Royal Boskalis Westminster N.V. (Boskalis) realized a net profit of EUR 253 million in the first half of 2014 (H1 2013: EUR 123 million). Revenue rose 21% in the first half of the year to EUR 1.5 billion (H1 2013: EUR 1.3 billion). Organic revenue growth was 13.4%. EBITDA amounted to EUR 466 million in the first six months and the operating result (EBIT) was EUR 338 million (H1 2013 EBITDA: EUR 280 million and EBIT: EUR 162 million, respectively).
The results in all three segments rose sharply compared to the first half of 2013. Dredging & Inland Infra had a busy first half of the year with a high fleet utilization rate, good project margins and substantial settlement results on old projects. The Offshore Energy segment also had a good first half of the year with a high fleet utilization rate and good project margins. Furthermore, Dockwise contributed an extra quarter to earnings compared to 2013 in addition to a sizable contribution from cancellation and rescheduling fees. The results at Towage & Salvage were higher despite a quiet first half of the year in terms of salvage activities, but with good results from the settlement of older salvage projects.
The order book stood at EUR 3,146 million at the end of the first half of the year (end 2013: EUR 3,323 million). Peter Berdowski, CEO Boskalis, commented: “We have posted a historically high result in the first half of 2014 and the performance across the board of the company has been very good. This result is partly thanks to the strategic choice we made to broaden our focus on offshore. The offshore activities are becoming increasingly important and the contribution of Dockwise forms a key part of this. But the traditional core dredging activities also made an excellent contribution to the results.”
“In the first half of the year we achieved a high fleet utilization rate and good project results. In addition, a number of exceptional gains made a substantial contribution to the results, including settlement results on old projects in Dredging and Salvage as well as compensation for Dockwise transport contracts that were cancelled. The extremely good results may however not be viewed as a fair reflection of current market conditions which remain very challenging, both in terms of margin and volume.”
The markets in which Boskalis operates are driven by growing prosperity and the world’s increasing population. This increases global trade and energy consumption, as the irreversible impact of climate change becomes visible. Boskalis responds to these trends. The extent to which these develop positively in the coming years depends largely on geopolitical stability and macro-economic growth. Positive investment decisions for large maritime infrastructure projects, which generate work for Boskalis, are closely linked to this.
Boskalis expects a reasonably stable market environment for Dredging and Towage in the next couple of years. The growth of global trade flows and the need to maintain and expand ports are expected to continue at a moderate rate. The growth opportunities for Boskalis are mainly in the offshore sector in the field of Transport, Logistics and Installation. Despite growing reluctance in the offshore sector to make investment decisions when it comes to large projects, Boskalis remains cautiously positive about its own prospects in this part of the market by using and combining equipment and expertise throughout the group.
Current insights suggest that the market picture is not expected to change significantly in the second half of the year compared to the first half of the year. With the projects in the order book a healthy fleet utilization is expected at Dredging and Offshore Energy in the second half of the year, although the utilization rate will be lower than in the first half of the year. After a very strong first half of the year for Dredging the absence of comparable substantial settlement results will result in a lower operating margin in the second half of the year. Similarly, the outlook for Offshore Energy is that the absence of comparable compensation for cancellations and delays will result in a lower operating margin in the second half of the year. The outlook for Towage & Salvage is stable compared to the first half of the year.
Assuming the positive settlement of several old projects in 2014 the Board of Management expects that, barring unforeseen circumstances, net profit for the 2014 financial year will exceed the record profit achieved in 2013 (EUR 366 million). Capital expenditure is expected to be around EUR 300 million in 2014 and will be financed from the company’s own cash flow.
The financial position of Boskalis is very solid and the solvency ratio has increased to 50%. Due to the high result in the first half of 2014 and a lower debt position, the net debt : EBITDA ratio declined to 0.7. With this strong financial departure point and within the framework and principles of the business plan 2014-2016, Boskalis intends to launch a share buyback program of up to 10 million shares. This program will be executed in the next two and a half years, subject to the development of results and maintaining the desired balance sheet ratios (Boskalis).