After suffering a EUR 62 million loss over 2021, 2022 was a year of growth and recovery for offshore and dredging contractor Van Oord. The company secured a net profit of EUR 60 million and has a healthy order book worth EUR 4.3 billion.
Van Oord says 2022 was not an easy year; external factors created problems within the supply chain, putting pressure on prices and planning. The complex project portfolio was under control by the end of the year and the net result increased. Van Oord envisages two major drivers for the future: the rapidly increasing demand for climate adaptation solutions and offshore energy projects.
Over 2022, Van Oord’s revenue was EUR 2 billion (2021: 1.5 billion), with EBITDA increasing from EUR 67 million to 243 million. Investments in equipment increased from EUR 208 million to EUR 227 million and the workforce increased to 5243 FTEs from 4725.
‘The year 2022 proved to be one of the most turbulent years in Van Oord’s 154-year history,’ says Pieter van Oord, CEO. ‘Market conditions and operational challenges demanded that we pull out all the stops, with the aim of ensuring recovery and a positive result.’
He adds: ‘The war in Ukraine has been raging since February 2022, with major consequences, both direct and indirect, for society and for our company. We have discontinued our operations in Russia and the projects in our order book have been cancelled. As a result of the war in Ukraine, we faced global disruption in our supply chain and steep price increases for certain products. However, on balance, this has cost the company tens of millions of euros in 2022.’
‘Globally, markets reacted in various ways, ranging from stagnation to recession, but this also led to growth opportunities,’ says Van Oord. ‘Demand in the offshore wind market increased exponentially. There is also a growing demand for sustainable solutions for climate change and coast protection.’
Van Oord is also becoming more sustainable. With its Sustainable Earth Actions (S.E.A.) programme, it is setting SBTi (Science Based Targets initiative) targets in 2023 for 2030, and the company is working towards net-zero emissions by 2050.
The four business units are putting a great deal of effort into achieving those targets. That involves considerable variation: from Building with Nature solutions in the design and implementation phase to operations and sustainability requirements within the supply chain. Van Oord is also using biofuels to reduce emissions.
Key financial performance
All of Van Oord’s business units realised a revenue increase in 2022. The Dredging business unit grew its revenue to EUR 892 million (2021: EUR 727 million) including amongst others the Fehmarnbelt Fixed Link project and the deepening of the Harwich channel.
Compared to 2021, the Offshore Wind business unit had a busy year with EUR 599 million revenue because of construction on the Saint-Brieuc, Greater Changhua and Hollandse Kust Noord projects (2021: EUR 347 million). Revenue in the Netherlands business unit was EUR 322 million (2021: EUR 252 million) and mainly included projects such as the Afsluitdijk, A16 motorway Rotterdam and Twentekanalen.
Despite the prolonged suspension of the Mozambique LNG project, the Offshore business unit was able to increase its revenue to EUR 208 million mainly in relation to various projects in Mexico, Norway and the United Kingdom (2021: EUR 191 million).
The total order book of EUR 4300 million at year-end 2022 remained stable compared to 2021 (EUR 4,353 million) as revenue was in line with the award volume including variations. The latter were on balance negative as a number of projects (in Russia and Angola) were taken out of the order book. Newly awarded projects in 2022 included: Ain Sokhna (Egypt) and Constanta Beaches (Romania) in the Dredging business unit, Ocean Wind (US) in the Offshore Wind business unit, Gas to Energy (Guyana) in the Offshore business unit and the dyke reinforcement Hansweert in the Netherlands business unit.
In June 2022, Van Oord’s first LNG trailing suction hopper dredger, Vox Ariane, was ceremonially brought into service. It will be joined by its two sister ships, the Vox Apolonia and the Vox Alexia, in 2023. In November, the three vessels jointly received the 2022 Maritime KNVR Shipping Award, in recognition of their contribution to innovation in the Dutch shipping industry.
On all the new vessels, the company is investing in the latest technology, which will (eventually) be able to be powered by the fuels of the future, such as methanol, ammonia, biofuels, and hydrogen.
In 2022, construction of the new offshore installation vessel, the Boreas, kicked off. This jack-up offshore installation vessel is being built in China. The crane – capable of lifting more than 3000 tonnes – is being built by Huisman. The vessel is designed to install wind turbines and monopiles with a capacity of 20 MW. The vessel will be able to run on methanol.
Two more hybrid water injection vessels were ordered in 2022. These two water injection dredgers (WIDs) are again built by Kooiman in Zwijndrecht. The design is based on the WIDs Maas and Mersey which are already in service.
The launch of the new cable-layer, the Calypso, is scheduled for September 2023. This vessel is equipped with two cable carousels, making it suitable for laying HVDC (high-voltage direct current) cables. These cables will play an important role particularly for offshore wind farms that are further away from the coast.
Russia and Ukraine
In 2022, the invasion of Ukraine made Van Oord decide to completely withdraw from Russia. Existing activities have been terminated in a controlled manner.
Van Oord employees are assisting in providing shelter for Ukrainian refugees. Various equipment, including for IT, has been donated. Van Oord is also providing practical support for refugees as regards entering the labour market. Electricity generators have also been sent to Ukraine.
Newly awarded contracts
Van Oord is proving to be a preferred partner for projects to protect against the impact of climate change. In Romania, Van Oord was awarded the contract for another coastal protection project near Constanța in 2022, with natural and nature-friendly solutions to protect against the Black Sea.
In April 2022, Van Oord signed the contract for a development project at Addu City in the Maldives. This involves creating 194 hectares of new land to protect the city from rising sea levels while providing opportunities for housing and economic development. The project is in an ecologically sensitive area; an Environmental Impact Assessment has been completed and Van Oord is making efforts to ensure the most nature-friendly approach.
In the Netherlands, Van Oord was awarded the contract for reinforcing the dike at Hansweert, as well as floodplain maintenance projects. Such projects are intended to prevent flooding due to climate change; clients are the provinces and Rijkswaterstaat.
Offshore energy projects are the other big driver in the market. End of 2022 Van Oord has been selected as preferred contractor for construction of the Baltic Power wind farm, 23 kilometres off the coast of Poland. That project was not yet included in the order book. Van Oord will handle the transportation and installation of more than seventy foundations. With a capacity of 1.2 GW, the wind farm will provide renewable electricity for over 1.5 million Polish households. Construction will start in 2024, with production scheduled to start in 2026.
Empire Offshore Wind, a joint venture between Equinor and BP, has selected the consortium of Van Oord and Great Lakes Dredge & Dock (GLDD) for the Empire Wind I & II project. Development of this wind farm off the east coast of the United States is an important step towards supplying renewable energy for the State of New York. The United States is becoming an important new offshore wind market for Van Oord.
As offshore wind farms increase, so does the demand for maintenance. In 2022, Vestas awarded a major maintenance contract to MPI Offshore, a subsidiary of Van Oord, for its European wind farms in 2022.
Van Oord remains committed to a portfolio of synergistic activities as a marine contractor, with the basic premise for that strategy being profitable growth. Van Oord is confident that its business will continue to grow during this decade thanks to two key developments in its markets: climate adaptation and the energy transition.
In the short term, there remain major uncertainties. Global economic growth in 2023 will be significantly lower than previously forecast, and the uncertainties may impact margins. For the present, Van Oord expects further growth in revenue and an expansion of its order book and results for 2023.
Van Oord: ‘We take a positive view of what lies ahead of us. Market conditions are favourable, and Van Oord has made a timely decision to invest substantially in new and sustainable equipment. The last two decennia Van Oord has developed itself to market leader in Offshore Wind in the Netherlands. The first of our three new award-winning LNG trailing suction hopper dredgers was launched in 2022, with the launch of the next two scheduled for 2023 (14 March and September).’
‘Van Oord is investing – in innovation, in sustainable equipment, in its people, and in the future. That’s what you do when you’re confident about that future. Our entire committed investment programme is worth more than EUR 800 million, this being part of a total investment programme in sustainable vessels, of EUR 2 billion this decade,’ states Van Oord.