Boskalis half year result 2019 tainted by offshore projects; 2019
EBITDA guidance unchanged
Papendrecht, 22 August 2019
Key Figures First Half Year 2019
- Revenue: EUR 1.3 billion
- EBITDA: EUR 135.7 million
- Net profit: EUR 1.3 million
- Order book: EUR 4.4 billion
Outlook 2019
- Dredging: stable market volume
- Offshore Energy contracting: positive contribution from
projects in second half year
- Offshore Energy services: reasonable volume and vessel
utilization
- Towage: sale of equity stake in Saam Smit Towage; other joint
ventures stable
- Salvage: strong year
- Profit outlook second half year: substantial improvement of the
net profit relative to the first half year
- 2019 EBITDA guidance maintained; comparable to level last
year
Royal Boskalis Westminster N.V. (Boskalis) realized a net profit
of EUR 1.3 million in the first half of the year (H1
2018: negative EUR 361.4 million).
Revenue in the first half of the year increased 8.6% compared to
the first half of last year to EUR 1.27 billion (H1 2018: EUR 1.17
billion).
EBITDA in the first half of the year totaled EUR
135.7 million and the EBIT was EUR 9.1 million (H1 2018
EBITDA: EUR 167.2 million, EBIT: negative EUR 349.6
million).
A strong decline of the result was caused by operational and
contractual issues on a limited number of offshore projects, partly
in decommissioning but mostly in offshore wind cables. In the
offshore wind market circumstances have changed as a consequence of
the move to zero subsidies and increased competition. This has
resulted in a recent and unexpected change in the attitude of
clients, which is reflected in a sharp increase in the number of
disputes and protracted claim negotiations. Following a thorough
review of the projects in hand, provisions of slightly more than
EUR 100 million have been made on a limited number of onerous
contracts. The entire order book was reviewed when determining
these provisions. Boskalis is confident that in time a substantial
part of these provisions will be recovered, however has not taken
this into consideration in the reported figures.Extraordinary items
impacted both the 2018 and 2019 half year result. In 2018, these
were related to (impairment) charges of EUR 397.0 million pre tax
whilst in 2019 a book profit of EUR 42.2 million is included in the
earnings, relating to the sale of the Kotug Smit Towage joint
venture and the sale of a vessel. The extraordinary items are
accounted for at group level.
Within the Dredging & Inland Infra segment, revenue
increased with the strongest growth realized outside Europe. Large
projects in progress in Oman, Singapore, Canada and the Indian
subcontinent contributed to this. The results were virtually stable
compared to the same period last year.
At Offshore Energy, revenue from contracting activities
increased with important contributions from the cable laying
activities and seabed intervention projects such as Nord Stream 2.
Within the services cluster, the developments were in line with
expectations. The subsea and survey activities had a relatively
busy first half year. Within heavy marine transport, revenue
decreased in part due to the decision taken last year to exit the
low-end transport market. The sharp decline in the division result
is fully explained by provisions for onerous contracts of more than
EUR 100 million.
Salvage had a very good first half year with high-profile and
successful salvage operations. The contribution from the Towage
joint ventures decreased, which is entirely attributable to the
(intended) sale of our interest in Kotug Smit Towage and Saam Smit
Towage. The contribution from the remaining joint ventures was
higher compared to the same period last year.
The net debt position increased to EUR 419.8 million in the
first half year, partly due to ongoing investments, acquisitions,
the share buy-back program and the effect of an all-cash dividend.
With the proceeds of the (intended) sale of our share in two harbor
towage joint ventures (Kotug Smit Towage and Saam Smit Towage)
combined with the operational outlook, the net debt position will
improve substantially in the second half of the year. Boskalis'
financial position remains strong with a solvency of 50.9%.
The order book, excluding our share in the order book of
associates, increased to EUR 4.36 billion at the end of the first
half year (year-end 2018: EUR 4.29 billion).
Peter Berdowski, CEO:“Over the past six years we have built up a
strong leading position in the offshore cable market in Northwest
Europe. These activities contributed well to the result in that
period. We have successfully completed many projects in close and
constructive cooperation with clients. Recently, however, we are
being confronted with a drastically changed attitude of many of
these clients. Under pressure from the disappearance of subsidies
on wind farms, clients are keenly looking for ways to reduce costs.
This has resulted in a considerably more tense situation in the
execution of projects and an accumulation of disputes on projects
and lengthy claim procedures. Although we are confident that we
will be able to recover a large proportion of the outstanding
claims in the future, we have prudently taken provisions on a
limited number of offshore projects, whereby we reviewed the entire
offshore portfolio.
In order to respond better to the changed market situation, we
have tightened the organization of the Offshore Energy division and
in particular that of Subsea Cables. The provisions have a major
impact on the earnings of the Offshore Energy division in the first
half of the year resulting in a loss, despite the stable revenue
and the decent occupancy of the vessels. We expect a positive
contribution from the Offshore Division for the second half of the
year and we see clear signs of recovery for the medium term. At
Dredging & Inland Infra the picture was stable in terms of
volume, vessel utilization and earnings and Salvage had a very
strong first half year with high-profile projects and a strong
increase in the result.
Finally, we have taken major steps in the repositioning of our
business portfolio this half year, on the one hand with agreements
reached on the sale of our harbor towage joint ventures Kotug Smit
Towage and Saam Smit Towage and on the other hand with the
expansion of our position in the early cyclical survey market with
the acquisition of a majority stake in the survey company
Horizon."
OutlookThe market picture for the rest of 2019
is not fundamentally different from that in the first half year and
with no further loss provisions anticipated, a strong improvement
of the result is expected.
At Dredging & Inland Infra we see a reasonable volume of
work in the market in the short term, with the timing of new
project awards being the biggest uncertainty. The emphasis for
Boskalis is on maintaining utilization at a responsible level of
project risk. With the current projects in hand, a reasonable part
of the fleet is set to be utilized in the remainder of 2019.
The picture for the Offshore Energy market has not changed and
the second half year is expected to be comparable to the first half
year, adjusted for the onerous contract provisions. Transport and
diving will be largely dependent on the spot market. Survey is
expected to have another good year with further growth, partly
thanks to the addition of Horizon. For the contracting activities
we expect the projects in the order book to result in a reasonable
second half year.
At Towage, market volumes within the remaining towage joint
ventures are stable and the saleof our stake in Saam Smit Towage is
expected to be completed in the second half year.Following a very
strong first half year Salvage will be dependent on new emergency
response assignments and settlement results from old projects, as
is customary for this business.
Based on the fleet planning and work in the order book and
barring unforeseen circumstances, the Board of Management expects a
sharp improvement in the net profit in the second half of 2019
compared to the first half year. The guidance stated earlier in
2019 that EBITDA levels will be stable relative to the
approximately EUR 350 million of last year is maintained.
Capital expenditure in 2019 is expected to be slightly more than
EUR 250 million, excluding acquisitions, and will be financed from
the company’s own cash flow.
The net debt position increased temporarily to EUR 419.8 million
at the end of the first half year. With the proceeds from the sof
our share in Kotug Smit Towage and Saam Smit Towage and with the
operational outlook, the net debt position is expected to improve
substantially towards the end of the year.
>>> click
here for the full version of the 2019 half
year reportincluding all the financial details
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KEY FIGURES |
1ST HY 2019 |
1ST HY 2018 |
2018 |
(in EUR
million) |
|
|
|
Revenue |
1,265.9 |
1,165.7 |
2,569.5 |
EBITDA |
135.7 |
167.2* |
353.6* |
Net result from
JVs and associates |
8.6 |
14.8 |
28.4* |
Operating
result |
-33.1 |
47.4 |
119.0 |
Extraordinary
items |
42.2 |
-397.0 |
-519.5 |
EBIT |
9.1 |
-349.6 |
-400.5 |
Net profit
adjusted for extraordinary income and charges after tax |
-40.9 |
34.5 |
82.8 |
Net profit
(loss) |
1.3 |
-361.4 |
-435.9 |
Earnings per
share |
0.01 |
-2.76 |
-3.29 |
|
|
|
|
|
30 June 2019 |
30 June 2018 |
End 2018 |
Order book |
4,363 |
3,885 |
4,292 |
EBITDA and operating result include our share in the net result
of joint ventures and associates* adjusted for extraordinary
items
Live audio webcast
The Board of Management of Royal Boskalis Westminster will
comment on the 2019 half-year results at the analyst meeting (11.30
am - 12.45 pm CET) on 22 August 2019. This meeting can be followed
by means of a live audio webcast, details of which can be found on
the homepage (www.boskalis.com).
2019-2020 |
FINANCIAL CALENDAR |
22 August |
Publication of
2019 half-year results |
8 November |
Trading update on
third quarter of 2019 |
5 March |
Publication of
2019 annual results |
13 May |
Trading update on
first quarter of 2020 |
13 May |
Annual General
Meeting of Shareholders |
20 August |
Publication of
2020 half-year results |
6 November |
Trading update on
third quarter of 2020 |
FOR FURTHER
INFORMATION
Investor relations:Martijn L.D.
Schuttevâerir@boskalis.com
Press:Arno Schikkerpress@boskalis.com
T +31 786969310
This is a Boskalis press release on the grounds of
article 17 paragraph 1 of the European Market Abuse Regulation
(596/2014).
This is an English translation of the Dutch press
release. In the event of any disparity between the Dutch original
and this translation, the Dutch text will prevail.
Royal Boskalis Westminster N.V. is a leading global
services provider operating in the dredging, maritime
infrastructure and maritime services sectors. The company provides
creative and innovative all-round solutions to infrastructural
challenges in the maritime, coastal and delta regions of the world.
With core activities such as coastal defense, riverbank protection
and land reclamation Boskalis is able to provide adaptive and
mitigating solutions to combat the effects of climate change, such
as extreme weather conditions and rising sea levels, as well as
delivering solutions for the increasing need for space in coastal
and delta regions across the world. The company facilitates the
development of offshore energy infrastructure, including renewable
wind energy. Boskalis is furthermore active in the construction and
maintenance of ports, waterways, access channels and civil
infrastructure, thus helping to facilitate trade flows and regional
socio-economic development. In addition, Boskalis is a global
marine salvage expert and has a number of strategic partnerships in
harbor towage and terminal services (Kotug Smit Towage, Keppel Smit
Towage, Saam Smit Towage and Smit Lamnalco). With a versatile fleet
of more than 900 vessels and floating equipment and 11,300
employees, including associates, Boskalis is creating new horizons
around the world.
This press release can also be found on our website
www.boskalis.com.
- Boskalis Half Year Report 2019
- Boskalis HY 2019 press release 22082019