Boskalis posts 2018 loss on impairments. Revenue up

Dutch dredging and marine giant Boskalis posted a net loss of 436 million euros for the full year 2018, down from 150.5 million euros profit in 2017. Revenue improved in 2018, with Boskalis reporting 2.57 billion euros, versus 2.34 billion euros in 2017.

Boskalis said the result was in line with expectations, adding that the loss was a result of an almost entirely non-cash extraordinary charge of EUR 519 million, stemming from a sharp decline in the result in its Offshore Energy division, which posted an operating loss in the first half of the year.

Of these charges, 502.2 euros million were non-cash impairments, with EUR 344.8 million relating primarily to goodwill (including goodwill embedded in the book value of joint ventures), EUR 136.9 million to equipment within the Offshore Energy division and the remaining EUR 20.6 million to equipment and associates within two towage joint ventures.

Boskalis’s Net profit adjusted for extraordinary charges after tax was 82.8 million euros.

“In light of the poor prospects the decision was taken in the first half of the year to terminate the low-end transport activities within this division. Market conditions have also deteriorated for the harbor towage activities, mainly as a result of the consolidation among the large container shipping companies. Together these developments resulted in an extraordinary charge of EUR 519 million, almost entirely non-cash and consisting primarily of impairments of goodwill and vessels,” Boskalis said.

Offshore revenue boosted by Gardline

Overall for the year, Offshore Energy division saw an 8% percent rise in revenue, with busier year for contracting and survey (Gardline).  The largest contribution to the contracting revenue growth within the Offshore Energy division came from various offshore wind and seabed intervention projects. Within services, subsea services and survey activities also improved year-on-year. Revenues from the Marine Transport & Services cluster declined as a result of prevailing market conditions and the decision earlier in the year to exit the low-end heavy marine transport market, Boskalis said.

“Within Offshore Energy, there was a strong decline in full year earnings largely explained by the operating loss in the first half year. The 2018 full year operating result amounted to EUR 5.0 million (2017: EUR 85.0 million). The low-end Marine Transport & Services activities and the Subsea Services activities showed the largest decline in earnings and were the main cause of this decline. The seabed intervention, cable-laying and survey activities contributed positively,” Boskalis added.

“The strong decline in the division’s results was largely due to the deterioration at services. The winding-up of the loss-making transport activities at the low end of the market is proceeding according to plan. The transport and subsea activities had a difficult year and were loss-making on balance,” Boskalis added.

Revenue by segment came mostly from Dredging & Inland infrastructure (1.43 billion euros), followed by the Offshore Energy division which came in at 1.04 billion euros, with the rest coming from towage & salvage.

Market picture in 2019 not different

“Boskalis’ financial position continues to be strong, with a solvency ratio of 56% and a modest net debt position of EUR 131 million. The order book, excluding our share in the order book of joint ventures and associated companies, increased by 23% to EUR 4.29 billion (end-2017: EUR 3.50 billion),” Boskalis said on Thursday.

Looking at 2019, Boskalis said: “The market picture for 2019 is not fundamentally different from 2018. With a limited recovery in the prospective volume of work, prices and margins will remain under pressure. At Dredging & Inland Infra we see a reasonable volume of work in the market in the short term. The emphasis for Boskalis is on maintaining utilization at a responsible level of project risk. The current size of the order book means that a good part of the fleet will be utilized in 2019.

“The picture for the Offshore Energy market has not changed. In the short term transport and Subsea Services will be largely dependent on the competitive 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 year,” Boskalis said.

Offshore Energy Today Staff