Royal Boskalis Westminster is looking at scrapping its oldest vessels to prepare the company for a downturn in dredging projects.
Royal Boskalis Westminster is looking at scrapping its oldest vessels to prepare the company for a downturn in dredging projects.
The Dutch shipping group continues to have high fleet utilisation and a strong orderbook of project work, but its management expects harder times to come.
Royal Boskalis Westminster N.V. realized a net profit of ? 102.7 million in the first half of 2009. In the first half of 2008 the company realized a net profit of ? 110.0 million, excluding a non-recurring gain relating to the W.D. Fairway (? 92.0 million).
Boskalis benefited from its broad, well-filled order book in the first half of 2009, resulting in solid equipment utilization levels as well as good margins.
Revenue increased to ? 989 million, with growth being achieved in the home markets and the offshore activities within the Dredging & Earthmoving segment as well as in the Maritime Infrastructure segment. Included in the earnings are Boskalis" share in Smit Internationale's first-half year result (? 13.1 million) and a positive hedge result on the Port Rashid project (? 7.2 million). The net order intake amounted to ? 622 million in the first half of the year, bringing Boskalis' well-filled and broadly spread order book to ? 3.0 billion.
Peter Berdowski, CEO: ?Despite difficult economic times we turned in a strong performance in the first half of the year. The utilization rate of our vessels was solid and revenue has remained robust. In addition, our margins on running projects are healthy, largely thanks to the selective contracting policy we have pursued in the past few years. This allowed us to start the year with an order book that was well filled and - above all - broadly spread.
It is owing to this strong order book that we continue to have a positive outlook on the rest of 2009. The outlook for the period thereafter is less clear. In some market segments clients are adopting a more hesitant attitude to their investment decisions. On the other hand, we are seeing positive developments in offshore and in government infrastructural projects. For the coming years, we are anticipating a decline in volumes in the global dredging market. To prepare the company for this decline we have initiated a fleet rationalization program.?
Market Developments
The global dredging and marine contracting market is driven by factors such as growth in world trade, the global population, energy consumption and the effects of climate change. All these factors have resulted in a period of unbridled growth in the past few years.
Impacted by the global recession, these positive market conditions have changed drastically since September 2008. Although long-term structural growth factors for dredging and marine contracting remain positive, a great deal has changed for the short term. Commodity prices have decreased sharply and global trade is stagnating and these factors are affecting demand for our products and services.
Outlook
Full-year revenue in 2009 is expected to be comparable to the level achieved in 2008. The Board of Management expects the result in the second half of 2009 to be comparable to the result achieved in first half of the year. The level of investment will be around ? 300 million in 2009.
Boskalis is taking into account a drop in volumes in global dredging markets in the coming years. To prepare the company for this Boskalis has initiated a fleet rationalization program.
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