Royal Boskalis Westminster says it has concluded a strong first half year. The utilisation of the large vessels was high and with a strong increase in revenue, earnings also rose sharply, in particular due to an exceptional gain.
Compared to last year, revenue increased by 22 per cent to EUR 1.61 billion (H1 2021: EUR 1.32 billion). Adjusted for (de)consolidation and currency effects, revenue growth was 20 per cent.
EBITDA increased by 29 per cent to EUR 292 million (H1 2021: EUR 226 million), including a book profit of EUR 50 million from the sale of Keppel Smit Towage. Operating profit including exceptional items increased by 47 per cent to EUR 143 million (H1 2021: EUR 97 million).
Net profit amounted to EUR 116 million, including EUR 37 million in exceptional items, whereas a year ago a net profit of EUR 72 million was reported.
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Strong growth for dredging projects in Asia
In the Dredging & Inland Infra segment, revenue increased by 46 per cent compared to the same period in 2021 with a similar increase in EBITDA result. Where the effects of Covid-19 led to major operational inefficiencies over the past two years on projects in Asia in particular, strong growth is now coming from large projects in that region. In particular, the activities in Manila Bay have contributed to the strong revenue growth.
Other noteworthy projects in progress include Tuas Terminal 2 and the Pulau Tekong Polder (both in Singapore), the Fehmarnbelt tunnel (between Denmark and Germany) and a large number of projects in the Netherlands to protect the country against climate change with the strengthening of dikes and coastal areas.
The hopper fleet was well utilised thanks to activities in the Philippines and at the end of the second quarter the extended Prins der Nederlanden was re-commissioned.
Strong demand from offshore wind and oil and gas
At Offshore Energy, revenue increased by 3 per cent and the EBITDA result increased by 29 per cent. A sharp decline in the contracting activities, partly due to a volume decline at Subsea Cables, was more than offset by a good half year at the services part of the division.
The utilisation of the heavy transport vessels in Marine Transport & Services was exceptionally high and also Subsea Services and Marine Survey had a very good operational half year. The strong demand from both the offshore wind market and the traditional oil and gas market was partly causing this.
In the second quarter the new crane vessel Bokalift 2 was commissioned and has since been working on the sizable Changfang & Xidao offshore wind project in Taiwan. The vessel was commissioned with almost three years of work in offshore wind in hand.
Salvage experiences quiet first half year
Within the Towage & Salvage division, both revenue and earnings declined sharply. After a number of years with large high-profile projects at Salvage and significant settlement results from old projects, the first half of the year was quiet in terms of both revenue and earnings.
At the end of June, the previously announced sale of the Keppel Smit Towage (KST) joint venture was successfully completed. The Towage activities are now mainly related to the terminal services of Smit Lamnalco.
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Stable order book
The order book remained virtually stable at EUR 5.37 billion (year-end 2021: EUR 5.41 billion). At Dredging & Inland Infra, more than EUR 0.5 billion worth of new work was taken on, but the substantial revenue growth led to a net decrease in the portfolio. At Offshore Energy the workload rose sharply with the addition of EUR 1 billion in new projects, the largest share of which is related to offshore wind.
‘Over the past six months we have managed to achieve a substantial increase in revenue and earnings – an excellent achievement given the restrictive COVID measures that were still having a major impact on our projects until recently and the inflationary pressures we are experiencing worldwide,’ says Peter Berdowski, CEO Boskalis.
Reaping the benefits of multi-purpose vessels
Berdowski stresses the importanceof the dredging work in Manila bay: ‘The construction of the new international airport is the largest project in our history and the contours of the new land are now visible. In addition to the long-term deployment of our large dredgers, this project also provides a significant amount of local employment.’
He continues: ‘At Offshore Energy, we are reaping the benefits of our strategy of focusing on multi-purpose vessels and services with which we are able to serve both the traditional markets and the offshore wind market. With demand from both markets picking up, we achieved a very good result with subsea services and marine survey. […] Offshore Energy’s order book now consists of over sixty per cent of offshore wind projects.’
HAL bid
In March, Boskalis’ existing major shareholder HAL announced its intention to make an offer for all outstanding shares. The company itself has taken a neutral position on the offer, leaving the decision to the shareholders.
Berdowski: ‘We have since held intensive talks with HAL in which we have taken the interests of all stakeholders into account. HAL has since launched its offer and Boskalis has published its formal position in a Position Statement. We will shortly explain this position to our shareholders in an extraordinary general meeting of shareholders, after which it will be up to the shareholders whether they wish to offer their shares. In the course of September more clarity will emerge regarding the outcome of the offer.’
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Outlook
Given the strong results in the first half of the year and the magnitude and composition of the order book, Boskalis is in good shape for the rest of the year, assuming that Covid-19-related restrictive measures experienced over the past two years, particularly in the Far East, will not return.
At Dredging & Inland Infra, a comparable operational and financial second half is expected. Due to the magnitude of the activities in Manila Bay, the progress will be a major determinant for the result. Furthermore, the other large works in Singapore, Denmark and the Netherlands will also make a significant contribution. The utilisation of the hopper fleet is expected to remain high and the utilisation of the cutters will only increase to a limited extent.
At Offshore Energy, the second half of the year is also expected to be in line with the first half. In contracting, a number of large ongoing offshore wind projects such as Changfang & Xidao and Fécamp will be decisive. In services, it is expected that the current market picture will not change substantially and that the strong demand will also be reflected in a good second half year.
A stable picture is expected for the terminals activities within Towage. The result of Salvage will strongly depend on the inherently unpredictable nature of the business. Possible large settlement results on previously executed projects are not expected.
Based on the fleet planning and works in portfolio, and barring unforeseen circumstances, the Board of Management expects the EBITDA level of the second half of the year to be in line with that of the first half, adjusted for exceptional items. For 2022, the unchanged capital expenditures outlook is approximately EUR 450 million, including dry-dockings, however excluding possible acquisitions.
Picture: The dredger Prins der Nederlanden was lengthened and re-commissioned in the second quarter (picture by Boskalis).
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