Good morning, good afternoon, good evening for some of you. Welcome to the first half of 2025 result presentation of Fugro. Welcome, thank you for joining. We're going to give a presentation, Barbara and myself, and then thereafter is room for questions for the people here in the room. First half of the year of 2025 was clearly marked by significant headwinds across our industries, and in particular, actually the offshore wind market where clients are reassessing their projects and approvals of projects to go ahead. While we're reporting a disappointing first half of the year, we expect a strong recovery during the second half, resulting in an overall margin for EBIT for the full year of 8%- 11%. That's underpinned by a strong second half of the year with growth around 20%. It's clear that that is a big turnaround compared to the first half.
We are confident that we can deliver on that. That has to do with, first and foremost, a strong backlog. I will come back on that and I will explain a little bit more why this time the backlog is underpinning, so to say, this confidence. Also, underpinned by projects that have started and the higher utilization of vessels that are now working on projects that are recently awarded or that were postponed in the earlier quarters in the first or the second quarter of this year. In addition, we're obviously fully working on our comprehensive cost program, cost reduction program, that is now being implemented and we'll see the results also in the second part of the year. Our mid to long term market potential continues to be strong and we also continue to stick to our strategy that will remain unchanged.
If we zoom out a little bit and look at the markets, then we can clearly see that macro uncertainties have been impacting the market developments. I think everybody is reading the newspapers and has seen what has happened in the world. A lot of geopolitical and economic uncertainties, and that obviously caused headwinds in our industries, resulting in clients, as I said already, reassessing their projects, also delaying projects, potentially, scope reductions. We have seen that basically some projects were postponed and pushed into later this year, and that had quite some impact on the second quarter that we just reported on. If we look at the various markets, the offshore wind market, that's really going through a recalibration. Obviously, and we spoke about that before, the U.S. wind market, yeah, we can talk about that. It's completely halted or collapsed, as they talk about themselves.
We used to have EUR 170 million of wind projects in the U.S. That came to a grinding halt. This year we have had hardly any wind projects in the first half of the year, and we're not counting on anything for the remainder of the year, or it's only EUR 1 million or EUR 2 million or a couple of million, so to say, but we're not banking on that. If you look broader at the offshore wind market, it's also going through a recalibration, and that has to do with the fact, and it's clearly visible in Europe, Africa, where we also saw a strong reduction in the first half of the year. It has to do with high interest rates we spoke about before, a higher cost of the supply chain, but also problems with taking off the renewable energy.
The demand for renewable energy, including the complexities that the operators have to actually be able to offload the energy into the grids onshore, is a problem. Operators are more careful to start new projects under the current regulations. Policies of countries are changing. There's a lot of discussion in Europe around, should there be any subsidies? Contract for differences is being discussed in multiple countries, and this is important for the whole industry to get along. Having said that, we also see projects kicked off in Asia, but also still in Europe. It's not the same as the U.S., and it's multiple things that are happening in this offshore wind market. Therefore, we speak about a recalibration. If we go to oil & gas, also that market is at the moment subdued, and that has to do more with the economic slowdown and uncertainties in the world.
This has an impact on this market in general. Having said that, there are several projects also being kicked off around the world, especially in South America and Southeast Asia. We have seen some developments, but it's cautious developments and very specific in particular areas. If we look at Fugro revenues moving forward, the second half of the year, we have been able to secure some of the key projects. I will come back on them. Despite the fact that this market is somewhat subdued, we still see an uptick in the activities that Fugro will perform there. Maybe it's good to mention, in the Big Beautiful Bill of the U.S., there's obviously stimulants to do more in oil & gas, but that also takes time before that kicks off. It doesn't mean that immediately tomorrow there are multiple projects on the board.
We'll see more activity there as well moving forward. Last but not least, there is still an ongoing and pretty high activity in the inspection and maintenance market, and that has to do with aging subsea assets, and that will continue for the years to come. All in all, the energy market, there's still a demand in the mid to longer term. We believe that there's a solid ground to further see this market growing. If it is renewables or oil & gas, there will be some differences year on year, but we expect that this market needs to pick up. That also has to do with a lot of demand for, for instance, data centers, which also support the infrastructure developments on land. There's a lot of data centers required in the world. There's a lot of energy required for those.
This has to do with the AI developments, the digital development that we see and that we all talk about in the newspapers as well. What you can say on infrastructure obviously is also affected by economic downturn and slow economic developments in some countries, but there's still a steady growth expected in this market moving forward. High inflation and supply chain disruptions obviously do not help with the economic uncertainty and cause some slowdowns here and there. We have seen that in some markets also in the beginning of this year, for instance, in Hong Kong and also in the Middle East, we have seen some slowdown on the infrastructure market. What you have seen in our land business, Barbara will come back on the finances there, is also in particular related to nearshore work that is down, but that is related more to the offshore wind side.
One more slide from my side before I hand over to Barbara to speak about the details of the finances. This slide is familiar to you. You see how our business has been diversifying over the years. Obviously, 10+ years ago, we were solidly dependent on oil & gas. There was a conscious decision in Fugro to further diversify and to have multiple markets that we can serve, not steering away from oil & gas, but having the ability to switch with our assets and people between multiple markets. Our assets, we always say, are market agnostic and can move from one market to the other market. This is what we clearly see happening moving forward. I will come back on the backlog and give you some more details on the backlog and how you really clearly see how our assets can shift from one to the other market.
It's visible here that obviously renewables has, yeah, got the highest hit, 36% drop in the business there. There's quite a lot of renewable business, and I will come back also on the backlog slide, how much there was last year around this time and how much is in the backlog this year. We expect that this, yeah, reduction will continue for the remainder of the year, maybe a little bit less aggressive, but still in this range or close to this range because we do not see this market, yeah, coming back aggressively. That doesn't mean that we don't have offshore wind projects being kicked off that were postponed in the first half of the year.
You see also the slow markets in oil & gas and also infrastructure there, as I just said, all to do with the economic developments in the world and the instability and the economic situation in many of these countries. First half of the year, we reduced EUR 150 million in renewables business. This is quite a lot, and this is the majority of our drop in revenues. It takes time to replace those revenues, and this is basically what we're talking about in the upcoming half year and year. We see that we have been able to replace this work. I will come back on that also on a backlog slide. With that, I would like to hand over to Barbara for the financial details.
Thank you, Mark. Thanks all for joining us here today in the room and also online. Right, so as usual, I will start with a quick glance of all the highlights of the results. Unfortunately, it's obvious this is clearly a very disappointing set of results. Having said that, it lasted longer than we expected, although we mentioned at the beginning of the year that we were embarking on an uncertain period, and this lasted quite the first half, I would say. As already indicated by Mark, we have now a brighter outlook. After limited growth during the second half of 2024, for the first half year, we were reporting a revenue drop of EUR 186 million, and as Mark just mentioned, more than EUR 150 million was in renewables.
The margin decline was mainly driven by lower revenue of 15.6% against the backdrop of a strong performance in the first half of 2024. Now, we're actively addressing our cost base, as already communicated in Q1 results, through a comprehensive cost reduction program. The majority of the EUR 80 million-EUR 1 00 million annualized savings initiatives will be executed in the second half of 2025. Included in that is a 750 FTE reduction, which will also take time to implement. Free cash flow was affected by reduced EBITDA and a front-loaded capital expenditure profile. Our 12-month backlog stands at EUR 1.5 billion, and the composition of the backlog has been changing quite significantly, with less offshore wind, and it now includes EUR 360 million in renewables compared to EUR 560 million a year ago. As Mark mentioned, he will get back on that on a separate slide.
If we then move to marine, marine revenue declined in the first half year by 15.3%. All four regions were impacted by project scope reductions and delays in award decisions of our customers. In particular, we have seen a significant impact from the offshore wind market. Through targeted redeployment of assets and personnel, we've mitigated part of this revenue decline by increased activity in traditional energy markets. However, this could not fully offset the shortfall in the offshore wind revenue. In addition, we're dealing with limited geotechnical vessel availability in the Europe, Africa region in the first half, mainly also lasting in quarter two. Overall, the vessel utilization was down to 66% compared to 69% last year.
As a consequence of lower revenue of EUR 139 million, EBIT dropped by EUR 104 million, as the decline could not be offset yet by cost savings, as most of the impact of cost savings will be in the second half of this year. If we then move to land, land revenue declined by 16.8%, which was primarily driven by less nearshore projects in Europe, Africa related to wind, and projects in the Middle East, shifting to later in the year. In infrastructure, which is a key market for our land business, we experienced subdued market conditions in some of our key countries, namely the Netherlands, Saudi Arabia, and Hong Kong. The revenue decline, again, also here had a significant impact on the margin for the same reasons as mentioned on the previous slides. Let's look at the net result.
The reduction in financing expenses was mainly driven by the lower interest rates resulting from our refinancing at the end of 2024, which was partly offset by increased interest expense from the revolving credit facility drawdown. There was a significant effect on the effects of a weaker dollar, mainly on intercompany transactions and loans. If we look at the tax line, the income tax expense of EUR 4 million comprises two opposing effects. One is a current tax expense, which is lower driven by a lower EBIT, and on the other hand, there is a tax benefit driven by deferred tax assets in Australia and Brazil, where we offset profits against the losses that we had, the tax losses that we had, in combination with a DTA recognition of EUR 6 million in the UK. On free cash flow, our operating cash flow before working capital movements was EUR 58 million.
This represents a sharp year-on-year decline, which was mainly caused by lower EBITDA. I will get back to working capital and capex when presenting the next two slides. Cash flow from discontinued operations follows from the successful outcome of remaining legal proceedings related to the legacy working capital positions in Seabed Geosolutions . In total, the free cash flow was negative EUR 187 million. For the full year, we expect a positive free cash flow. Working capital increased by EUR 97 million, and as you can see on this slide, this is the normal seasonal pattern. This time, it reflects project execution and preparations for an uptick in activity, which we already seen in the third quarter. Thanks to enhanced billing and cash collection and the special working capital project, in relation to the revenue decline in H1, working capital was significantly lower than a year ago.
As a percentage of revenue, 12.6%. This compares favorably to 15.9% in June 2024, and it's well within the targeted bandwidth of 10% to 15%. The DRO amounted to 85 days compared to 88 in the previous year. If you look at CapEx, this year, capital expenditure is front-end loaded. It amounted to EUR 151 million, largely related to the final phase of the geotechnical fleet expansion and vessel conversion program. Transformation and expansion CapEx includes investments in the expansion of the geotechnical fleet, in particular, the acquisition and conversion of the Fugro Zephyr and the delivery and related special surveys of the Zenith and the Fugro Revelation. The Fugro Voyager hybrid conversion plus special survey was included in maintenance and sustaining CapEx. We confirm our full year guidance of capital expenditure of approximately EUR 250 million.
Regarding 2026 and beyond, our planned expansion and transformation CapEx is important for the implementation of our strategy, and it's largely discretionary in nature. Now that the geotechnical fleet expansion is complete, we're shifting focus towards further enhancing our uncrewed and remote operational capabilities through the USVs, uncrewed surface vessels. This also positions us to size the opportunities that we have, amongst others, within the defense sector, and also realize additional operational efficiencies. All CapEx, of course, is subject to strict capital return hurdles. This is my last slide before I'm going to hand over to Mark. I want to talk a little bit about the balance sheet. Net debt stood at EUR 437 million in June, and it was up from EUR 96 million at year-end. This increase was primarily driven by a negative free cash flow of EUR 186 million and EUR 84 million of dividend payments.
In combination with the lower EBITDA, net leverage increased quite steeply during this first half year to 1.2x . However, I would like to note this is still very much well below our company target of below 1.5x . As in every year, we expect to delever towards year-end. As per the end of June, we had drawn EUR 240 million under our revolving credit facility. To add operational flexibility and liquidity backup, in relation to the expected increase also in activity levels, we increased the credit facility by EUR 50 million in July to EUR 350 million via the accordion option in the facilities agreement. In June, we also canceled 3 million shares after receiving approval from the AGM. We had acquired these shares under the buyback program that we executed between half November and half January.
As a result, we have 112.7 million shares outstanding, of which there are treasury shares 1.4 million. Also in June, we updated our sustainability arrangements and associate key performance indicators. Following this update, the financing arrangements are classified as sustainability linked, incorporating a discount or a penalty mechanism on the interest rate margin based on our performance against those measures of an absolute scope, one and two emissions reductions, revenues from renewables, and women in senior management. There are no near-term maturities, which I find important to stress. It's only in 2029. Largely, this clean balance sheet position enables us, despite the trading that we have seen in the first half of the year, to really fully focus on the business and on the implementation of our strategy. With that, I want to hand back over to Mark.
Thank you very much, Barbara. Let's have a look at the market developments mid to longer term. Those fundamentals are still strong, good, solid for the mid to longer term. All to do with, obviously, the population in the world growing to roughly 10 billion. That requires a lot of energy, a lot of infrastructure development. That's obviously in the longer term causing these markets to continue to grow. There will be a large need for geodata to do any development offshore or onshore. Those measurements that are required can be done by Fugro, which is, I think, supporting our business in the mid to longer term. If we look at these different markets, and this is data from Rystad and Foresea Offshore, so databases are not our own estimates, but these are made by external companies, you can see what is happening.
You primarily see that there is some growth that came down, especially on the offshore wind side, because these growth figures used to be a lot higher, close to 25%, 30%. Now we're down quite a lot. The recalibration in this market is already factored in here. At least that is what these databases or the owners of the databases are saying. We expect these markets to continue to develop. They're obviously influenced, especially on the wind side, by the setbacks in the U.S., but also the offshore wind recalibration, as spoken about before. We also see a continued lower oil and gas price, and that obviously also affects the developments of the oil and gas market there. I already spoke about that. Still, Fugro sees the development in the second half of the year, specifically also in oil and gas picking up again.
I will come back on some of these projects. Why do we feel that the second half of the year is going to be a lot better? That has to do, first and foremost, as I spoke about, with projects that we just recently won. Some are shown on this board, but also projects that were not executed in the first half of the year, pushed into the second half of the year. There's a combination of those two. The first project here for ENI Indonesia, we only announced that the 2nd of June. We were waiting for that. We knew that this was coming through. Eventually, it was only the 2nd of June that this came through. This is a project that we're now mobilizing, and it's happening as we speak. It will generate utilization of our vessels in the upcoming months.
The second one mentioned here, Petrobras Brazil, we announced at the end of June, and we were also expecting this to come through. These are four projects of four years, quite significant in size. Some of it is an extension of existing work that we have, but there's also new work. The new work is more kicking off at the end of this year, but still also first start in this year, 2025. If you move to RWE Total, this is the wind Bostel work in Germany. This is announced actually the 23rd of June, also recently, almost all in June. This is a wind project that is now being kicked off and gets going in the second half of the year. These are all projects that are happening as we speak or very soon.
Today, we announced multiple projects in the Middle East, site characterization work to be done in the Middle East. I think these projects are fundamental for the region to further develop. We have seen in the past the backlog increasing. This is partly covered in that backlog, but also these projects, and we were waiting for these awards for a long time, but these are now came through actually yesterday, and we are announcing it today that we have these projects under our belt, and we are actually starting right now immediately. This is also work that will happen in the first and the fourth quarter. There are multiple reasons why we believe, yeah, the third quarter and the fourth quarter will be better than the first half of the year.
These are two to mention postponed projects and projects that are recently awarded that are really happening as we speak. Another reason, and I spoke about coming back on the backlog, is we see a similar backlog. There's a difference in absolute number because there's quite a difference in currency comparable numbers with the dollar moving around quite a bit. Basically, you could say it's an equal backlog mid-last year compared to what we have today. However, as Barbara also said, the composition of this backlog is very different. You can see that at the bottom of this slide, 37% of renewable work last year in this backlog, we have replaced that completely by other work. This is a great example of what we have been talking about over the last couple of years. We have agnostic assets and people that can be deployed in multiple markets.
This is why Fugro likes to have a diversified business where we can shift our assets and people to different markets. That always takes a little bit of time, so that didn't happen in the first half or in the second quarter of this year. In the second half, we will see this happening. This is obviously a 12-month backlog, so it is a little bit longer than only the second half of this year. As Barbara said, EUR 360 million is the 24% renewables this year. Last year was EUR 560 million. If you would do that like for like, you obviously need to correct also there for the currency comparable difference. Then you get to a 30%- 35% drop in offshore wind in our backlog, a little bit less than the drop that we saw in the first half of the year.
The wind business will still be tough and moving forward. How long that will last is difficult for us to say, but at least we are able to show here a proof point that we have projects that we are executing at the moment in different markets than offshore wind. Another reason for us to say, hey, we have more confidence in the second half of the year is that we were working, as Barbara said, on quite a few modifications of vessels. This has to do with the fleet expansion that we specifically targeted for geotechnics that we're now completing. All the vessels that you see on the right side, that is not the total geotechnical fleet, but these are the vessels that were going through modification and conversion in the first half of the year.
Some of it is actually rolling into the second half of the year. You see that with the gray tick boxes there, the Resolve and the Voyager, I will come back on those. The other vessels are now available to do work and have work in the third quarter. We could not work with them in the first half of the year or only partly. This is another reason. As Barbara already said, yes, we had longer modifications here and there, as we mentioned in our press release. That has to do with multiple reasons. Here and there, we had to change the scope along the way because these are very complex, or some of them are very complex modifications to the vessels. We are working with multiple suppliers on these complex modifications, and some of the suppliers also let us down.
We have obviously an effect in the first half of the year that is not pleasant, but now we are leaving that behind us, and we can move forward, and we can deploy these assets. The utilization and the number of days that we work in the field on these assets will increase. Another proof point that the second half of the year can be a lot better. Another reason is that we have been working on the cost. We have introduced, and we spoke about that already at the end of the first quarter, introduced a cost reduction program. We're now well underway in this program, rolling this out. Obviously, that takes time.
In some jurisdictions, if you have to also touch the workforce, which is, and I want to emphasize that, a painful process and an emotional process, this is not nice for a company to go through this. I think we have to also appreciate that. Especially because we're busy in the second half of the year, we need all the operational firepower that we have in the organization. A lot of the people are people that are on the functional sides that have to help us also grow and become more professional on some of the functions. We cannot afford that at the moment. We have to reduce the cost and go in a leaner way forward. Now, that is all in all coming down to an annualized cost saving of EUR 80 million-EUR 100 million on an annualized basis. This is a quite significant cost reduction program.
As I said, we're well underway in implementing it, and most of the reductions we'll also see on this program in the second part of the year. Another proof point that we can actually have better results in the second part of the year. Those are the more technical things, so to say, around the finances and our operation and what we expect. If we then dive into the real technical stuff and innovation, I think it's always good to show a little bit what we're doing. I spoke about the Resolve and the Blue Dragon test that is ongoing. We're in the final stages of testing the Blue Dragon, which is a geotechnical seabed drill, a very sophisticated drill that can work remotely on the seabed, collecting geotechnical soil samples. A very complex system.
It should be able to operate also in deep water because we see the deep water and ultra-deep water market also to pick up in the future. Therefore, we need to finalize this whole program. It takes time. It's the most sophisticated thing probably Fugro has built in the whole history. Very complex, very impressive what it will be capable of doing. Great example of the innovative power that Fugro has. If we move to the right side, which is also a very important element, is the GroundIQ , as we call it. This is quite a revolutionary way of producing soil information of the subsurface. This is for land. It could change the way we're doing site screening and site characterization for land projects in a much faster and efficient way.
We can collect data of the subsurface down to 20, 30 meters, depending on the soil conditions, using geophysics on land. This is already rolled out in the world. We have multiple projects at the moment being deployed, especially in the Middle East. This is taking off quite well. We also have the first project now being announced in the U.S., where we are actually also using GroundIQ . This is a great prospect for the future, also changing the way land geotechnics or land soil characteristics are being gathered. We've spoken a lot about our remote solutions and our uncrewed surface vessels. You see here on the slide in the middle, the 18-meter version that is just in the water and should be actually starting to work in the next few weeks for clients. They're waiting for this. We had some delays in deploying this unit.
We're also building multiple other units, not necessarily this model, because we're also obviously learning a lot from the first batch of USVs that we have built. We have multiple USVs in production right now. We're talking about seven USVs that are being built at the moment at different formats, also for geophysics and for marine asset integrity work. Bottom right, again, also land. I'm jumping from marine to land, from marine to land. Total Light, we're developing this system we spoke about that is also a very revolutionary system to actually monitor movements, for instance, of bridges, tunnel segments, buildings. Everything is possible there, sub-millimeter accuracy. This is all built based on LED lights and cameras, very sophisticated, something very new. We just launched the second version of this system that can also operate more sufficiently or efficiently in the outdoors.
The first version had some issues, obviously, with weather, rain, all these kinds of things, so we can operate indoor and in tunnels, but this system now can also move outdoor. We have already deployed in multiple situations, and we see great results coming back. Also, potential for the future, x not generating an enormous amount in the short term, but this is really falling in our strategy for the people that know our strategy in the third column where we say we're going to get more hardware and software solutions and subscription-based solutions for recurring revenue. Slowly get to the end of the presentation, I will move over to questions. We have spoken about the opportunity of Fugro being an expert to collect data of subsea infrastructure.
Obviously, this is a big topic now in the world, especially in Europe, with dark vessels sailing around on the North Sea, basically, yeah, collecting information about the subsea structure. Governments in Europe obviously want to be able to keep this well secured and protected. Fugro has multiple solutions offered to governments. You have seen the announcement of the Galatea, the vessel, the gray vessel that is mentioned or shown here on the slide. We have this now rented out to the government. Together with Damen, we have a joint venture to deliver this boat. This is a fast sailing boat. It can go 20 knots and actually can have equipment on the back deck to inspect subsea infrastructure. We're working on a lot more things.
We're working on solutions also with some partners to actually be able from satellites to detect automatically dark vessels that are maybe switched off their beacons that can be automatically detected, tracked back where they come from. Are they suspicious potentially that we can go with vessels like the Galatea to these areas, but also with USVs to the area and inspect subsea infrastructure? There is obviously a lot of data that needs to be gathered and maintained and put together. Also, Fugro is obviously an expert because this is all geodata, and we can help governments here in Europe and around the world to actually collect this and also to maintain that in the right way. There is opportunity here. Do you need to expect next month immediately huge contracts and huge returns? No, be careful with that.
This takes time, but there's absolutely an opportunity with Fugro being in a sweet spot, having all the expertise there in this area. I come to the final outlook again. I think you have now seen it already. I spoke about the reasons why the second half of the year is better than the first half of the year. It has all to do with the projects that are kicked off and are actually operating right now, recently awarded projects and projects that were postponed from the first half to the second half of the year. We see the utilization already increasing of the vessels, very important. You have seen the backlog, which is solid of 1.5 billion, same as last year, but now with a different composition where we have replaced the reduced wind projects with oil & gas and infrastructure work.
The cost-saving program that is also being rolled out is well underway and should also show the results in the second half and beyond. These are very important elements to get confidence around, certainly the third quarter, because we know the first three to four months in Fugro doesn't have a very long backlog, but the first six months, we always say, is the majority of the backlog. The first three to four months, we know extremely well what's happening. For the last two months of this year, we always say, okay, what is happening in the winter months? We have a good feeling around it, but we don't know all the details yet. Therefore, there's still a window to see where this exactly comes out.
If we look at the mid-term guidance, then first and foremost, we say we stick to our targets for the mid-term 2027, which are on EBIT, ROIC, and cash flow. Those targets remain and stay there. If we talk about the revenue guidance targets of EUR 3 billion -EUR 3.5 billion, I think everybody understands with 12 months of limited growth or no growth or even a decrease in revenue, that it will take longer to reach this target. With the confidence we have in the mid to longer term on these markets further developing and also requiring geodata, we still feel that we're going to grow to EUR 3 billion -EUR 3.5 billion. We'll come back on that at a later stage. The last slide is basically summarizing the key highlights that I just mentioned to you.
With this, I would like to get Barbara back here that we can get over to the questions that you might have. Thank you very much for your attention, by the way. I look around. Yes, go ahead.
Luuk van Beek, Degroof Petercam. I have a question about the shift in your backlog because it's quite some changes. Big offshore wind projects shifting towards more smaller oil & gas projects, regional shifts. What impact does it have on your capacity planning and your execution? Will it be, for example, more difficult to avoid gaps between projects? Do you need to shift capacity between regions?
Yeah, very good question. Thank you very much, Luuk. You refer to smaller oil & gas projects. We actually put some very large oil & gas projects on the board. We even refer to the largest project that we have acquired since many, many years in Southeast Asia. That project, ENI in Indonesia, is very large and has also a longer runway than being a short project. Also, some of the other projects I mentioned are quite significant. We spoke about Petrobras, four projects of four years. This is longer-term work, recurring work that we have for Petrobras, in the long run and basically throughout the whole year. I don't think we're talking about small projects.
It is true that normally the difference between wind and oil & gas is that the projects in oil & gas are normally shorter because especially on the site characterization side, these are maybe a couple of weeks or months, whereas large wind developments could last longer. In that sense, you're right. In general, that's the case. In this particular case, we have longer and larger contracts secured.
Okay, is it more difficult to keep a good utilization, and do you need to shift capacity?
Yeah, oh yeah, that's the second part of your question. We have shifted some capacity already. We're not going to do that in the upcoming period too much. It's very expensive to bring vessels from one side of the world to the other side of the world. We do have some work in Africa that we need to cater for and will probably bring a vessel in that direction. For instance, in the Middle East, it's being kicked off now with these recent projects and they basically need the capacity themselves. They cannot lose the capacity, might even need to get some more capacity. Also, in the Far East, they have their assets working, especially with these projects being kicked off. Europe, Africa has some additional capacity from the Americas already. We spoke about the beginning of this year. They kept some of the assets in the region.
That only goes later on back to the Americas.
I have a question about the European offshore wind markets we see the delay in tenders and the slower growth prospects going forward in the near term. You do a lot of investigation ahead of tenders to basically create a backlog that can be for which new concessions can be awarded. Would you expect to see an additional impact from the fact that the backlog is still there and maybe governments are not in such a hurry to add more to it as long as the current tenders are not executed?
Yeah. What you see, there's I think a difference if we work for the government versus for the operators. The operators are always very careful to hand out work before, if they don't know that they want to go ahead with certain fields. They have the intention and then they collect basically the basic information. This is what we have seen, postponements and more reluctance to go ahead. When you work for governments, for instance, in Germany or in the Netherlands, they're also careful in obviously doing too much work upfront. There is a program because they also want to continue and stimulate new licenses. They want to collect this information before they go out for the licenses. Now, we get it close to home here in the Netherlands. They had a plan to issue a new license in the second part of the year, in October time, I think.
They just pulled back on that intention. That has to do with the type of contract. They're talking, as you have seen in the government, around a contract for difference. They need to change the policies here in the Netherlands to make it attractive for the operators to actually bid for these licenses. They said instead of going out in the old-fashioned way and nobody's bidding, that is affecting the industry in a negative manner, we actually pull it back, change the contract form, and come back to the market. Then operators should be more interested in tendering for that. I do not expect a huge additional impact on top of what we have seen already.
Thank you.
Philip Ngotho Kepler Cheuvreux , a few questions. This morning we already discussed a little bit on the outlook, but I think maybe it's probably good as well to discuss during this call. The implied guidance rate for H2 is, of course, much better, but the range is also quite wide, 12.8% up to 18.3% for the second half. I'm just curious to hear your thoughts on what really determines whether we end up at the bottom end of the range or at the high end of the range. What could be the deciding factors in that? The other question I have is, I mean, you indicate yourself that you have good visibility of the work that you're doing in the coming three to four months. You have a good view on that. People that want to be cynical can say, yeah, look at Q1 with Q1 updates.
You were more optimistic about Q2 work, or at least Q2 has been much more disappointing. In that sense, what is different now that you can be so much more firm that H2, at least Q3, will be so much better?
Yeah. Let me start with the latter. I think the difference between Q2, where we were expecting projects to be kicked off and starting, which were postponed at the time, really didn't happen as we expected initially. It lasted longer and people were delaying awards as well. What we have seen over the last one and a half, two months, I mentioned just four projects all approved and awarded in June, July time, or even yesterday. This is really affecting us. All these projects are immediately starting in Q3 or in Q4. We also had to get the confirmation on these projects to be really kicked off. Whereas in the second quarter, at the end of the first quarter, we were expecting because we had already the insight of these projects are going to start. Indeed, in the practice, they were postponed and postponed.
This is one of the key reasons why we feel that we can be much more confident right now. Also, the backlog in the past was containing more wind work without having that replaced by other markets. Now we have also very clear visibility on, okay, and I showed you on the slide, 37%, 24% of these wind business in 560 versus 370. Quite a big shift. We have replaced that with other work. There's more confidence and also work that we can really get going on. This is the first or your second question. You talk about the outlook. Barbara, you want to say a few words on that?
Yeah, sure. 8% versus 11%. There's a couple of, it is, you could say, a fairly wide range, but we are still dealing with, there's the top line impact that we know, and as Mark said, the last two months of the year are always a little bit more uncertain. There is the top line component that plays a role. We're going to be very busy. We are already very busy. We're executing as we speak, which gives us a lot of confidence. However, we need to execute well, as we all know. The execution of projects is always a factor, which we are not 100% certain about at the beginning. Then we have the other component, which is the vessel availability. We now have more days available, so we can also sell more days, which supports a higher margin.
We see continued on pricing on the geotech market, still very healthy, I would say. The other component is the cost savings. We have a program, we're communicating EUR 80 million -EUR 100 million on an annualized basis. Clearly, there will be P&L impact in the second half of the year, which will be material. At the same time, a large component of the savings program is related to people. That means clearly we have to do this globally. It's a long list of initiatives. It impacts people, and we have to follow local laws and regulations in terms of making that happen. That timing will also be different per jurisdiction. The P&L impact of that cost savings program effectively at the end of the year will also play into that ability to achieve the upper bound of the margins or more in the lower bound.
Those are the main components, I would say, that play a role in the 8% versus the 11%.
Thank you.
Thijs Berkelder, ABN AMRO ODDO BHF. First question on the cost savings, the EUR 80 million-EUR 100 million targeted. You mentioned three components. Can you maybe sort of separate between the three, what they deliver?
Yeah, I think Barbara.
The majority, around half, will be people-related. There's a bigger third-party cost component in terms of renegotiating with the suppliers. There's the other operating expense, which is also the smallest component, I would say. This is actually in line with how our OpEx bill is built up. I would say that the majority of almost all of the EUR 80 million-EUR 100 million savings are structural savings. That is looking at the baseline of early 2025, so that is what you need to compare it to. Of course, when we resume growth year on year, costs will come back because we will have to adjust the organization. That is largely the buildup.
Yeah, the contribution in the second half will be roughly a quarter of those savings or so. Is that a logical assumption?
I would say a little bit more.
Clear. Are there any costs to be taken in the second half for reaching those cost savings?
Yeah, the restructuring cost, we took EUR 4.2 million in the first half of the year, as you could have seen. For the second half year, that is also still depending on what kind of programs. In some jurisdictions, we run collective programs. There, the costs are not fully visible yet. That's difficult to say at this point in time because they haven't been finalized.
Clear. Barbara, a question on your very strong backlog, especially for the next three to four months. Can you maybe also give a script on the backlog here? You're now reporting for H1 2026 when compared to a year ago, H1 2025. Is that also more or less similar, or is that still down?
Yeah, so as you know, the winter months are always difficult to predict. As I already said, the end of the year, yeah, we'll have to take a little bit of precaution to talk about November, December. The same applies always to Q1, which is the slowest quarter of Fugro. It's a lot depending on how busy are you eventually in the fourth quarter. Is there something rolling over into the first quarter? At some point in time, your operation is drying up. This is only obviously applicable in Europe and in Americas where you have seasonality kicking in, yeah, more aggressively than in the other regions. When is the work drying up, so to say, is difficult to say. We have a solid backlog. We have longer-term projects that also run through in some regions as well into the fourth quarter or start in the fourth quarter.
That is giving us some confidence that, and we know that some of these projects will run into 2026 as well. That's good news. To be very specific around, yeah, how is the first quarter going to be? I don't know. We see tender activity being high in many cases, but you always need to be a little bit careful because, yeah, clients will keep you busy with tendering as well, but then not awarding, which is sometimes the case. We have seen that in the past as well. I don't want to jump to conclusions, but that means that as soon as the markets are stabilizing, there's a lot of work to be executed on because, yeah, things are slowing down and it's still there. Projects are there, but yeah, we need to get some confidence that the clients are also really awarding it.
We have seen some of that happening, obviously, over the last two months, which really gives us now a bit more confidence around, yeah, the upcoming period. To go into 2026, I would like to be a little bit careful in overpromising there.
A question on your operational management. You've changed CEO in Europe, Africa, your most important region, as well as in the Middle East. Can you give a bit of explanation what the new strategic plans of these new executives are? What are they doing different than before?
Yeah, so we have two new people. In actual fact, if you look at our four Group Directors for the regions, three out of four are quite new. Our leader in the Americas, Céline Gerson, is there the longest now. She has a tough time, obviously, dealing with everything that is changing there in the Americas. A lot of compliments to what she is achieving there with the team. If you look at the other regions, we also have replaced somebody in Asia Pacific mid-last year or towards the end of the third quarter last year. That person was an internal appointment, so knows the company extremely well, knows the region very well, is in full force right now and doing the right things there.
The last two, basically the most recent from the 1st of January, we have Annabelle Vos, who is in Fugro already for a long time as well, knows the business very well, has been part of the Executive Leadership Team, knows also the complexities that we have in the business, and goes into the region where we had difficulties over the last one and a half years, and knows really well what to do there and to attack basically that market. I think it's a great comfort to have these recent awards that they have been working on. Kudos to the region there that they have been able to secure this work. I think that will help them moving forward in the upcoming period. We have seen as well that the backlog in that region is growing steepest. Now we also have that fundament under the project awards.
I think first and foremost, stabilizing the region and bringing the profitability, but then also looking wider at how can we further improve the strength of the region in the various countries that we're operating in. Europe, Africa, a change. Indeed, only a month ago, we have somebody that came from the outside knowing the industry, I think, quite well, and joins forces, which is great, a fresh pair of eyes. I think sometimes that is needed. Also in the region Europe, Africa, that is the largest region, as you say, it's important that we continuously question ourselves, okay, are we moving in the right direction? Is this also the structure that we need moving forward and the stability that we need in the organization as we have it today?
We brought in somebody with fresh ideas and new views, but we have a very stable management and leadership team in that region to continue the good performance from the last couple of years that we have seen the solid performance. I'm really confident that the mix of the two will bring some new insights and also further strengthen the way forward. There is no particular assignment to the person that came in. We always like to be careful and we want to hear from new people that come in, what are your initial observations and can we learn from it? Some will change over time because you need to learn and get to know the company. I think Niels Schallenberg did a great start in the first couple of weeks joining Fugro.
Good morning, Jeremy Kincaid from Van Lanschot Kempen. My first line of questions is just around the CapEx. Obviously, you're constructing, I think I heard, seven USVs now, and you said most of the growth CapEx for FY 2026 was going to be USVs. Is this the same USVs that you're constructing now and that rolls into FY 2026, or will there be additional USVs on top of that?
Yes, and yes, I think, yes. No, and no. We will build new USVs. The build will continue in 2026 because one of the geophysical units that we're going to launch is in the first quarter of 2026. We'll have the first geophysical unit coming to the market. That's a new version. You haven't seen this yet. We have four more in the build process. We're really focusing on the various different markets. We have been focusing on asset integrity in the past. We have learned a lot. We also made a new design for the asset integrity side, a totally different design again. We'll come out with that, probably thereafter. We will start building next year new types of units. Also, what we showed there, there's interest obviously from governments as well and maybe defense for these units.
We need to really mature the build of USVs and learn from what we have done over the last, I think, seven years already, what we have been doing with USVs, maybe even longer. T his experience and all these hours of working and also operational experience that we have with these units around the world is very important to actually build the next version, versions, because we need multiple solutions because we have different businesses. They will be different again. If people want to copy what we have built in the past, then very good, keep going. We will have new versions, more robust, more reliable, and more solid for the future.
How many new USVs will you start building next year?
I will keep that for myself for the moment.
Okay. Would it be safe to assume that there's quite a material step down in growth CapEx from FY 2025 to FY 2026?
We will see a shift because I think we basically guided for in the midterm EUR 200 million- EUR 250 million. Now we're two years around the EUR 250 million. We have guided this year again for it. I'm not going to be very specific right now on what 2026 will be, but we're obviously looking at with the current growth or no growth, we obviously need to adapt our CapEx accordingly. That's obviously very visible for us, and we understand that. At the same time, we also need to prepare for the future. You saw the split in CapEx that Barbara showed. There's EUR 100 million related to sustaining and maintaining. We have discretionary CapEx. Obviously, it's not discretionary anymore if you contract suppliers to deliver certain things, then it's committed. Then it's not so much flexible. For the future, we can actually play with that bucket quite a bit.
We also consciously want to invest in these things because we need to change the industry. We need to be in the forefront there, and we need to determine what the future looks like in this industry. We are strong and believe in our strategy. In that sense, we will continue to invest in new ways of working because some of the businesses you have also seen that geophysical is more competitive in some areas in the world. You need to change, and you need to make sure that you differentiate again. We are doing that on every front. We're looking at what needs to be done because every market segment and every service that we provide is slightly different.
Sure. I suppose previously the last two years, it feels like your growth CapEx has been more focused on the geotechnical side of things, but now you're focused more in FY 2026 at least to the USVs, which I understand is more geophysical, but also you're saying that there's more competitive pressures in the geophysical market at the moment. I'm just wondering why this decision has been made and what the thought process is around the USVs.
As I just said, there are differences between our services. There's totally different market dynamics in geotechnics. We have put in a pretty aggressive scale-up program on the geotechnical side, end of 2023, and I think we're done now with that. The final things are being done. Yes, we will reduce the amount of investment in the geotechnical area. We have not done that necessarily to the same extent in other areas. That is also not needed because this is the most capital-intensive one. We have presented in our Capital Markets Day 2023, we want to become more asset-light in geophysics and also in asset integrity, so in the inspections that we do for pipelines and cables and so on. We can do that with smaller boats, remotely operated. That is obviously, if you have one of these units, then the cost base is no different, so to say.
If you have multiple units working out of one control center, you get different economic figures, so to say. You can also drive maybe some efficiencies that can also help you to have better results overall for a market that is maybe under pressure. You need to also change it quite drastically. We believe that this market needs to change. We also believe already for years that asset integrity needs to change and shouldn't be done in the same manner as it has been done over the last decade. We are working on new ways of working. That costs money, and that is investment. Obviously, if we don't have the money to spend, then we need to take action. I fully appreciate that, and we do that. We take this seriously as well. At the same time, we should not pause on our strategy.
We need to continue to transform and move ahead with the plans that we have because we look at it over and over again, and we believe we have very solid plans in place.
Great, thank you.
Good morning. I have a couple of questions. My first question is about the Americas. I don't understand this because if I look at the Americas, if you speak about EUR 150 million decline in offshore wind, then in my view, EUR 70 million should be U.S. and still, the decline is only EUR 40 million. Petrobras hadn't started, in my view, the new contract. It's interesting what you have put on your text, but still, I'm somewhat puzzled. At the same time, you were very positive about what's happening in the U.S. with regard to cost savings, but that's already since the third quarter of 2024. We don't see that back, with EBIT declining from EUR 21 million to - EUR 4 million, so - EUR 25 million. I'm very interested in what the impact of these cost savings are, without that we can see it.
That's my first question. With regard to your remark about the Dutch government and the postponing this October, in October, the whole process of this project in October, for me, it's interesting to know what is the impact on the whole programming of the Dutch government. Are they going to continue the program, the underlying program, or are they going to postpone the program? Are they saying, okay, let's phase down? That's the second question. On the revenues increase in the second half of 2025, plus 20%, how much of that plus 20% is related to the work which was not executed in the first half of 2025, due to the vessel availability mainly? That is for me. On 2026, how do you look at the offshore wind market at this moment?
We have discussed it in the past, but I'm interested to see, are you seeing some recovery compared to 2025, or are we saying something like, okay, it will be flattish, or we don't know anything about it? That were my questions.
Okay, we'll jump between myself and Barbara. Let me first start with the Dutch government. Obviously, if you know what the Dutch government is going to do, because we don't even have a government in the Netherlands at the moment. I don't know where this is going. What I can say is that if you look at Europe, there is a lot of discussion going on around how should we develop wind projects. At the moment, there's a lot of turbulence and changes between year in, year out, what is being built. The operators also in Europe, and global operators, are asking for more stability. Make a plan in Europe and stabilize on how much do you want to install, because these governments still have targets that are quite ambitious.
Even if we listen to the current Dutch government, they have maybe made it more realistic because, mind you, for many, many years, Barbara and I have been saying way too ambitious, never possible what they actually want to develop. There are no builders there. There are no installation vessels. There's not Fugro capable of doing all the work that needs to be done to actually build what some of these governments are saying. Even if it goes to half the ambition, there's still a lot of work on the board. That's one thing. Secondly, they put in a more realistic plan. Great. They could have done that maybe earlier because you saw this coming, that this is not possible. Fine. Operators are also asking for different contract terms because it also needs to be an economically viable development. Everybody wants to go green, green energy.
That's fantastic, and I think we really support that. Obviously, it needs to work as well for all parties involved. We believe that this is maturing, so this market is maturing. The operators are asking the European Union also, why are we not building 10 GW a year in a stable manner, and that we plan this and coordinate this a little bit better so that every year there's a continuous workload. This is quite important for all the parties involved if we want to have a successful green industry development in the offshore wind side. This is a pitch that is being made by the operators. Fugro really supports that pitch as well, and I think this is quite important to have a functioning industry. Otherwise, the industry cannot function.
Today, we build 5 GW, so half of that, and it goes up and down. Every year, it changes, and that is really difficult to deal with. Maybe on the cost saving or the Americas, Barbara.
Yeah, a good question. Understandable question. Indeed, we have been seeing a shift, and the Americas has been embarking on a cost saving to adjust to the new realities in Q4 already. What has happened is that a lot of the staff reductions have taken place in North America. We need to make a distinction also between South America, where actually we see growth. There, you know, there is a plus and a minus in that, and that will also go for the group if you shift, you know, if you hire operational staff to also get ready, especially we see a lot of increased activity in Brazil. There is that net impact on the P&L. I would also say we're very busy on shifting assets around in terms of bringing it to the markets where we can make the money.
I think we've done a good job there in doing, if you like, damage control and equally positioning for our new future. There's been a lot of talk on nuclear, on data centers, on critical minerals, on land. There's a lot of opportunities we see there, but this takes time and a little bit longer. There will also be more activity in the Gulf, and we are preparing for that, but there's also still some permitting issues around that. I think we are really shifting. Indeed, we're unfortunately firing, but also rehiring in different pockets, and that would explain that you don't see that in the P&L, but the actions are being taken.
Maybe to add, the Americas did indeed in the fourth quarter start with cost savings, but also, last week they have done, unfortunately, another layoff of a group of people. This is the third time that they have to go through this, and this is very painful. You always want to avoid these things, but if you see that things postpone, postpone, postpone, and the government really hasn't helped to give clarity, now with this Big B eautiful Bill, we get some more clarity, and now you see activities picking up and more policies being written on certain industries. Now they can actually also get going on certain elements. In that sense, it's stabilizing. By the way, you mentioned a number of EUR 70 million. In fact, it is EUR 80 million down on renewables in the Americas for the first half of this year.
Before, it was EUR 100 million, EUR 100+ million , so there's an enormous drop that they have seen because they had EUR 170 million renewables last year in the Americas, which dropped down to, let's say, EUR 20 million for this year. We don't expect anything else, as I mentioned, in the remainder of this year. Quite a steep drop. The other half of the EUR 150 million is in Europe. That's in the wind side.
Asia is quite, quite okay.
Asia is more stable. They obviously had significantly less projects ongoing, and we just started off a wonderful project in Taiwan, which is again also another good progress there. If you look at Asia, the biggest shift you see is there in Japan. We see significantly less work in Japan, specifically in the near shore or wind related. Also there, the impact is quite large, but it's reported on the land side. You had your question around the 20% growth and how much of that is postponed work, so to say that we didn't do in the first half of the year. I would say I would give you one number.
Everything related to these vessels that couldn't work and were extended, and that work still needs to happen, is probably roughly EUR 35 million that we lost in Europe, Africa, for not being able to execute projects, and that falls down to the bottom line.
Yeah, I'm afraid you have to repeat your fourth question.
That's more about the outlook. Let me say the total outlook for 2026 and the wind, but we have discussed it, I think, and I think my questions have been answered anyway. Thank you.
Thank you.
Thijs Berkelder again, ABN AMRO ODDO BHF . Three, maybe more, technical questions. Can you explain how your Blue Dragon compares with competition slash [Bentik]? Second question, are you only building USVs for your own fleet or are you also building for external clients? Third question is, yeah, a concrete one. We're now August 1. July revenues, have they grown or not year on year and by how much?
Are you pushing the boundary test? No answer on the last question, but a nice try. I jump back to the Blue Dragon. Yeah, I can technically explain exactly how it works, the system. Do you have a moment? No, joking aside. We obviously built a system that is more capable than what is out there right now. We believe if, as soon as we get going on this, we can obviously verify that this is really going according to the design. If you look at what we are capable of doing, if the design really works as we want it to work, then it's a real step up compared to what the systems can do that are out there right now. It is obviously a process that has been ongoing for multiple years right now.
This wasn't really hindering us in the last couple of years, because there was no deep water or ultra deep water to do. Now, in the years to come, we do see developments in primarily South America, North America, but also maybe in Africa and some other places in the world. We have done some very deep geotechnical drilling in Asia Pacific with our existing seabed drill, even going down beyond 2,000 meter water depth. That has functioned now very well, which is very impressive. We have also gained quite a bit of experience with the remote robots on the seafloor, so to say. This is a different ballgame and quite sophisticated. We invite you as soon as we launch it, and then you can have a look at how it looks. It is quite sophisticated. The beauty is, as well, it can shift between different systems.
We can do coring, and we can do CPTs. We can do multiple things with one system without recovering it from the seabed. I think the depth that we can get to is also quite impressive. Obviously, first, we need to prove it, and then we'll come out with the real numbers, what it is capable of. If you talk about USVs, we have already sold at least one USV to the outside world. We're not necessarily, yeah, we also explore that. We have been exploring that in the past, and we will do that moving forward. You saw a government, maybe Coast Guard or maybe Defense, if they're interested in particular solutions that can be discussed, either buy or lease, construction. We're not saying we're staying away from it.
However, we have a program that obviously needs to also cater for our own needs, and we can only do so much at the same time. We obviously need to factor that in as well. That's why we're ramping up on the capabilities there as well.
Philip Ngotho, Kepler, I have one follow-up question. It's on what you just mentioned, the asset integrity part, that you'll be investing or allocating some growth capital to that. I mean, if I look at the revenues over the last eight years, what you have disclosed, it's actually flat or even down. I mean, there's no growth at all in that part of the business. No idea how the margins have been, of course, but I can imagine it's probably not very good. You indicate it's a tough sector anyway, a tough part of the business. I'm just wondering, to what extent is this still a right allocation of capital? Is it something that you really still need to be in? What type of returns or payback periods do you envision when investing in these USVs?
Is there maybe a potential to actually divest a number of geophysical vessels that you have that aren't USVs?
Okay. Geophysics, asset integrity. We're mixing a few things here, but it doesn't really matter. The asset integrity work that we do is obviously inspecting, and some cleaning with ROVs underwater, pipelines, cables, burial depth of these existing infrastructure, inspecting corrosion on pipelines, platform lags, all these kinds of things. That is quite a healthy business. Also, our positioning business is in there. It's lucrative. If you look back in all these years, and you go and compare all the numbers, there's always stories in it. You need to be careful. We had periods where, for instance, in Asia Pacific, we had large boats, and they were loss-making in difficult times. We had to divest some of these businesses to really turn it around. For a long time, for instance, Asia Pacific was loss-making on the asset integrity side. We have reported on that for quite a few years, unfortunately.
If you now look at asset integrity business in itself, it's more inspection and maintenance or inspection and monitoring work. The IRM contracts that you see, that's a good business to be in because there are lots of aging assets. The people that have assets that do this work, also the larger assets, I think you're having a good business. It's also a cyclical business, so you need to be careful, especially if you have very large assets. We don't want to invest in large assets anymore. We have decided that we only want to invest in asset lighter solutions, and therefore the USVs are being brought in as remote solutions. We see this as the next way of doing this business. We're not investing in the traditional way of doing asset integrity work. We're investing in the new ways of doing inspection and monitoring work.
There we feel that we can still have good margins. We have very strict guidelines on when we do invest and what kind of IRRs we normally expect from investments. You can expect from us a good assessment before we invest any money in any system, in whatever business we have. Can we divest in the future, which is a different business, geophysical business, maybe some of the geophysical vessels? If we introduce more USVs, maybe, but we also have vessels that get to the end of lifetime, and then we might retire one or two, and then it goes very gradually. We will reduce the larger assets, and then we'll introduce the smaller assets.
Quirijn Mulder, ING again, two additional questions. One is about the EUR 750 billion from the negotiations with the European Union about importing U.S. energy. It seems impossible, but how do you see chances, let me say, in the way that the whole energy infrastructure will return? We have got some signals there. Is that something which you consider? Where there are possibilities in that market?
If you refer to the LNG development in the Americas, we see multiple LNG developments on the board. Since also the new administration, a lot more firm discussion around those LNG developments. We have secured some small work, but no large projects yet. I do expect LNG to be back on the board, and certainly, I assume that some of the energy that the European Union wants to import is part of that. How they get to the EUR 750 billion, the newspapers are writing that it's impossible. You have to redo the sums there, but I'm not doing them.
My second question is because we discussed the whole day about marine, but about land, it looks an acceleration of decline of revenues. Do you think, let me say, and what part of the cost savings is also related to land? Are you going to solve now this whole, let me say, long-term disappointing results in land?
Before I hand over to Barbara, maybe also to add a few words, I'm not necessarily in agreement or confirming the long-term problems on land because, as you know, we also showed a fantastic turnaround on land. In 2023, we had really good results on land. Also, last year was not bad. Land always has a complex story because you're adding, let's say, 10, 12 countries that have very different dynamics and also do very different work put all together in one basket. If you then look at, and this is the same as the question that came earlier, if you look at there's no growth in MAI, it's because we trimmed down businesses, and we also trimmed down businesses in the UK, in Germany, in the Netherlands, in Qatar on the land side, and all sorts of regions.
If you then go back into history and you say there's no growth or there's underperformance, then you need to know the story, so to say, you need to know the details. Currently, in land, we are affected because we report near shore in land. This is a wind business that is reported in land for the near shore developments. This has affected mostly the land performance. I think this is something that you have to take on board. I just showed a new technology that we're introducing, Ground IQ, which is also changing the way we're collecting data from the subsurface. I think it has a lot of potential. I think it's important that in every service that we provide that we're looking at how are we going to be differentiating and successful in the future. That's what we're doing.
We have 11 service lines, and we're looking at all these service lines individually. They are in different stages of maturity in the markets, and you need to do different things. Here, you need to add maybe technology. There, you need to scale up. There's different things you need to do, and we're looking at it in detail. You want to add some words on land, maybe?
Maybe two small comments to add is that indeed we have been investing in near shore. That was mostly related to wind with the jack-up barges. That has also increased OpEx, and when the top line then falls away, you get quite a big impact from that. That's what we're seeing. Also there, we need to recalibrate the business and see what suits in this situation. I would like to state that, yes, you know, land has not contributed from an EBIT margin perspective, but land has throughout the years always led to a high cash conversion because of the low CapEx requirements and has also contributed from a diversification perspective.
Scalability is key, as Mark says, and if we turn that around, it's very local markets, but if we have the scalable technologies like Ground IQ, that unfortunately requires time to implement and execute, but we're working hard on that.
Statements land for part of the 20% increase in the second half.
Land participates there, yeah.
Participates to EUR 100 billion are related to land. Can you give an idea?
I don't want to go into that detail now, but it would be equally, as we know, land is much more FTE-related business than marine, which is more assets. You can expect that everyone is contributing, and we will take actions, especially with Niels Schallenberg now also in seat. He will take his own view also on the land business in Europe-Africa.
Okay. I thank everyone for the questions and attendance, also everybody online. I just want to close out with a few final remarks, just to emphasize once again. The first half of the year, we have been faced with headwinds, and the result of that is obviously not nice. Second quarter performance wasn't good, so it's low. We do, however, expect a strong recovery in the second part of the year, and we have given the proof points with projects that are on the board that are being executed with vessels working, generating higher utilization, a backlog that has a different composition as well, which is already factoring in the reduction on the wind side, and then our cost-saving programs that should support us as well moving forward.
I want to emphasize that we're doing everything we can, obviously, to rectify what we didn't do in the first half of the year, but that's very difficult to recover everything. Therefore, our guidance for the full year of 8% and 11% or to 11% EBIT margin for the full year. Thank you very much.