Welcome everybody. Good morning, and welcome to the Q3 2026 trading updates. We go to the second slide. As we indicated at the publication of our first half-year results, we have indicated that the second half of this year will be challenging, and our third quarter performance reflected that outlook. Revenue grew, albeit modestly, and driven by steady growth in oil and gas and infrastructure. This highlights our ability to successfully redeploy our capacity into markets where healthy demand was there, helping also to offset the continued weakness in offshore wind site markets. When we look at our margin development, it is clear that the positive impacts of the ongoing implementation of the cost reductions during the last quarters have not yet translated into our margin. The achieved cost reductions were offset by lower pricing in marine site characterisation and incremental costs related to the Middle East war.
In addition, we incurred a one-off charter expenses on two inspection and monitoring campaigns in Australia. Our priority is clear, to improve profitability and strengthen cash flow. We have taken substantial action over the past years to reduce our cost base, and current EUR 50 million annualized cost reduction program is progressing as planned, and we are building on these actions by further intensifying our focus on structural performance improvements. This increasingly involves fundamental changes in how we organize ourselves, how we operate the business, which takes time to fully implement, and we are approaching these actions with urgency and strong focus on delivery. Looking ahead, we expect offshore wind site characterisation to start to recover from the second half of 2027 onwards, as already communicated also at half year.
This expectation is supported by healthy tendering activity throughout the year, although I have to say firm awards have yet to follow, and our offshore wind backlog remains below last year's level. It is good to take note of that. But I will get back to the backlog and outlook later. We go to the next slide. Turning specifically to the Middle East, the situation remains volatile and continues to affect our operations. The negative EBIT impact was approximately EUR 25 million year-to-date, of which EUR 15 million was already communicated in the first half of the year, which is March to June. The additional third quarter impact mainly relates to operational disruptions, the transfer of the Fugro Resilience through the Strait of Hormuz, and some clients deciding to undertake certain inspection and monitoring campaigns in-house. We have made operational adjustments that have reduced the impact of spoofing and jamming.
However, disruptions of GNSS navigation signals continue to affect operations in the Gulf region. We are also seeing some indirect effects outside of the region, including higher fuel costs. The wider repercussions for the business environment remain difficult to predict. Looking ahead, the principal risk are potential delays in customer investments decisions, higher fuel prices, insurance costs, and changes to project startups and mobilization schedules. We are managing these effects as actively as possible and as best as we can, but the environment remains highly uncertain. We will therefore continue to monitor the developments closely and adjust our operations where necessary. Above all, the safety of our people remains our foremost priority. We go to the next slide. And now an update on the progress we have been making with our vessel rationalization program. As you know, this includes a variety of permanent and temporary adjustments to our vessel fleet.
First, the retirement of own vessels. In Q3, we retired the older geophysical vessel, the Fugro Meridian. Within the next couple of months, we will also retire an older geotechnical vessel in the Americas, Fugro Explorer. This is, by the way, a vessel that is fully depreciated. We talk about the long-term charters. In Q4, we will let go of two of our four long-term geotechnical charters. This is the Kommandor Orca, will be released at the end of its charter period, early 2027, and the Pacific Grouse will also be released upon the completion of the charter period in Q4. It has been replaced by the Fugro Resilience, our own capacity, which arrived in the Gulf region in early September, and is currently fully operational on its first project in the region. Then if we talk about the vessel redeployments, we already spoke about the Fugro Resilience.
We are also talking about the Fugro Helmert is scheduled to sail to the Middle East region in Q4 2026. The Fugro Resolve is planned to operate in the Europe, Africa region, as well as in the Americas in the first half, probably, of 2027. We will see that happening. We then talk about cold and warm layups, and there are a lot of discussions of what is cold, what is warm. Basically, the longer you lay up something, the more cost you can save. The Fugro Zenith, the Fugro Revelation, and the Elegancia are now in the regular winter layup. That is for the winter season. While the Fugro Pioneer has been also in a so-called cold layup since Q3, earlier in Q3. Winter layup may follow with more vessels, depending on the completion of ongoing projects and scheduling of future work.
We will obviously continue to reassess the fleet capacity and benchmark it against current market developments, existing backlog, and future expectation. We are also trying to remain flexible for work that walks in, and obviously also to be ready for a potential up cycle that is in the future visible. We go to the next slide. Let me briefly comment on the development of the 12-month backlog. The backlog was 8.5% lower year- on- year. This decline is predominantly driven by offshore wind, where the reduction in the market activity continues to affect the order intake for marine site characterisation, as we have spoken about many times before. In oil and gas, the year-on-year comparison includes the large Indonesian project that was in the backlog last year. So, if you exclude that project, the underlying oil and gas backlog has actually increased in multiple areas around the world.
Infrastructure backlog also remains resilient, supported by continued demand across our key regions. We are seeing a broader change in customer behavior, with clients increasingly awarding work closer to the planned execution date. This reduces backlog visibility, but does not necessarily indicate an equivalent reduction in the underlying level of market activity. The backlog, therefore, needs to be viewed in context. The headline decline reflects both weakness in offshore wind and the effect of timing and project phasing in oil and gas. At the same time, we remain very cautious. In offshore wind, tendering activity is healthy, but firm awards have yet to be followed, and we have to rebuild our MSC back in our backlog. Overall, the backlog supports our expectation of continued activity in oil and gas and infrastructure, while offshore wind is likely to remain subdued in the near term. We go to the next slide.
Now, a couple of comments about the regional performance and also the business line, or the two areas, marine and land. First, marine. Revenue declined by 2.1%. Our largest business line, marine site characterisation in Europe, Africa, we have seen an ongoing shift in revenue mix towards generally typically shorter duration oil and gas projects. While we continue to maintain strong market positions, particularly in geotech solutions, industry overcapacity has resulted in lower pricing, particularly in geophysical services. Although we are actively rationalizing our fleet, adjusting the cost base takes time, and therefore also this has a significant adverse impact in the group's margin. In the Americas, more asset integrity business has been seen in Brazil, as you know, on the long-term contracts that we have started, and that has been partly compensated by ongoing soft marine site characterisation market environment there as well.
In Asia Pacific, asset integrity revenue included a high contribution from two inspection and monitoring campaigns in Australia, with a relatively high portion of low-margin pass-through revenue and a significant one-off charter cost. In the Middle East, results were impacted by incremental expense from the war, as we spoke about, including some clients deciding to undertake certain inspection and monitoring campaigns in-house themselves. In our land business, the 19.5% currency comparable growth was primarily attributed to strong nearshore activities in Europe and Africa, and more onshore infrastructure projects in the Americas, in particular in the U.S. With that, we go to the next slide. Free cash flow. The free cash flow was EUR 3 million compared to EUR 26 million in the third quarter of last year. The benefit of a lower working capital outflow was offset by lower operating cash flow, primarily reflected by a decline in EBITDA.
Capital expenditure was EUR 34 million and remained in line with the full-year guidance of approximately EUR 150 million. Days revenue outstanding improved from 82 days a year ago to 80 days, and the quality of the receivables remained sound, as the aging profile of our revenue or receivables improved. Working capital remained elevated at 17.7% of the 12-month revenue at the end of September, and this is driven by increased revenues in the year to date, as well as lower CapEx and other payables. We remain committed to bringing the working capital down to our targeted level of 10%-15% range at year-end. Consistent with normal seasonality patterns, we expect working capital to unwind in the fourth quarter. We go to the next slide. The balance sheet. We continue to proactively manage our balance sheet. First, the leverage.
The net debt amounted EUR 474 million as per end September 2026, broadly unchanged from the EUR 473 million at the end of June, resulting in a net leverage of 1.9 x. As we are above the self-imposed target of 1.5 , or below 1.5 , I should say, we are focused and intent to further strengthen our balance sheet moving forward. Management is very focused on to improve financial performance and actively manage net debt through strict capital discipline, limiting CapEx and managing working capital down to our target level of 10%-15% of revenue, as I just mentioned. Our maturity profile. We are pleased to have secured a long-term funding until 2031.
On the 14th of October, we announced that we have secured a two-year extension on the maturity of our existing senior unsecured debt facilities to December 2031, on the exact same terms as secured in December 2024, extending the maturities of our RCF of EUR 400 million and the term loan of EUR 100 million to 2031.
On the 22nd of October, we paid back the EUR 40 million loan, the term loan we took last year as a temporary measure to strengthen operational flexibility. In parallel to extending our debt facilities, we announced a EUR 150 million unsecured financing facility with the European Investment Bank to support a phased development and deployment of our uncrewed surface vessel technology and the related subsea robotics and remote control. The facility underpins our technological leadership and provides long-term funding, effectively protecting our RCF from potential future funding needs related to the transformation towards USVs.
It is important to add that the facility does not determine how much and where we will invest. Further investments in USVs will, of course, be evaluated on their own merits. The business case for USVs is built on the ability to operate in a more efficient, safer, and sustainable way. Gradually, we will be replacing our traditional geophysical vessels with USVs. That is also basically not necessarily taking out all the vessels, because we also feel that those larger vessels will be needed for particular projects. But over time, the larger vessels will be reduced. We go to the next slide. Let me turn to offshore wind, obviously the big question of many of you. Our long-term view of this market has not changed. Offshore wind remains an essential component of an affordable, secure, and diversified energy system, alongside other renewable and conventional energy sources.
Its strategic importance in Europe was reaffirmed by the North Sea Summit earlier this year, reflecting the growing focus on energy security and independence. Political commitment, therefore, remains strong. At the same time, the industry continues to recalibrate. Developers are placing greater emphasis on financial discipline, project returns, and delivery certainty. Governments are also working to improve auction frameworks and risk allocation. This is necessary to restore developer appetite and to create a healthier basis for investments. However, the translation of political ambitions into bankable projects and firm awards is still taking longer than anticipated. Progress differs significantly country by country, and developers remain selective. There are nevertheless encouraging signs. The recent successful auction in Denmark supports our view that the European market is gradually moving towards recovery. Further auctions are expected in a number of markets, including United Kingdom, France, the Netherlands, and several Asian countries.
In parallel, investment in European grid infrastructure is increasing. This is essential to address the connection constraints and ultimately enable further offshore wind development. The medium and long-term investment outlook remains attractive. To go in a bit more detail, the next slide. This slide provides more detail on what the recovery could mean for Fugro, and importantly, the expected timelines. The chart shows the sharp reduction in awarded European offshore wind capacity in 2026. It also shows a significantly stronger pipeline of ongoing and planned auctions over the coming quarters. If you look at the graph here, you need to take a little bit of time to really understand what you are seeing here, because the last three columns there, or the last three bars, you need to add together to get the combined gigawatts of new auctions being brought to the market in the upcoming three quarters.
You see different forms of that. We are already seeing healthy tendering activity supported by improving auction and contracting frameworks across several countries. These changes are intended to provide developers with more attractive balance between risk and expected returns. The important point is that there is a time lag between the auction and the resulting activity for Fugro. An auction process normally takes between three to six months. Where the site is awarded to a developer, survey activity would normally begin around six to nine months later, depending on the type of auction and the maturity of the project. Again, you see different means of auction suggested here in the slide. In several markets, including the Netherlands, Belgium, Germany, Denmark, governments are also commissioning surveys before the auction itself. These state-led programs can create activity earlier in the cycle.
Beyond the initial marine site characterisation phase, Fugro can also support projects through the detailed engineering investigations, construction support, and subsequent inspection and monitoring. The opportunity therefore extends across a considerable part of the project life cycle. Based on the current auction pipeline and the expected timing of the subsequent surveys work, we continue expect offshore wind marine site characterisation activity to begin recovering from the second half of 2027. I do want to emphasize that we remain cautious. Tendering activity is healthy, but firm awards have yet to follow at the required scale. Our expectation is therefore based on a visible and improving pipeline, but we still need to see this pipeline to convert in actual projects and backlog. We go to the next slide. Two more slides. Now turn to the other core markets of Fugro, where the medium-term outlook remains sound.
In offshore oil and gas, we continue to see selective growth rather than a broad-based expansion. The market is absolutely affected by the ongoing volatility in the Middle East, but the underlying fundamentals remain supportive. Continued investment is required to compensate for the natural field depletion and also to maintain sufficient spare production capacity. We see particularly attractive activity in frontier and deepwater developments in Latin America, Asia Pacific, and Africa. At the same time, construction activity is increasingly focused on smaller tiebacks and modifications to existing assets rather than large new greenfields developments. These play well to our broad offering across marine site characterisation, asset integrity, and inspection and monitoring. The aging offshore asset base also creates structural demand for inspection, maintenance, and life extensions services. This provides a relatively resilient source of activity, even in a more volatile investment environment.
In infrastructure, long-term investment programs continue to support activity levels. We are seeing particularly opportunities around nuclear energy and data centers in Europe and the U.S., with data center investment also accelerating in Asia Pacific. We do, however, remain mindful of the pressures for the geopolitical uncertainty, persistent inflation, and increasing sovereign debt. These factors can affect timing of public and private investments. Overall, though, the expectation investment growth in both offshore oil and gas and infrastructure supports our confidence in the medium-term outlook of these core markets of Fugro. I come to the last slide. To conclude, our outlook for the full year remains unchanged. Market uncertainty is expected to persist in what is normally a seasonally slower fourth quarter.
Customer caution, overcapacity in parts of the marine site characterisation market, and continuing impact of the war in the Middle East are all expected to weigh on profitability and therefore on our full-year margin. Against that backdrop, our immediate priorities are clear. We are focused on improving profitability, protecting cash generation, and strengthening our balance sheet. The EUR 50 million annualized cost reduction program remains on track. At the same time, we are intensifying our efforts to structurally improve performance. This goes beyond the current program and includes further changes in the way we operate and organize our business, as well as the already named vessel rationalization measures discussed earlier. We are also applying strict capital discipline. Capital expenditure for the full year remains limited to approximately EUR 150 million, and we expect the normal fourth quarter working capital unwind to support cash flow.
While the near-term market environment remains challenging, we are taking decisive action on the elements within our control. At the same time, the medium to longer term financials across offshore wind, oil and gas, and infrastructure remain sound. With that, I would like to open up for questions.
Ladies and gentlemen, we are now ready to take your questions. If you wish to ask a question, please press pound key five on your telephone to enter the queue. The first question comes from Luuk van Beek from Degroof Petercam. Please go ahead.
Yes, good morning. I have two questions for now. First, you mentioned in the press release that you are taking actions to fundamentally change how you organize and operate the business. That sounds like something different than just cost savings by taking out vessels and people. Can you elaborate a bit on that? My second question is on the capacity planning in view of the smaller, shorter projects and the tendency of customers to wait longer before they award new projects. Does that make it more difficult for you to keep your vessel planning optimal?
Thank you, Luuk, for the questions. Your first question is around the additional announcement that we are looking more fundamentally at, and how we are organized, how we operate. This is something that we have kicked off over the last couple of months, basically to more structurally look at how we are organized, what do we do centrally, what do we do decentral. Are there efficiencies possible, for instance, by implementing maybe more AI solutions, but also other software tools where possible? We are looking at all the functional setups that we have in the organization and see if we can bring efficiencies there by reviewing basically throughout the whole organization vertically how we are set up, for instance, in legal or HR or finance and so on. We do that throughout the business, but also throughout the functional services. This is obviously something that is not low-hanging fruit.
It is not necessarily meant to generate huge cost savings, but it will take six to 12 months probably to properly implement certain things, and maybe some things will even take longer. This is more a fundamental way of seeing how can we further optimize our organizational setup. Your second question is about capacity vessel planning, the shorter projects. Obviously, that means you need more projects to fill up your vessels. That also could mean, and this is what we have seen in some areas in the world, more idle time on vessels in between projects. Obviously, in the past, where you had longer and larger offshore wind projects that were further in -
Ladies and gentlemen, we are experiencing a technical difficulty. Please hold on.
I think we dropped out on our sound from connection issues here on our side. Luuk, did you get my answer?
Luuk has disconnected.
Oh.
Luuk, if you can signal again, pound key five, to enter the queue for the remainder of your question. We will continue. Oh, there he is. Luuk, your line is now open.
Yes, I lost the connection halfway the answer, I think, on the vessel utilization.
Okay. Yes, it was a problem on our side, the connection, so apologies for that. Okay, so on the capacity, Luuk, I was saying that you are correct that with shorter projects, this is obviously a bigger challenge to keep the vessels properly utilized and deployed. You have larger chance to have some gaps in the utilization between the projects if you have shorter projects. Whereas in the past, with the longer and larger offshore wind projects, it is easier to do this planning and more securely to have high utilization. So in that sense, you are right. We are obviously adjusting to that. We let go of short-term third-party vessels, which we always do in the winter seasons, and also, as I spoke about, reduce the longer-term charters, and obviously take out some of our older capacity as well.
In that sense, we put more tension on the total fleet to have high utilization. That is our key goal.
Thank you.
All right. The following question comes from Philip Ngotho from Kepler Cheuvreux. Please go ahead.
Good morning, and thank you for taking my questions. I have three, if I may. One on the vessels that you are relocating. I was wondering, to what extent do you have visibility on work for these vessels? I assume, of course, you relocate them, but then they should be there for a longer period of time. Otherwise, it is not worth relocation costs. So, what visibility do you have on actual work for these vessels? Also, for example, in the case of the Fugro Helmert vessel, that it is, I believe it is scheduled to relocate to the Middle East. What is the risk that that vessel could be impacted by ongoing tensions in that region? That is my first question. My second question was, if you could elaborate a little bit on the, I missed it, but on the campaign that was taken in-house by client, I believe.
What was the reason for that, and could we see more of these things happening in the future as well? My last question is on that chart that you show with auctions in upcoming auctions. Two questions there. The offtake only, the 6 GW for the U.K., does that imply that you expect AR8 to lead to about 6 GW of offshore wind auctions being awarded on the CFD contract there? Maybe also on the 10 GW that it is linked to other regions, could you maybe explain which regions specifically? Because it does make up a large part of that site-only part. Those are my questions.
Thank you, Philip. First, vessel relocation. Obviously, you know that we have already relocated the Fugro Resilience, and yes, that took a bit longer to eventually get her through the Strait of Hormuz, but we managed to do that, and that vessel is now operational. The decision that we have taken on the Fugro Helmert is done because we hired there quite a number of third-party vessels against a certain cost, and we believe that by bringing in the Fugro Helmert, we can do this work also with our own capacity. There is work that we can immediately start doing once we are there. We obviously realize that that is still a journey to go through. Therefore, we have also prospects along the way, so in Egypt and also in other places along the way there, we might be able to keep the vessel already earlier occupied on projects.
We are obviously doing this with great care, and we are not moving on spec, so to say, a vessel to the other side of the world. We also spoke about a vessel, the Fugro Resolve, being deployed between Europe and Americas and Africa. We are obviously only moving these assets when we have work in a particular area. We are also not sailing over to Africa without firm work on the books. So, that is what I can say around that, because you are right, moving vessels around the world costs a lot of money, and you only do that when you have some certainty to have work and return. Then you asked around elaboration on the clients taking some work in-house in the Middle East.
Basically, what you have to imagine that some of these clients that have projects ongoing, and this could be construction clients as well, to do all sorts of construction work within the Gulf, they have issues to also keep their own schedules or stick to their own schedules because they need to bring in more capacity or maybe supplies or maybe pieces of equipment to be installed. And they sometimes face difficulties with that because they also need to go through the Strait of Hormuz. Then they have idle capacity in the area, and basically, they try to also optimize their capacity that they have, and sometimes even very large assets can then be deployed to do a simple survey, for instance, or a simple operation, ROV operation, inspection, and monitoring campaign, because, they also look at optimization.
We had some examples there in the third quarter where we lost some work simply because the client decided to do it themselves with, a not really suitable asset, but an asset that they had available. That is the story. Then you talk about the auction charts that we have. Two questions from your side. The offtake only, and then particularly around the U.K. and the AR8. We do indeed expect AR8 to be on the board in the upcoming period. There is a lot of interest shown, and before we already heard people asking to bring it forward. We do expect this to move ahead. How large exactly? I am not 100% sure, so I will have to follow up on that. But we saw in AR7 that I think they came out with 5 point something gigawatts in the end. They awarded more than 7.
I am not necessarily saying that this could be the same or so, but we have to see what it eventually will be. But I think at the moment, it is scheduled for 6 GW. Then the 10 GW, that is also listed below in the comments that we have at the bottom of the slide. You see how it is built up. It is built up by a number of countries there, Finland, Portugal, Italy and so on. You can see there the buildup of the other elements.
Okay. Thank you. Very clear.
The next question comes from Jeremy Kincaid from Van Lanschot Kempen. Please go ahead.
Morning, Mark and Catrien. Just one question for me as well on the same slide. Obviously, a large part of the story requires a recovery in the second half of 2027 as offshore wind recovers, and the tender outlook certainly does look very promising. When I look at the chart, 2025 had 13 GW worth of capacity awarded. Over the next two and a bit years, it's going to be over 40 GW. It feels like quite a lot for these offshore wind developers to absorb. I was just curious on your thoughts, like if the industry can actually handle that much additional capacity and if there's any talk around the offshore wind developers hiring in advance of this or any indicators to suggest that developers can actually and want to bid on the full 41 GW.
Jeremy, a really good question, and a couple of things that I can say about that. We also indicated here that it does not necessarily mean that if governments come out with auctions that everything will be taken. That is, I think, very important to take note of. Additionally, it doesn't include what you see here, because here we're only talking about the auctions. It doesn't include the government work that also is done before auctions even start. That is also important to mention because Germany, we have announced the work that we have secured again for the upcoming period years in Germany and for BSH. Those kind of things are not included. That is one thing. The other thing is that if we see here the 40 GW, it's split in different ways.
Obviously, as you see, it is something that is currently scheduled for the next three quarters. I do expect a change in this, first and foremost, because even in some countries, like for instance France, there's elections, so we'll have to see where it is moving to, what will be decided. But this is just us reflecting what is currently on the books, on the planning, just to indicate more clearly what is currently scheduled. I have already mentioned in a number of occasions that I'm concerned exactly about what you mentioned, that everything comes at once. We have seen in Fugro 2025 and 2026 being, yeah, almost a, now not a grinding halt, but a very strong reduction in new auctions and work for Fugro.
This is basically, yeah, coming to an end with the intentions that all the governments have to bring Europe into a situation where there's energy independence. There is a lot of commitment from these governments. However, they need the time to actually get to these new contract forms and to organize themselves. Now you see all these countries more or less coming out at the same time or in the upcoming period. That is somewhat concerning because, as you say, operators will not be able to take everything in, and they will make choices. Also, the industry will not be able to serve everything that is potentially happening at the same time.
That has a risk, obviously, that you will see maybe also an effect again a few years thereafter, that operators say, "Well, hang on, prices move up," or whatever the case could be in these quick turnarounds. I share that view, Jeremy.
Great. Thanks for the color.
The following question comes from Thijs Berkelder from ABN AMRO - ODDO BHF. Please go ahead.
Morning, all. Thanks for having me. First, a couple of questions on, yeah, they call it one-off effects or extra effects in the quarter we had. You mentioned EUR 10 million impacts from Middle East. Can you maybe quantify the Australian impact? Can you maybe quantify the impact of higher fuel costs and maybe quantify the impact of higher insurance costs? Then second question is on the backlog. I am very happy to see that backlog in marine is picking up again. It is 10% higher than end of the previous quarter. A question there, does it already include the full contract of Timor-Leste, or only a small part of that contract? You are also a chair in the Dutch Maritime Organization or so.
Can you maybe tell us a bit more on how the discussions with the Dutch government are progressing regarding offshore wind, whether you see any acceleration there in the streams? Finally, there is a very strong pickup in nuclear. Can you maybe also quantify the size there and the backlog related to nuclear?
Okay, Thijs. Thank you very much for all the questions. First maybe the one-off effects, and I think you mentioned in particular the Middle East. Indeed, altogether, the Middle East year-to-date is now EUR 25 million, as mentioned before, and EUR 10 million in the second quarter. That is more tilted towards the region itself, and I think that is what we have communicated. I do not have an exact number for insurance cost increases, but I think in particular, the insurance cost was obviously high when you bring a vessel through the Strait of Hormuz.
That is a business case that you need to make, and you need to wait till the right moment where the situation is in such a state that the insurance costs come down, and then you say, "Okay, now we go through with all the additional measures that you have to take." And those can vary a lot day by day, week by week. We obviously timed it quite well with the Fugro Resilience at the time. And the fuel cost, yeah, is significant that we have in Fugro. We obviously especially had in the second quarter more contracts that were probably affected by not being able to fully recharge the additional cost to our customers. We are obviously much sharper on that now this conflict is ongoing for some time. So, over time, this should further reduce.
On the other hand, it is sometimes included in our top line, because it is obviously charged as revenue also to the customer, and then there is obviously also affecting in that sense maybe a little bit the margin. So, that is good to realize. And on the EUR 25 million in the Middle East as a whole, I could say that probably three-quarters of that is in the region itself and one-quarter in the rest of the world. Then, I support your comment on marine growth between the second and the third quarter on the backlog.
Timor-Leste is fully included there, so that was all awarded, the two lots, geophysics and geotechnics, deep water development, a very interesting new area, and a good project for Fugro to be involved. So, that I can say there. And then, maybe first nuclear. I do not have a very specific number for you on the nuclear side.
I know that specifically in the U.S., we're involved in multiple projects. We have secured several, and some are multi-year, so we are involved in the upcoming years where we have to do a certain amount of work in a certain timeframe or spread around a longer time. We can come back on that and see if there's any additional information on it. At the moment, I think we have to wait probably for the first official announcement on one of these projects. Very often, we're not allowed to also be specific around the contract values that these clients are more or less always stating that they don't want to have that out in the open. So, we need to be careful there.
Your last question, if I have answered all the others, by the way, is around me being also chair of Maritime & Offshore NL, and specifically what the Dutch government is doing. I think we see that most of the governments being involved in the Hamburg conference, that they are absolutely preparing for these new auctions, and they take it quite seriously. They also see that the industry is suffering from this period. They realize it. They try to do what they can, but they also need a certain amount of time. So, I think the right steps are being taken, and everybody is fully committed to make this happen and to also drive the energy independence, as I said before, of Europe. Quite an important thing. It's also in Brussels, I think, high on the agenda.
Having said that, it takes time, and they have limited means to further speed it up. That is also where my concern is raised, that everybody's trying really hard to push, push, and then suddenly everything comes more or less in the same period. That is a little bit of concern. I do hear also from these governments that they try to coordinate it between the countries, but it's very difficult. So, this is a little bit what I can say on this element.
Okay. Thank you.
The next question comes from Quirijn Mulder from ING. Please go ahead.
Yeah. Good morning, everyone. Couple of questions on wind from my side, and on the working capital. Do you hear me?
Yes, we can hear you. Absolutely, Quirijn. Welcome.
Okay, perfect. On the working capital, it's 17.7%. That's relatively high, and it's not related to the DSO. Maybe you can explain what's the cause there? That's my first question. About wind, first of all, if you look at the order book in wind, that is even larger than in the second quarter. How can we translate? Is that related to the fact that you have now included third quarter 2027 in the order book against taking out the third quarter of 2026? Is that what's happening? Is that a shift of a quarter? Maybe you can elaborate that, or is that increase of And then, in the wind, how is the competition at this moment? How desperate are they with regard to winning orders?
Even if there are some tendering activities, that these tenders are being concrete, and you still have very low prices in the market. Is there anything you can say about that?
Thank you, Quirijn. Very good. Maybe if I first talk about the order book in wind. What you see there is that, yeah, the first projects slowly coming through in this area, some of the tenders basically being awarded to projects. That helps in building backlog again. I don't think we have seen yet the larger translation of tenders into firm backlog, which is something that I think we should get more clarity on in the upcoming months. Because as I said before, there's a healthy tender activity.
No firm projects, or not enough firm projects yet to really say, "Okay, now the activity is also immediately increasing." I think the signals that we earlier in the year flagged and saw are now becoming more specific and concrete in the forms of tenders, not yet in the forms of projects in the extent that it needs to be. But to some extent, yes, that is also happening. And we have received also some awards over the last few weeks. Some of it still needs to be announced. It's good signals, but we remain cautious because we need a lot more translated into the backlog in that sense to have firm work and to see the activity really increasing.
As we say, it probably is also due to the lack of new auctions and so on, as presented, more visible in the second part of 2027 activity-wise. Then maybe connect immediately competition and pricing. We have spoken about that, obviously, also at first half of the year. I think we have done quite well in securing work, especially in geotech area. That means that obviously with significantly less work out there, that competition is also becoming more aggressive to secure work for their assets.
That pressure will continue to be there in the upcoming quarters, I believe. I don't necessarily say that the prices will come down significantly on top of what it has already been, especially in geophysics. It's probably more stabilizing at this level, which is a low level, and it needs to improve as soon as activity comes up. Then working capital.
Working capital, as you say, it is not in days sales outstanding. It is, yeah, obviously a combination of things, but yeah, net debt is also stabilized, but working capital is basically a combination of, yeah, collections that still need to be done, and invoices that need to be sent out. Especially the latter part, we are strongly focusing on the work in progress to bring that down. Cees as interim CFO was really on top of that to make sure that everybody is invoicing as much as we can, to also be able to collect, yeah, with the amount of days there. This is obviously one reason, and yeah, you also have to deal with the relationship with the revenue, and then that gives a certain percentage. We do expect in the fourth quarter that it will come down as normal with the normal seasonal pattern.
Okay, thank you.
The next question comes from Kristof Samoy from KBC Securities. Please go ahead.
Yes. Good morning, Kristof Samoy, KBC. Thank you for taking my questions. First of all, on the slide with the auction schedule, aside the absolute amount of gigawatts mentioned, is there any support in there for Fugro from the quality of work, type of work? Then I am specifically referring to floating versus fixed bottom offshore wind, whether that will already be a meaningful growth contributor for Fugro. Then as a follow-up, can you confirm that looking at the life cycle of an offshore wind project that up until the auction phase, the vast majority of the geo-data that you collect occurs through geophysical and not geotechnical? That would be the first block of questions. Then secondly, strong performance seen in land, in terms of top line, also in the backlog.
Can we say that the land division has turned the corner, or is there some one-off large project in there? What about GroundIQ? Do we see simply a continuation of demand in projects there, or do we see an acceleration? If you could give a little bit more color on that too. Thank you.
Yeah, thank you very much for the questions there. Maybe first to talk about floating wind and the areas allocated to that. We have done globally already quite a few projects or survey work related to floating wind proposed areas. I think it is still an area that is not developing very rapidly, so it is still, the verdict is out how fast and how economically viable these solutions are. But I think people are continuing and still planning also in Asia quite a bit of floating wind projects. So, I think this is definitely not going away. There is also work to be done on the floating wind side. So, the difference, there is absolutely a difference, I would say.
On the other hand, yeah, floating wind, the windmills that are floating also need to be attached to the sea bottom, and therefore you still need to do marine site characterisation work, and you also still need to know all the details of the seabed. So, in that sense, there is a difference. You could probably say less geotechnical work required, but because you have less piles in the seabed, and it depends on the solution they choose. I think there are many, many, many different solutions being worked on for offshore wind, so it is very difficult for floating offshore wind, very difficult to make a generic comment around that. But there is still work, everything you do offshore, there is work required in the seabed, and that is geotech as well as geophysics. If I jump to-
And-
Sorry, yeah?
I am just wondering whether you could confirm or not that looking at the life cycle of an offshore wind project for Fugro, up until and including the auction phase, the vast majority of work is geophysical instead of geotechnical? Only after the auction phase and the run-up to FID and then towards construction that geotech becomes the vast majority of your work?
This is in principle correct. However, we also see still fields that have been awarded already to clients that the clients are now starting to kick off and ask geotechnical work for. We do not necessarily feel that it is only geophysics being required moving forward. There is also a difference in what kind of geotech work is required in the particular soil conditions. Where we have complex soil, there is a lot of coring required, and especially in the upcoming period, we do see a lot of coring geotechnical requirements coming up, and that is something that Fugro does really well. If I move over to the land side, we did see a strong performance in land, which is largely attributed to the nearshore work that we have been doing in the region, Europe, Africa, and primarily Europe.
We had some larger projects, nuclear developments as well, nearshore developments where we used large jack-up barges that were deployed with high utilization. This has driven a lot of nearshore activity that is booked in our land division, and that has caused, for sure, a better return. On the other hand, we also have seen increased activities in the Americas on the land side, and an improvement on some of the European countries on the land base as well. This is something that is a result of some of the restructurings that we have done in 2025, early 2026. Then, specifically talking about GroundIQ, which is also attributing to a better result in the land business.
We see this progressing well and further expanding, and we do see still lots of opportunities to further grow this solution in the business, in the land business, eventually, as I mentioned before, moving a large part of the land business into a combined solution where geophysics and geotechnics are combined to give clients a lower cost, significantly better answer much faster.
Okay. Thank you. No further questions. Back to the operator.
The next question comes from Thijs Berkelder. Please go ahead.
Yeah. Two follow-up questions from my side. Congrats with the hire of a new CFO. Can you explain how the, let's say, the handover will be timed, how that will be handled, more or less? And the second question, I forgot. Sorry.
Okay. So, I will fill in the second question for you, Thijs.
Oh, I know it now.
Please go.
It's on the USV fleet. Can you maybe give an update there on the progress? Maybe related to that, what the long-term or maybe midterm or short-term ambition is for the shipyard making these USVs?
First, a couple of words on the CFO. Emiel Jongerius starts on the 16th of November, so very soon. He's actually already quite busy getting to know the company, getting to know people, doing some of the basic training that he requires as well. We're quite extensive in communication with each other, which is really good, which facilitates also a fluent handover. Cees den Ouden, as interim CFO, is still here, is available for us till the year-end. We can flexibly use him in the handover as well as thereafter, if required. Cees is also writing handover documents for Emiel. I think this is going to be a very smooth upcoming period where Emiel gets a really good, successful start in Fugro. Emiel, I've spoken to him, he's enthusiastic to get going as soon as he can.
Then on the USV fleet, basically, we have more or less finished the build of the traditional Blue Essence, the 12-meter units that we used to build, and the last ones are finalized. We are in the process of finalizing a build of five geophysical USVs. As you know, and we spoke about, we call them the Blue Prisms. Those are 17-meter geophysical uncrewed surface vessels. They come out in the first half of next year, not all at the same time, and will be deployed around the world. So, we are finalizing that, doing the installation of all the final equipment and sensors and the testing and so on. This is being finalized. With that on the board, also with obviously a very tight investment program that we have in mind for next year, we are still focusing on keeping investments very much to a limit.
In that sense, we are not, at the moment, immediately kicking off new USVs, albeit there is obviously a lot of work done in the background to be ready to pick that up again whenever we feel the time is right. We want to first be even more successful in deploying those units and having those successfully out there in the field and make money with the new ones that have come out and that are coming out in the first half of next year. This is our key focus. Then, I do not know if I understood you well on the yards that are building these, because we do that in consultation with vessel builders that build the hulls and the propulsion systems for us. I believe that all vessel builders in the world eventually will start building some sort of remote solution and operated vessels.
This is just the future, and that will not be stopped. I see also in other industries much more uncrewed remotely operated vehicles coming in. That is what I can say on the use fees.
Okay. Thank you.
I just want to come back on one question because I didn't finalize Quirijn's question on the working capital because, Quirijn, I wasn't complete there, because the percentage is high also because the payables are significantly low. We obviously have less capex than in the past, and we have less payables, so it's a bit strange, but that drives your working capital up in that sense. Therefore, the percentage is still high in relation to the revenue. My apologies for that. I should have said that before.
We have time for one more question. The final question comes from Philip Ngotho from Kepler Cheuvreux. Please go ahead. Your line is open.
Yes. Thanks for taking the questions. They're two very short to clarify a few things. First of all, on the EUR 50 million cost savings, can you just maybe give a bit more detail? Like, where are we exactly in terms of hitting that run rate of EUR 50 million, and when would you expect to hit that run rate to have it fully in the P&L, or not fully, but at least achieving those cost savings? The second question is maybe on just dividend thoughts for the results over 2026. I mean, your dividend policy is, of course, on a percentage of net results, but likely 2026 will be a net loss year, given how the first half of the year was. So, what are the early thoughts on the dividend?
Okay. Thanks, Philip, for your first question. On the EUR 50 million program, yeah, this is letting go of some of the charters. We have communicated that in the deck as well, that some will happen in the fourth quarter. In that sense, everything is prepared, everything is ready. As soon as the project completes, we let go of the vessel. An example I mentioned, for instance, the Fugro Grouse is one of those. So, then you see that we can immediately act as soon as the last day of work is done. And there are a few other things that are happening in the fourth quarter, and some are actually happening around the first quarter. It's not only assets. There's also obviously related costs there and some people.
I believe that all these actions will be taken certainly in the first half of 2027, that the actions are taken. I think that program, we could say, is then implemented in the first half of 2027, with the majority in Q4 and Q1 of next year. Your other question was referring to-
Dividend
the dividend. Oh, yeah. Okay. Yeah. I will say the same thing as I said before. A dividend is very important to Fugro. Obviously, we realize that Fugro has been, over the last couple of years, paying dividends. But to take a final decision on what we're doing there is obviously too early at the moment. The right timeframe for that is to look at your full-year results, your full-year cash generation, and then take final decisions on dividends. I can just assure you that, yeah, when we started paying dividends, we said we only start when we can actually pay multiple years in a row dividends. We do obviously realize that with the current free cash flow production, this is a different discussion than maybe a couple of years ago. Nevertheless, we'll take those decisions only on the full-year results.
Okay. Thank you.
And with that, I think we finalized the last question. I want to thank everyone for participating and wish you all a good day. If you have any additional questions, obviously, you can contact Catrien from Investor Relations. Thank you very much.