Shares of Fugro NV jumped more than 6% on Friday following a change in stance from Jefferies, which moved the Dutch geodata specialist up to a "hold" rating from "underperform." The brokerage attributed the upgrade to an improving tone around offshore wind activity, even as it warned of a difficult fiscal 2025 ahead.
Jefferies projects a significant contraction in Fugro’s profitability for fiscal 2025, forecasting earnings before interest and taxes (EBIT) to drop 76% to €74 million, down from €314.6 million in fiscal 2024. Revenue is expected to decline about 19% to €1.85 billion for the year, reflecting a period of market weakness that has affected both offshore wind and oil and gas work.
The upgrade followed signals of renewed momentum in European offshore wind markets. Jefferies pointed to a successful U.K. offshore wind auction and a multi-country agreement in the North Sea region, where nine countries have committed to accelerate offshore wind development. That agreement sets an interim target of 15 gigawatts of new offshore wind capacity per year from 2031 through 2040 and a longer-term ambition of 300 gigawatts by 2050.
Despite those positive policy signals, Jefferies noted Fugro itself has warned of a tough winter season and suppressed offshore wind activity in the near term. The brokerage also said targeted upstream spending in oil and gas is likely to continue, but that market softness has already had an impact: roughly 20 projects were either postponed or had their scope reduced, mostly in the oil and gas segment. Jefferies estimates these changes trimmed Fugro’s fiscal 2025 fourth-quarter revenue by about €100 million.
In response to the revenue pressures, Fugro has implemented cost-reduction initiatives aimed at saving between €100 million and €120 million. The measures include workforce cuts of roughly 1,050 full-time equivalents - approximately 10% of the company’s staff - alongside steps to lower short-term chartering costs, reduce reliance on third-party personnel and equipment, and optimize the company’s fleet.
Looking beyond fiscal 2025, Jefferies revised its fiscal 2026 forecasts upward. The brokerage lifted its EBIT estimate by 38% to €159 million from €127 million while keeping revenue assumptions flat at €1.85 billion. The expected EBIT margin for fiscal 2026 was increased to 8.6% from a previous 6.5% estimate.
Market performance has been volatile: Fugro shares fell 49% during fiscal 2025 but had recovered 28% year to date prior to the Friday uptick, according to Jefferies’ data. The broker raised its price target on Fugro to €10 from €7.50, noting that the prior closing price was €10.86. Fugro’s market capitalization was cited at €1.2 billion.
Context for investors: The upgrade reflects a balance between nearer-term revenue and project headwinds and improving demand signals in offshore wind markets, along with company-led cost measures that could support margins if demand stabilizes.