basically the situation. We cannot change that. Most of the governments are very aware of the fact that, yes, there is a gap for most of the companies. They're trying to accelerate things. We do see the activity really coming up and increasing, but it's not happening right now. As we said before, it will take time. In Asia Pacific, we see in several countries developments. There's still ongoing developments in South Korea, Taiwan and some in Japan, but we also see new opportunities coming through in Australia, Philippines and Vietnam, as we spoke about in the past, but it is very slow, and it's not moving very fast. The Americas, as I said, in the United States, nothing is happening. Canada and Brazil are definitely looking at something. I spoke about a pilot project in Brazil, which is starting up in the second part of this year for us and will also generate some work in the nearshore environment. So this is the wind business. This is really affecting us, and I will come back on what it has happened for the full year and for the first half of this year. If we then move to oil and gas, we saw a growth in oil and gas in the first half of the year of 22%, and we'll talk a little bit more about that. We do EUR 424 million in oil and gas. This is obviously split around the world in the following blocks. You can see it there in the picture at the bottom there. The traditional energy oil and gas is, yes, you could say, back on the board. It's a more buoyant market. We have seen growth, as I said, 22% in the first half of the year. However, I will come back to the backlog. We see also a small decline in the backlog in oil and gas, which is, I think -- or that is fully attributed to the large project that we have done and executing on in Indonesia, as we spoke about before. So the underlying oil and gas business is still continuing to grow. What you can see there on the graph is a small growth in the CapEx and the OpEx graphs there. It's slightly higher than what we showed you before because, yes, if we go back 2 quarters or so, it was more hovering around 0. And now we see this slightly increasing already. If we go through the various regions, then Europe, Africa. In Europe, there is very limited developments ongoing in oil and gas. Obviously, the U.K. is looking at it. Again, as we picked up in the news, Norway is a pretty steady development with exploration activity there. But yes, in general, Europe, you could say, is pretty slow in developing oil and gas work. But for Africa, we see many things on the board. It takes time. It's primarily deepwater developments in Angola, Nigeria, Mozambique, the fields are developing there, but also the East Mediterranean gas development. So the north part of Africa is still on the board and has a priority there. In Americas, it's really focused on South America. There, we see lots of development in Guyana, but also in Brazil and in Suriname, as we spoke about before. Asia Pacific, as I said, we are executing on this large project in Indonesia. There are multiple roll-on projects coming out there as well. We see other developments. You probably picked up the news for Timor-Leste, where we have also picked up the first project. This is a large development, and there might be some additional work that we'll do there also on other activities. So we do see blocks coming back in Asia Pacific, a region that is developing quite nicely for Fugro. Middle East and India, there's a lot on the board. There are a lot of opportunities, obviously, somewhat stalled by the current situation, primarily affecting the UAE and Qatar. As I said, because of the jamming and the spoofing, the work is there, but we can't have every day operational because at some days, we do not have navigation signals. Obviously, yes, the blockage of the Strait of Hormuz is an issue. We don't have to go through the Strait of Hormuz all the time. In actual fact, we want to go through with one vessel one time, that will be great. So we're following that very closely. And as soon as we see an opening, then we'll make this move. In the meantime, we'll look also for other opportunities for the vessel that we have on standby there. Other markets, Azerbaijan, Iraq are actually developing quite well for us. And then we also see some deepwater work coming up in India. If we then look at the infrastructure market, again, bottom right, you see the split there between the various regions. I will click through them. Obviously, large in Europe, Africa, but also in the Americas, Asia Pacific and Middle East, India are splitting the rest there. So lots of opportunities there. They are obviously affected by the general economic situation in the world. Infrastructure is always affected by that. So geopolitical situation in the Middle East is affecting the general developments for infrastructure in the Middle East. If you look broader in the world, then we see new developments coming up, especially around nuclear, quite a few projects worldwide on the board. We see that in Europe coming up, obviously, very actively in the Americas, but also the rest of the world is talking about nuclear. And those are smaller reactors, so the small modular reactors, the SMRs, but also full-blown larger nuclear developments are on the board. Data centers is another development that we see coming up, huge ambition there, and this is obviously happening also in Europe, Americas, and we'll expect that to be there in the rest of the world as well. Middle East and India, we primarily focus on ports and harbors, which has a lot of development and also our capabilities are really well tailored for that. And you see a CAGR that is now for the upcoming years around 6%. That hasn't really changed over the last few quarters. It's always hovering around 6%, 7%, something like that. So that's the infrastructure market will still be a good market for Fugro, and we have also new technologies that we can deploy there, and I will say a few more words about that a little bit later. If we then look at the development markets, these are markets that we have listed in our strategy in Pillar 2, yes, basically adjacent markets that we can serve with our current expertise, and we can basically do similar work than we do in our traditional markets. Coastal resilience and ocean health, it's captured in water. This is in one way, a little bit affected by sustainability being not highest on the list anymore in the last year or so. However, there is tightening regulations, in particular areas, especially around developments in Europe, also the wind developments where they have really high demands around biodiversity, ecology surveys, and this is driving basically also this part of ocean health, so to say, and the biodiversity. And then we have a lot of coastal protection surveys that are popping up that are quite important with the changes in the climate. And I think everybody is following the news. This is very visible, obviously, here in Europe with the temperature rising, but it has a lot of effect, basically risking situations with harsher weather patterns, but also risk for floods and hurricanes and all these kind of things. So this is a market that is still a developing market. So it's still small. It's a future growth market we called it before, but it's something that we continue to focus on. Then in the middle, critical minerals, obviously, something that is really needed for everything we want to do, the electrification of the world, the battery power that we need, but also many other things. If we want to build wind mills, yes, you need also the minerals and the metals for that. So those kind of things are really important because there's almost a battle in the world who has control of the critical minerals imported for chips and so on. So there are multiple jurisdictions with the U.S., obviously very high on the list, but also the Middle East really looking at taking more control of finding the critical minerals. We see that with a change in the Middle East, especially in Saudi Arabia, where they have in their Vision 2030 now a full push for critical mineral developments. And one of the things that we're doing in Saudi Arabia is really tilting the business also towards that diversing it and we'll pick up the first projects there, which really helps us to basically recover that market as well. After, for instance, a project like NEOM is now in the doldrums and is not happening anymore. So also in the Americas, in Canada, U.S., but also South America, this is high on the list, and there are a lot of developments ongoing, and we see opportunities to further grow this market. Then on the right side, we spoke about that before, security and surveillance, quite an important market that is new and coming up. We have 1,000 Russian dark vessels sailing around on the North Sea, trying to inspect and also probably influence our infrastructure that is out there, map it. So we need to get to situations where, yes, Europe can protect itself for these threats, and this is something that Fugro can play a role in mapping the conditions, but also the situation on the North Sea. And also in the U.S., we see multiple projects coming up where we can help basically the countries, the governments with mapping and understanding the baseline of the current conditions of the infrastructure. And we see this also popping up now in the rest of the world where this becomes a more important element. If we then go to the backlog development and the split in markets, then on the left side, you can obviously see revenue by market segment. And what you can see there, what I already spoke about, 22% growth in oil and gas for the first half of the year. You see wind coming down with another 24%. So mind you, last year, we dropped 45% in offshore wind. There's another 24% on top of it. And if you then go to the right side of the picture, another 47% down in the backlog. So yes, this is really going to be significantly smaller for Fugro and over a very short time frame, and this is also the reason why we have to step in and do more cost savings in the short term. And it's not so much that we say something else than what we did a couple of months ago. We still say that this market comes back. We see the positive signs. We see multiple countries bringing these licenses to the market, but it takes time, as we said as well. However, what is the change maybe? We thought that we were already at the bottom earlier this year, but we see actually that it is declining even further. So it goes deeper before it comes back probably second half of next year. So this is important to note. Then if you look at the other markets, then infrastructure, oil and gas and water, they have been growing in the first half of the year, and they have basically fully recovered that 24% drop in offshore wind. We have grown 4% for the first half of the year, primarily due to a 10% growth in the second quarter. Mind you, the second quarter of last year was quite low. So it was easy to grow and show growth in the second quarter. So also good to take note of that. Now if you move forward and you look on the right side, again, on the backlog development. A couple of things to say there. You see 8% drop in oil and gas, which is, yes, fully attributed to the project that we do in Indonesia, where we had it in the full backlog. And then this year, there's only 15% left of that project still to be executed on. So that is a big drop. That's also, if you dive into the regions, why you see Asia Pacific dropping in the backlog so aggressively. That is only related to that project. Now, what is also important to note because the backlog in itself drops by 13.9%, roughly half of it is related to this project in Indonesia and the other half to offshore wind dropping even further. Underlying oil and gas business is growing. So this is still -- also still happening, and we do expect also to continue to grow with other projects again like the one that we just announced in Timor-Leste in Asia Pacific. What is important to note there as well is the different dynamics in these markets. So offshore wind projects are larger in size, and there are more -- you can anticipate them earlier. So you know that you bid for a license for next year to be on the board for maybe multiple months of work, where oil and gas is always a shorter backlog. So there's more uncertainty in the backlog right now because we need to rely more on oil and gas. There are also larger projects in oil and gas, as we have shown in the past as well, but the majority is also shorter-term backlog that we still need to secure. So I think these things are all important to note because in the upcoming months, we're going to secure more work for a few months down the line to still execute on. The project in wind is often larger, not always, but often larger and more continuation on one project. So there are differences there, and that has also created more uncertainty to know exactly how the rest of the year progresses. That is also why we have to step in and adjust ourselves to the current market environment. And we're also going to do vessel rationalizations. All in all, the cost savings should contribute to EUR 50 million annualized savings. A large part of that is related to the assets that you see here on the board. We're doing several things. And some of these things are really related to, yes, scenarios that we already spoke about before. So we always said we can take out a few older vessels, and we postponed it and postponed it because we still needed those assets. But now are we going to actually take them out and say, okay, this is it. As soon as the project is over, we'll take out this vessel or that vessel. So 2 to 3 vessels. And why is that still not 100% clear because we're still evaluating what we can do and which one we really need. And as this is changing all the time, we might extend one a little bit more or take it out as listed here. Also charter reductions, we always said in the strategic review, we can adapt ourselves. So even when we were investing, for instance, and mind you, we were investing in the geotechnical fleet, not so much in the geophysical fleet or not at all in the geophysical fleet. And we said we bring in these newer capacity. We need that because we need to retire the older capacity. We haven't done that yet. Now we're doing it. And we also can adapt ourselves by reducing the amount of charters there. And that is also what we're doing right now. We're taking 3 charters out over time. So it's not like that's already happened, but that happens one maybe in September, another one in November, those kind of things, and one is happening as we speak. So that is basically the more permanent structural change. We can obviously use those assets that we have installed on these charter vessels again if we want to ramp up. So if we have a drill rig that we take off a vessel, then it's obviously ready to be mobilized again on a new charter in the next season when it picks up. So the capacity is not necessarily completely gone. It takes time, and it's also a conscious decision that you have to take because if you mobilize these vessels, then normally you have to run with it at least 1 or 2 years to 3 years to actually earn back also the mobilization cost. So we will be careful before we take that decision again. Then we have some relocations. We spoke about in the past, that's a little bit less of a cost saving, but that's also important to drive utilization up. And then on the right side, it's more temporary solutions, cold layup of 1 or 2 more vessels. Those are owned vessels that we will lay up then temporarily -- well, what is temporarily, at least 6 months. Otherwise, you don't go to a cold layup. Cold layup means that you actually take down also quite a bit of the personnel and that you cannot the next day, mobilize again. You can mobilize, but it will take a number of weeks to have it ready again to be operational. And that has to do with certifications that you need on these vessels, et cetera. So if you go to a winter layup on the right side, and we haven't mentioned how many vessels because that's really dependent on how the winter will develop, but it could easily be 5 or 6 or 7 vessels that we will temporarily layup and then they are almost in a situation where you can, in a few days, mobilize again. So this is also much more reduction in the cost savings. So it's not really a large cost saving. So this is quite an important element. That's why I spent a little bit of time on it because it's quite important for us to do this. We have postponed some of these actions, obviously, as long as we could and utilize those assets as long as we could, but now it's time to make this move. And that's, as I said, a move that will gradually be implemented in the upcoming months. So because some of the vessels are still operational. Then I want to show you a little bit on some of the things that we're doing in line with our strategy before I dive into the hard numbers. But I think it's also important to show some of the good things that where we get traction also to change the portfolio of services of Fugro because that's the whole intention that we're also less cyclical and sensitive to these market dynamics in the future. We spoke quite a bit about the new technology, GroundIQ, which is basically using, yes, more data that is available from particular sites, but also using geophysics. And you can see on the right side, an animation of several nodes in the ground. They look quite large, but they're actually only 10 to 15 centimeters high, and you put them in the ground and you listen to the ambient noise, so no active noise, but noise that the ground actually generates by cars going by or by machines working in the neighborhood. And then if we listen for a couple of days, we can actually determine a 3D cube of the whole environment, so we can see what kind of layers there are. And then if you -- as you see with the drill rig, go to the particular sites, then you can calibrate this whole 3D model. And what you see on the left in the animation is how we actually get to this 3D model where we can quickly analyze and you see that with the green blocks, where are the critical areas. And then you can also make the plan much more specifically where to do boreholes and where you can maybe have a sparser array for drills or CPTs that you will do. So before the traditional way of doing this work would require that you basically do some CPTs or boreholes with a certain pattern in a block that you need to survey. You get to a probably 0.1 degree of mapping the area. With this way, we're going close to 100% of mapping the area, knowing exactly what the subsurface is all about. And this is really critical because then you can concentrate more boreholes in the critical areas. And you might know and pick up from the news that there's a lot of money wasted by lawsuits and insurance claims at the end because they haven't done the groundwork properly. It can also save a lot of money for clients to know how they should develop their fields and design them. It's better data. As I said, we're close to 100% compared to less than 1% or 0.1%. It's a lot faster and it's even cheaper. So it's almost good to be true. There are some great examples. So we have here some examples on the board. I don't want to dive into all of them in detail, but they all are aimed at they are collecting data quite fast in a matter of weeks. This example, for instance, on Bechtel in Rio Grande LNG terminal that we have done. This is basically, yes, gathering information in a very fast way and really help them to accelerate. And they had already their traditional information that matched completely, and we basically could confirm what they already knew and that gave them more confidence to move forward. You see also examples of data center in Europe here or near-shore cable survey, which is very interesting because this was in the surf zone. So this is even in the nearshore area where we can also deploy when the water was gone, we could very quickly actually have some measurements done with the same system. So it really drives speed and better data and much more insights and a lot of cost reduction for the end clients. So we're very excited about it. You can see already we started with this actually last year. We picked up 22 projects last year. We're now for the first half already on 27 projects. We expect this to further grow this year. And this is one of the successes of new technology that we're bringing in. I believe, especially on the land side, there is an enormous potential also to go back in areas where maybe there is more commodity or commoditized areas, and we can probably do a lot more and also have decent margins again in this area for the land business to further grow. So we're quite excited about this. And we'll see in the upcoming years further growth in this area. We're aiming also more towards this, and the investment is relatively minimal that we have to do in this area. Then you probably picked up from the news that we have invested in a company, in a Dutch company, DTACT. We have acquired 30% of the shares there. And that is basically a continuation of a partnership that we already started earlier, where we do a pilot for the Dutch Navy or defense where we basically analyze and pilot what I just described, critical infrastructure on the North Sea, where we can basically with satellite information and various data sources combined and our data that Fugro has the knowledge on the geo-data determine where are the critical infrastructure, which pipelines are more exposed, which could be maybe dragged from the seabed by anchors from dark vessels. And if we see those dark vessels that are by satellite basically tracked, then you can basically indicate which vessels could be at risk coming close to a critical pipeline or cable. And then obviously, you can decide to have a surveillance vessel going there. This is one of the examples that we're working on together with DTACT, but they have a data fusion platform where they can have multiple data sources being on top of each other. I think we all know about the other companies more from the U.S. that do these things. DTACT is a similar one, but then a Dutch company that can basically combine multiple data sources, even cloud independent. And this is very critical for Fugro to further develop the area that we have always announced as our Pillar 3 developments for software and hardware and geo-data solutions. So we're very excited about this and that we can work even more closely together. Then coming back on one of the other strategic agendas that we have is advancing the capabilities we have on the USV side. You see a few projects mentioned here. You see also different USVs on the screen here. In the middle, you see our larger 18-meter platform, the Eclipse. We brought that to the market end of last year, and it has been working very steadily on multiple projects. And this is just one project as an example, but we see that this vessel is nicely filled. It's larger. It can operate better on the North Sea with obviously harsher weather patterns. We have a smaller one on the North Sea, doing a little bit less work because it's obviously more affected. So we really see that we move in the right direction there. We are looking at the development of the next generation. However, we also are very careful in the investments currently today. So we're keeping cash very high on the agenda. So we have also slowed down some of the developments, but we're still in full force ahead with the ones that we have in the making, which is not shown are the geophysical USVs on this picture. We have 5 boats that we're building, 70-meter. They come to the market, the first one, end of this year, early next year. And then we'll start doing geophysical work with these prisms as we call them, 70-meter, we can do geophysical work with them. The ones that you see on the board here are doing inspection work with ROVs, robots that come out of the back of the boat. You can see that in the middle, the yellow robot there, they can do inspections and the one in the middle can go a little bit deeper. And obviously, there's also a request for even going deeper water, especially in areas like Brazil, where they want to do inspections without divers or in the Middle East. So this is still high on the list as something that Fugro feels we should develop the inspection markets in. But it takes time, and it is a market that is still quite young and needs to further mature. So it's also coming with start-up pains with not enough utilization in certain areas yet, where we see the successes already on the board. Especially in Australia, we have done quite a lot of work for multiple clients. And also in end of the second quarter or during the course of the second quarter, we were working in the Bass Strait, a very difficult environment, obviously, high currents, but -- and also in the Northwest shelf, we did a nice campaign. So we see this, yes, working really well and then clients adapting to this new environment where they can use these uncrewed, no people on board, once again, uncrewed platforms that are operated from control centers. Okay. Then we get to the hard numbers. I already mentioned some of the numbers, and you have seen the press release, but let me go through the basics there. Yes, the second quarter. The second quarter had a growth, as you can see there, I already spoke about it. Now, the second quarter of last year, you can see as well was quite low. So it's easier to generate the growth. But it's good to see that growth of 10-plus percent, close to 11%, which is basically solid, and that was good. Also on the EBIT side, close to 8%, 7.9%, an improvement compared to last year, where it was 4.3%. So that is positive. And in that sense, yes, also helping us for the first half of the year. Operating cash flow, as you see on the bottom left graph, also significantly better. If you talk about free cash flow, we see also an enormous improvement in the free cash flow. That's not shown here on the slide, but we have reduced CapEx quite a bit and also improved working capital. And yes, this had a positive effect on the free cash flow generation. It was positive free cash flow for the second quarter, which is good for the whole first half of the year, minus EUR 38 million. That is not strange for Fugro. We normally see more cash inflow in the second half of the year, and it's an enormous improvement compared to last year first half. If we then go into Marine, then we see that Marine grew by 4.2%. The margin was, however, flat. And site characterization reported an increase for the first half of the year. This was primarily related to some larger oil and gas field developments, as we said, in Indonesia, but also in the UAE. In Saudi Arabia, we did a lot more work in the marine environment. This is something that we have not done in the past. So Saudi Arabia was primarily a land business for us. We now pick up more and more work in the marine environment, which is actually quite good for us and also diversification again for the country. The growth in Asia Pacific and Middle East regions, as I just mentioned, was partly offset by lower volumes, especially in the offshore wind environment in the Americas. There's no offshore wind in the Americas anymore. We had a little bit last year, EUR 20 million still in there, nothing now anymore and obviously, in Europe, Africa. If we talk about asset integrity, then results both in Europe, Africa and the Americas were impacted by reallocating or relocating a vessel. We moved the vessel. We spoke about that before from Europe to the Americas, and it had quite a few knock-on effects. This was very much needed because we have these large contracts in Brazil for Petrobras, 4 projects, 4 years, really good, steady work, which is now, by the way, a touch wood, working really well. We have 2 vessels working on it, the Aquarius and [ M/V Bella ]. They are in full force ahead, and that is just for the upcoming years, steady income and steady returns for Brazil. However, it took a little bit of time to get these vessels there and operational. We also had a dry dock of one of the vessels that was already working there, the Fugro Aquarius and that dry dock took a lot longer because these contracts are so intense that you don't really have the time to inspect the vessels in -- during these projects. So we had a few more things to do in the dry dock when we brought it to the shore. So that took time. In the meantime, Europe-Africa didn't have this vessel anymore in the beginning of the year, so they didn't generate any revenues. They tried to -- or we moved in with the Fugro Resolve that was working with the Blue Dragon, our new robot for a deepwater geotech work, where we thought we can use this vessel temporarily for ROV work in Denmark. We communicated about that already in the first quarter, and that didn't go flawlessly. So they were somewhat delayed. They also mobilized the new vessel a little bit later than we normally operate in Europe. So that is the EDT Hercules that was operational at the end of May is now full force ahead. So the Hercules as well the EDT Jane are for the Europe-Africa region for the remainder of the year, quite steady income and quite good. So MEI was quite affected there in the first half of the year. Obviously, in the Middle East, we were affected by the war situation and the spoofing and jamming, which also had an impact on our first half there. If we go to land, then land grew close to 5% currency comparable, supported by a strong nearshore development in Europe-Africa. So we have a lot more activities there, a good return. So that's great. In Asia Pacific, we're affected by a slow market. We spoke about that more often, Hong Kong, but also, to some extent, a slow market in the nearshore area in Japan in offshore wind. We do expect that there are opportunities again in Japan, nearshore very soon. So we have a rig there that should be able to start working in the near future. In the U.S., particularly in the first quarter, we're still affected by the prolonged government shutdown that we had end of last year. So this was still delaying permitting because in actual fact, we have quite a lot of work on the land side for the U.S. So that is also the reason why you see in the backlog the Americas actually growing because we have quite a lot of firm work to be executed on in Brazil, as I spoke about, that's on the marine side and on the land side in the U.S. So this is helping the Americas to probably counter a little bit the uncertainties they have in the marine site characterization, which is significantly smaller for the U.S. moving forward. So those are the business lines. Then I go to the net result, which is maybe not the nicest picture to show because we have a negative EUR 62 million net result, including discontinued operations, basically 2 blocks, 2 clear blocks mentioned on the right side, specific items. And you all picked it up. We have done impairments of EUR 36 million. That is, yes, due to the challenging market conditions in geophysics, we have taken a downgrade in 4 vessels on the value there, and that's because of the market situation and the pricing pressure there. One is retired. So one of these vessels in geophysics is retired. And the other one, we actually called layup one of the vessels. And that has an impact. And always the short-term development in these calculations, as you know, it's accounting, but you need to calculate the net present value of these things. And then the short term, the next 1 or 2 years have a lot of effect on these calculations. So this is why this needed to be done. There's, in addition, also a conversion ongoing on one of the geotechnical platforms. This is basically the last modification that we're still completing, as we spoke about before, this is the Fugro Scout. I'm not keeping that as a secret, but we had quite a bit of issues there with the yard executing this. And basically, we had during -- halfway during the work, taking the vessel apart, that went well, but basically rebuilding it is not being done by the same yard. So we're moving this vessel. We have moved this vessel to a completely different yard to complete the modification of this vessel, which obviously had an impact on higher cost, and we have taken a downgrade on that in this current EUR 36 million. There's also EUR 9 million in writing down the bad debt provision in Asia Pacific. There, we're obviously still going after it. But at the moment, we have taken that hit. And the remainder is related to restructuring expenses, which is a relatively small EUR 2 million. Then the second block, which is obviously also affecting the net result is all to do with income tax expense. And then, yes, the current tax expense is only EUR 7 million or is EUR 7 million, I should say. And the rest is all related to a derecognition of deferred tax assets. And this is, again, the same calculation that you do for your impairment testing, obviously, the future forecast and then the next 1 or 2 years have a major effect. We have also upgraded some of the DTAs last year. This year, we come to the conclusion that we have to downgrade that in certain geographies, and that had an effect of EUR 41 million. Yes, all in all, ugly picture because then you get to EUR 62 million negative net result. Luckily, some of it is noncash, but that is always a little bit of an unimportant one because it is basically reducing your balance sheet position. Then if we go to cash flow, free cash flow, this slide is showing then overall free cash flow amounted to minus EUR 38 million, as I said, negative, so -- which is not unusual for the first half of the year. As I said, typically, we see working capital wind down towards the year-end and therefore, supporting the H2 cash flow. Operating cash flow, we already looked at was, yes, EUR 85 million -- or operating cash flow before working capital movements was EUR 85 million, and that is up from the EUR 58 million, mostly due to higher EBITDA. So the seasonal working capital buildup consumed EUR 59 million of cash, an improvement compared to last year where it consumed EUR 81 million of outflow in the first half of 2025. And I will get back to the working capital in the next slide. Capital expenditure is EUR 81 million for the first half of the year, representing a decrease -- EUR 87 million decrease from last year, EUR 168 million, which is obviously a big drop. We then get to working capital. Working capital amounted to EUR 310 million in June 2026 compared to H1 2025. This is an increase of EUR 46 million. And this is a result of trade and other receivables consistent with the increased revenue in the second quarter. In addition, reduced CapEx resulted in lower trade and other payables, which obviously has an effect also on the net debt. At 16.6% of the 12 months revenue, working capital is lower than the previous 2 quarters, but still outside of our range that we have communicated before between 10% and 15%. That bandwidth is important. We want to drive that back into that, obviously, and we're really focused on getting this done. And also, yes, Marijn, Group Controller and Cees, our Interim CFO, really on top of this as we have been over the last period, and we will obviously continue to do that. On a positive note, days revenue outstanding improved to 78 coming down from the -- what is it, 87 last now -- 85 last year. So that's a positive side. Then if we go to the balance sheet, then net debt amounted to EUR 473 million at the end of June, up from the EUR 383 million at year-end in 2025, so year-end compared to June. In addition to the free cash flow development, this increase was primarily due to the payment of dividend over the year 2025 and additions to leases. The net leverage at the end of June was 1.7x, which is down from the 1.8x previous quarter. We're still above the 1.5x, the self-imposed target that we have of 1.5x. We want to be below 1.5x leverage. We focus obviously very much on that by improving our cash flow, actively managing the capital discipline, limiting CapEx, as I just presented, but also driving down the working capital there. So our target remains there still to get in the level of 10% to 15% for the working capital in the revenue -- compared to revenue. In July 2026, we have added a bank to our banking group, DNB, which basically gave us an additional EUR 50 million to our credit facility that now is EUR 400 million, not because we want to draw that, but this is just flexibility that we create operational flexibility if required. And this is also something that all the companies obviously do in this uncertain time that you have options there. The 1-year term loan that is maturing in October, we either pay that down with the available cash or we will use one of the financing options that we have. We have multiple options to refinance that term loan or extend it or go into different scenarios. So we're not concerned about that. Our key focus is to bring leverage down. That is basically what I want to emphasize and to focus on cash returns. And that brings me to the last slide, the outlook of 2026. And yes, we have said that the uncertainty remains elevated due to the ongoing conflicts in the Middle East, but we also see the ongoing weakness in wind market. That is not new because we said it will take time, but we go a little bit deeper. And we have more oil and gas work to replace this offshore wind. And that is, yes, a little bit shorter-term backlog, and that is more uncertainty in the backlog, and that's also driving the backlog down now in the short term or the 12 months because you have less work, yes, beyond the 6 to 9 months, which is normally what we also see in our backlog. And as it says here, we have taken the -- yes, previously expected margin improvement. We took that away. We say now that it's unlikely that we will achieve that. And that has to do with, first and foremost, great improvement in the first half of the year, but we expected even a better improvement, I can say that, because the war was not anticipated and the pricing pressure was probably more severe and also the second half of the year being more uncertain. We want to be very careful in what we do. We don't want to go back to the market, obviously, with surprises there. So we better say what it is, and therefore, we take away that earlier guidance. And to support free cash flow, we have driven the CapEx or the investment profile from EUR 150 million to EUR 165 million now to the lower band around EUR 150 million. And yes, we can end with a little bit strange to say, but in the mid- to longer term, we still feel that geodata is really required and our core markets remain sound. But obviously, I fully appreciate that everybody is looking at what is happening in the second half of the year and early next year. And obviously, that's not necessarily the most optimistic outlook, but that's why we formulated it like this. And with that, I want to move over to questions. And as I said before, I have some support lines here. If you become too technical on the finance side, I will call in my support lines here from Cees and [ Marijn ], which are here only a few meters away. Who can I give the word first? Luuk.

A couple of questions. First, on the CapEx. Can you explain a bit on the plans -- the outstanding expansion plans that you still have for execution in '27 and also the maintenance CapEx level, I think last year was slightly above EUR 100 million. Will that come down and to what level approximately? Then a question about the change in the type of orders that you mentioned from the shift from wind to oil and gas with smaller contracts and a shorter planning horizon. Will it make it more difficult for you to optimize your utilization because of the shorter planning horizon? Or will it be offset by the fact that the smaller projects and you have some flexibility from customers? And then finally, on the behavior of customers in this environment. One of your strengths is obviously that you have -- you can combine several services, and you mentioned an example with GroundIQ, how you can save money for customers by doing that and replacing expensive services by cheaper ones. But I can also imagine that in the current environment with price pressure and some competitors with smaller set of services being desperate for work that some customers may be shifting to tendering each bit of parts to have the lowest price possible for each individual part. So how are they behaving? Are they opting for more integrated packages like yours? Or is it still very heavy competition for smaller parts?

Yes. Thank you very much for the questions, Luuk. Maybe first on CapEx. And I think I know the number roughly from the top of my head, but the maintenance CapEx for the first half of the year was EUR 36 million, if I'm not mistaken. And yes, if you would double that, then you're lower than the EUR 100 million. I'm not saying that that's exactly the way you should look at it, but we are lower this year on maintenance and sustaining, so to say, the expectation. There are a few larger blocks in the CapEx, and one is the vessel that we just mentioned that is going through the modification. We're also finalizing these prisms, the 17-meter USVs that is more expansion and growth as we call it. And then there are smaller things like growth on, for instance, some additional ROVs that we need to have and some other things, smaller things. There are no big blocks that we can necessarily take out so easily anymore. So we're really strict on what we're doing there. And yes, we will keep the maintenance sustaining down and that's also to do with less maintenance on the vessels this year. So that -- and that is always difference between the various years. We expect in '27, we have, again, maybe a few more vessels going into dock or into special survey. As you know, every 5 years, you need to do a special survey. You can't really deviate from it because if you don't do it in that time frame, you can't work with these vessels anymore. And then you have these intermediate surveys every 2 years. So this is on the CapEx side. Yes, wind is absolutely creating more certainty in the longer term. So indeed, as I said, there is a different dynamic in oil and gas. With the actions that we take right now, we obviously adapt ourselves to the right size of serving the market that we feel is there. We also pick up things that maybe the next season, we need more capacity, but that's with a certain peak. And I want to make sure that we also drive or stabilize pricing again. So I'd rather take out a little bit more or stall a little bit more on some of the assets so that we also see that there's imbalance again with the market size. So we take the steps that we feel is required right now. With the steps that we take, we can still be quite flexible, especially with geophysics. We can mobilize more easily short-term charters. We're also working on an extension of our strategy to become even more flexible so that we can more easily ramp up and down. This is always a bit more complex for the geotechnical platforms because, yes, as I said before, you mobilize them for at least 2 to 3 years. But this is also something that we are looking at, can we create more flexibility there. But especially on the geophysical side and also with the USVs coming in, we do see a completely different way of working in the future on the geophysical side. I'm not planning to talk for another few years about geophysics. We're just going to shake up that geophysical market and do it in many different ways with more modular solutions, with more USVs, but also with different technologies that we can really compete again and make money. And if not, we'll leave those areas in particular areas. Then the behavior of the clients and if they are now tendering certain blocks separately, I don't necessarily see that, but there are a few other things. The markets are different between wind and oil and gas because the oil and gas players are much more mature, and they have very specific requirements. They have also departments that really know I need to have this for geotech or I need to have this for my metocean research, so to say. And therefore, they have always been a bit more selective in bringing packages to the market. That's a good -- that was the right answer? No. So anyway, they have always been a bit more particular in we want to have this for the metocean or this for geophysics or geotechnics. So they have specialists there, where the wind business is more integrated services, longer contracts, and more combined services. If we talk about the land business itself, I think with the movement into more total solution around GroundIQ, we do see more embedded services coming together. And that is, I think, also a positive thing, especially because it drives really the cost down for our clients. And I think, yes, if you look at it correctly, any clients listening, then this is also the sales pitch because this is really beneficial to them for lower cost and much better data and less risk on the ground. So it's really driving ground risk down. Quirijn?

Quirijn Mulder from ING. 3 questions. First about the U.S. as usual. So are you still expecting a profit in the U.S. full year 2026 on EBIT level? And in connection with that, we discussed last year the issues with regard to jack-up rigs, et cetera, that they were not utilized. So is that situation now improving there? My second question is about the debt. You see an increase of additional leases, for example, EUR 36 million, I think. Is the reverse coming in the second half because of the rationalization of the vessels and the taking out of the -- some charters? And yes, and then on general, I think if you look at the situation, are you -- if you look at wind offshore and you say, okay, we can -- maybe if it is early, then in September, October, the tender restarts and then it takes 6 to 8 months before the vessel is being asked to perform. What is then, in that respect, your view on 2027, especially with regard to the seasonal period?

Thank you very much, Quirijn. So let me go back to your first question on the U.S. I'm not specifically going to guide on a particular region and then on the profitability. So you obviously couldn't expect that. But I'm optimistic about 2 things in the U.S. or in the Americas. And that is on the one side, the land business development. As I said, some of the permitting unfortunately delayed some of the work into the second half of the year, but we do have solid work there. And that is positive, that is data centers, that's nuclear and LNG development. So there is quite a lot happening and also on the defense side, the security side. So I'm optimistic about that. I'm also optimistic about the asset integrity business in the Americas, especially with the Petrobras work that is now ongoing with vessels up and running, generating good returns, so always pray for vessels not breaking down. But if that continues as is at the moment, then that is also a solid return for the second half of the year. And in general, we see our positioning and construction support work that we do is actually worldwide strengthening. So this is good business for us. This is just simple positioning. It is helping our customers for the work that they do in various areas during installation, during the build, but also in OpEx-related environment. So that is positive. I think where the risk in the U.S. is still is around the MSC work. That was not too bad in the first half of the year, but we see less work there and the limited projects that are there on the MSC side, there's obviously more competition and also pressure on the pricing. So that is basically what I can say. It is significantly smaller by now than we used to have in the Americas on the MSC side. So the risk is a little bit lower to see further drop. So we have, yes, a more optimistic view of the second half of the year for the Americas. So that's one. And then, yes, you spoke specifically about jack-up rigs, which is one thing that is needed. So we are bringing in a jack-up rig or barge for the project in Brazil. This was a problem because we wanted to actually bring 1 over from the Middle East. That didn't work, and then we had to source another one. So this is -- that was delayed and caused some issues there, but that is now under control, Quirijn. Then on your additional leases, will that drive down the overall cost. So with the charters obviously disappearing, that will help, but not all charters disappearing at 1st of July. So it's during the course of the second half of the year. And how much the impact exactly will be is difficult for me to know exactly at the moment. But in principle, yes, the additional leases should come down because we're very focused on doing more with our own equipment. The other thing that we see, Quirijn, is that we hired quite a bit of third-party assets in the project in Indonesia. You need in Asia -- so if you would drill deeper into the third-party cost, which is actually up compared to last year, which is a little bit strange, the amount that it's up, but that's because in certain countries, you need vessels that are flagged for the country, so Indonesian flagged vessels. And we are actually bringing 1 vessel now into an Indonesia flagged situation. But before that, for the project that we have executed over the last half year, we had to hire quite a lot of Indonesian vessels, and that drove up also the leases and the third-party cost. Then your last question is the crystal ball question around offshore wind Europe. So the view on 2027. So what I said before, things take time for the wind business to come back. But also if you look at our slide that we presented on the market, you see multiple licenses now coming on the board. Obviously, some is delayed in Germany towards next year. But you see also now in the U.K. end of this year, they will start again with the next round, which is positive. I just spoke about the Netherlands bringing a large area to the market. Denmark is doing things. So there is a lot of activity, and that wasn't there this year or end of last year, so to say. So in that sense, we do expect that during the course of '27, yes, we will see activity picking up on that side. I'm still careful in saying how much that is and when it exactly will happen because I'm taken by surprise all the time. But we're emphasizing this and pushing also jurisdictions or the governments in various countries to help the business to really overcome this gap. But having said that, it's not for nothing that we take out capacity and that we now retire some of the older assets and let go of some of the lease assets and move some vessels around in the world. Yes, we don't do that for nothing, but we have the flexibility also during the winter season to lay up warm or hot stack some of the vessels, small cost reductions, but not large, but then we can actually ramp them up again in the season next year.

First we have [indiscernible]

Yes, go ahead.

Kristof Samoy, KBC Securities. First on turnover and backlog. You commented on the trends and the comparable evolution year-on-year. In the past, you've also shed some light on pricing and volume trends in there. Could you share that with us both in terms of revenue and backlog? And then as a second, on the land business, comparable growth in the first year of 5%, respectable growth margin, I would say. But if you strip out the capital gain on the building sale in Hong Kong, let's say, a subdued result. The land division has been underperforming for quite a while. Aside from GroundIQ, what are the main growth pockets within the land segment? And what share or what proportion of the land business is indispensable for nearshore activities because in the past, you've always indicated that the relevance of the land business is for the nearshore activities. And then a final housekeeping question. Maybe I'm mistaken, but I couldn't find the vessel utilization rates in the half year report. If you could share that with us.

Thank you very much, Kristof. First, on the backlog, yes, we have not issued the details on how much is volume, how much is pricing. And I understand that could be interesting to know all the details on. To be honest, it's not easy to actually get a very exact pricing effect in the various regions and then have 1 overall picture that gives you a good insight on what's happening because we see in some regions actually hardly any price effect. And in other regions, obviously, the effect in the wind business is quite large. And then obviously, also other markets like oil and gas benefiting from that in particular situations. So what I can say is that we have in our current backlog absolutely already priced in the pricing effect. So yes, for the work that is already on the books, we don't feel that there is a large additional drop on top of what we already know and see for the remainder of the year. But as I said before, it's also important that we balance again the oversupply because we have actually gained quite a lot of market share in some areas. For instance, on Geotech, we have managed to grow market share significantly. But if you are one of the competitors to Fugro, then after sitting still for half a year, you're going to become quite desperate and then you will drop your prices probably to be cash flow positive on a particular asset and a job and you go in very aggressively. This is also happening. Now for the projects that are already secured, that's not so much the case. But you see in certain areas that, yes, you normally have an offer a tender to a client and then you get a request for a best and final offer, BAFO. And now we have seen certain contracts where they ask 3 times for the best and final offer, which is actually scandalous if you ask me because they should also make sure that parties like Fugro and also some of our peers continue to exist. But to be honest, they are not so nice. And then when these crises are over, I know from the past as well, then they apologize and they say we shouldn't do that next time. And the next time comes and they repeat exactly the same thing. So that's painful, but I don't think it will help you a lot to because then you need to dive into all the regions in specific, and we also don't want to necessarily open up too much on that. On the land side, so you're obviously right that the result is affected by the income of the building. You can read that. We're not hiding that EUR 12 million of the building sale. We also -- as I said before, we're also not hiding the impact on the land business, for instance, or on the overall business on the Middle East situation. So that's obviously also in there, the EUR 50 million negative there. So obviously, we will have to balance those out and then look at land as a, yes, specific thing if you take out all these special items, then you could see that especially nearshore is doing well in Europe, Africa. Then you see that land in the Americas has been staying behind, absolutely, but with lots of potential moving forward, as I just described. Middle East, India, very much affected on the land side by the current geopolitical situation and the war situation there. And then, Asia Pacific, we spoke about, the Hong Kong market and also Japan nearshore market has been slow. We do expect not necessarily Hong Kong, but certainly Japan to contribute a little bit more moving forward. Then your question around, okay, what else is there in the land business and what are you focusing on beyond nearshore because most of the people see that nearshore is an interesting market. Well, to be honest, it is GroundIQ, and the next thing is GroundIQ, and the next thing is GroundIQ, or what I'm saying is everything in land will be changed to the new situation where we're going to change everything towards GroundIQ. We have a lot of potential to grow, I think, our share, our opportunities because, as I said, some markets are maybe commoditized, and we never served anymore. And we believe with this new technology I always call it the iPhone of the site characterization, we're going to change. We're going to change the land business, how it's being done. And this is happening, and we see the first proof points, and it's growing very rapidly and will change the whole land business and then nearshore will continue to do what we have been doing.

And most investments for the [ land IQ ] is up and running, is operational. So you don't need further add-on investments?

Well, there are investments required, but it's relatively small. You have seen in the news that we also created a new setup in Australia, where we bought a small setup in Australia with geotechnical expertise, and we'll complement that with geophysics so that we have a real good hub there for GroundIQ development because we see that this area also offers opportunity to further grow in the area in whole Australia with large projects that are coming up where we can also offer GroundIQ. Also in the mining business, GroundIQ can offer quite a few solutions there. So I think this is helping a lot. But to be honest, over time, yes, things will change to GroundIQ and nearshore. That's the land business for the future. Monitoring will also stay because we do monitoring services, but solidly only doing, let's say, CPT work or drilling work, that will disappear over time. If it makes money, I'm less eager to close it down because making money always fits in our strategy. So then your housekeeping question, and now I'm a little bit stuck because I...

Yes. It's on top of page number 3.

Sorry, I missed it.

Yes, I thought it was also in there, but I didn't want to off the cuff mention the number. It is down compared to last year. Thijs and then Philip and then [indiscernible].

Thijs Berkelder, ABN AMRO ODDO BHF. First housekeeping question, one-off costs for the efforts to realize your EUR 50 million cost savings. What should we pencil in there? Then coming back on GroundIQ and the numbers you mentioned, back of the envelope, let's say, EUR 2.5 million per project means GroundIQ revenues last year, something like EUR 50 million. And now in H1 already EUR 60 million. Is that too high? Or is such a project on average, much smaller than that or maybe much larger? Further, I want to have an update on the U.S. for the unmanned fleet. What is the revenue growth there, the utilization of the unmanned fleet because you are rewarded in your bonus schemes based on that. So I'm curious what the progress is there. And I have a couple of other questions, but they are more on corporate governance.

Okay. Thank you, Thijs. So I'm going to ask one of my experts here to maybe say a few words on how much the cost is for the cost saving and maybe they don't have the full answer, but they can think about it now while I answer the other questions. So on the GroundIQ side, I think you're slightly too high, not on average project size, by the way. But basically, we have projects that are actually EUR 20 million that will run over multiple years and involve GroundIQ. We have also projects of a couple hundred thousand. So it's difficult to give you that average number. So that is basically what I can say there. Then let me see. You asked the question around the utilization of the USVs. And that is obviously also connected to us being successful in maybe some incentives. Well, the incentive program is not running really well for management at the moment with the current figures. And this is also part of that. Some is still close to meet. Others are far from. And I think this is one that is staying behind in the first half of the year, certainly really catching up in the second half of the year, but I don't think we'll meet our targets that are set for our incentive scheme, unfortunately, but that's life.

Then corporate governance, can you give an update...

But we can first maybe answer the question on -- do you have an indication on what the cost could be for downscaling basically the EUR 50 million, the restructuring cost that is related to it. We have a microphone there. This is Marijn Feddes, our Group Controller, answering. Yes, you can speak.