SMIT achieves a net profit of over EUR 75 million

The net profit for the period until 30 September 2009 amounts to EUR 75.1 million. The result includes a net contribution of EUR 10 million from the financial settlement of the “Thunderhorse” project. The net profit shows a decrease compared with the corresponding period in 2008. The decrease is caused mainly by a drop in revenues of the Harbour Towage and Transport & Heavy Lift Divisions. In contrast, the Terminals and Salvage Divisions realised sharp increases in their results. EBITDA (including the income contributed by “Thunderhorse” and the results from associated companies) rose slightly compared with last year.

Ben Vree, SMIT’s CEO, comments, “Despite the current recession, we have proved capable of maintaining our financial results at a reasonable level, by reallocating harbour tug vessels to new areas. During the third quarter we saw a slight recovery in the number of towage movements. However, the cyclical activities of the Transport & Heavy Lift Division generated lower returns. The profit forecast for the whole of 2009 is still in line with our earlier announcements.”

Harbour Towage Division
Harbour towage services and related maritime services.

During the third quarter, the number of towage movements recovered slightly compared with the first half of 2009. However, the operating result of the group companies were below last year’s level, in particular owing to a drop in revenues in the ports in Europe and Canada. The joint ventures, on the other hand, recorded a substantial growth. The result of in particular the SMIT Rebras joint venture in Brazil showed sharp improvement. The joint venture’s construction programme for 18 new tug vessels was completed, and 21 tugs are currently operational at 5 locations. The new joint venture in the Baltic, Towmar SMIT Baltic, has also contributed to the results since May 2009.

Tugs are being repositioned (within the Harbour Towage and Terminals Divisions) in order to improve the capacity utilisation. In addition, cost-cutting measures have been implemented in order to maintain the level of the profit margins.

Terminals Division
Towage services and related maritime and management services to offshore and onshore terminals

The rise in the results of the Terminals activities continued during the third quarter of 2009. Both the group companies and the joint ventures realised sharp higher results than during the corresponding period in 2008. Two smaller contracts were concluded during the third quarter in India and Gabon. Also during the third quarter, the 25-year contract for an LNG terminal in Italy became operational. At this terminal the joint venture will deploy 4 tugs. The current terminal contract in Novorossiysk (Russia) will not be renewed.

Salvage Division
Salvage, wreck removal, environmental protection and consultancy

The workload during the third quarter of 2009 was greater than during the first six months of the year. The results for the period until 30 September are sharply higher than those for last year, owing to settlements for prior-year salvage operations. As reported previously the most important of these is the settlement for the “Thunderhorse” project from 2005 (net impact of EUR 10 million). Work on the “Pride Wyoming” in the Gulf van Mexico was completed. Until now the workload for the fourth quarter is below the historical average.

Transport & Heavy Lift Division
Transport: Chartering, barge rental, heavy transport and towage
Heavy Lift: Heavy lift activities, implementation of maritime projects, marine support and subsea activities

The third-quarter results of the Transport & Heavy Lift Division were slightly below the results for the first six months of the year, the primary reason being that the vessels operating on the spot market generated lower returns. As a result, the accumulated results for 2009 are below last year’s level. The long-term Transport contracts generate a stable cash flow.

Owing to the currently unfavourable market conditions, the “Taklift 4” sheerleg is undergoing substantial modification during the latter half of the year to increase its capacity and extend its useful life. As a result of this and other factors, income from the Heavy Lift activities for the second half of the year will be below the level of the first six months.

Until 30 September 2009, 13 vessels were delivered at group companies and another 13 tugs at associated companies. A further 8 vessels (for both group and associated companies) are scheduled for completion during the remainder of this year. The net investments (including surveys of vessels) up to and including 30 September were approximately EUR 87 million.

The Group’s tax charges for the second half of the year are expected to be less than for the first six months, as a result of the valuation of unused tax-losses.

The net profit for the second half of the year is expected to be comparable to that for the first half, with the exception of the non-recurring income from the “Thunderhorse” settlement. This profit forecast is based in part on a historical average result for the fourth quarter for the Salvage Division.