Boskalis maintains 2016 profit outlook
November 11 2016 - 2:00AM
Papendrecht, 11 November 2016
Q3 TRADING UPDATE - HIGHLIGHTS
-
Revenue and result development in line with
expectations
-
Utilization rates stable for trailing suction
hopper dredgers (Dredging) and heavy transport vessels (Offshore
Energy)
-
Order book increased 8% to EUR 2.9 billion
-
Good contribution from VolkerWessels offshore
activities acquired at beginning of Q3
OUTLOOK
-
Persistently difficult market conditions
characterized by low volumes of work and pressure on utilization
rates and margins
-
Profit outlook: operating net profit in second
half of 2016 to approach operating net profit level achieved in
first half of the year
Royal Boskalis Westminster N.V. (Boskalis) closed
the third quarter of 2016 in line with expectations. Both revenue
and operating profit were higher than the average seen in the first
two quarters of the year. The increase was wholly attributable to
the contribution from the offshore activities acquired from
VolkerWessels, which are consolidated with effect from the third
quarter. Adjusted for these activities there was a slight decline
in revenue and operating profit compared to the average seen in the
first two quarters of the year.
Adjusted for acquisitions there was a substantial
decline in revenue and operating profit compared to the third
quarter of last year, in line with expectations. 2015 as a whole
was an exceptionally good year with high fleet utilization and
particularly good project margins.
Market conditions remain persistently difficult
both at Dredging and for the capacity-driven service-related
activities of Offshore Energy, putting pressure on volumes and
prices.
The order book increased to EUR 2.9 billion,
up 8% compared to end-June, with the increase wholly attributable
to the addition of the offshore activities of VolkerWessels.
The expectations for the remainder of the year
remain unchanged. For 2016 as a whole Boskalis expects the
operating net profit in the second half to approach the level
achieved in the first half of the year.
Operational
developments
Dredging & Inland Infra had a quiet third
quarter in line with the first half of the year. Market weakness
resulted in low but stable utilization levels for the hopper fleet
and revenue comparable to the average seen in the first two
quarters of the year. Results on dredging projects in progress were
reasonable to good and there was also a positive contribution to
the result from projects that were technically completed at an
earlier stage. However, at the same time the result was adversely
impacted by the considerably lower equipment utilization rates. In
the third quarter projects were contracted in countries including
the Netherlands, Finland, the United Kingdom and Uruguay. On
balance the order book at Dredging & Inland Infra fell by
around 5% compared to mid-2016.
Offshore Energy had a good
third quarter on balance, supported by the contribution from the
offshore activities acquired from VolkerWessels. Revenue and the
result at the segment rose compared to the previous quarters.
Excluding the contribution from the VolkerWessels activities
revenue and the result were slightly lower compared to the average
seen in the first two quarters of the year.
The sharply contracting market and increased competition is putting
increasing pressure on utilization and margins at the
capacity-driven Marine Services activities. By contrast new
opportunities are opening up in the offshore wind energy market,
partly thanks to the offshore activities recently acquired from
VolkerWessels. In the third quarter Boskalis secured the contract
for the construction of the Aberdeen Offshore Wind Farm as well as
numerous smaller contracts. The order book of Offshore Energy was
higher as a result of the VolkerWessels acquisition; adjusted for
this consolidation effect the order book declined compared to
mid-2016 levels.
In the Towage & Salvage
segment revenue at Salvage in the third quarter was comparable to
the first two quarters. Contrary to last year, this year there were
no large wreck removal projects in progress or in the order book.
There was no material change in the picture at the Towage joint
ventures and associated companies (Smit Lamnalco, Keppel Smit
Towage, Saam Smit Towage and, from the second quarter, KOTUG SMIT
Towage) in the third quarter compared to the first half of the
year. The contribution to the result from Smit Lamnalco and Keppel
Smit Towage was lower than expected due to pressure on end
markets.
The Holding segment mainly
comprises the usual non-allocated head office costs as well as
various non-allocated (in many cases non-recurring) income and
expenses. The acquisition of the remaining shares in VBMS, in which
Boskalis already held a 50% stake, resulted in a revaluation gain
of EUR 40 million in the third quarter.
Update on fleet rationalization
At the beginning of July Boskalis announced a
fleet rationalization program to be implemented over the next two
years. It involves 24 vessels being taken out of service and the
loss of 650 jobs. After obtaining a positive opinion from the Dutch
Works Council and approval of the social plan from both trade union
CNV Waterbouw and the Works Council, Boskalis started with the
implementation of the program. Of the announced reduction affecting
650 jobs, the workforce has already been reduced by more than 200
jobs. The timing of the remaining workforce reduction is partly
dependent on factors including the current deployment of vessels
and national legislation.
Outlook
At the release of the half-year results the
company stated that, based on the fleet planning and work in the
order book and barring unforeseen circumstances, operating net
profit in the second half of 2016 was expected to approach the
level achieved in the first half of the year. Based on the result
and the market picture in the third quarter the Board of Management
maintains this forecast.
Exceptional items such as book and revaluation
gains, impairments and our share in the result of Fugro are
excluded from the operating net profit forecast. At the close of
the fourth quarter and based on the new three-year corporate
business plan, annual impairment tests required under IFRS will be
conducted. Given the rapid and strong deterioration in market
conditions impairment charges cannot be ruled out, in particular at
the offshore services activities. A potential impairment of this
type will have no impact on determining the dividend amount.
Capital expenditure in 2016 is expected to total
EUR 180-200 million, excluding acquisitions. The amount is well
below the level of depreciation and will be financed from the
company's own cash flow.
Boskalis' financial position remains strong. The net debt position
has declined since mid-2016 and Boskalis comfortably meets the
covenants agreed with its debt providers.
2017 |
FINANCIAL CALENDAR |
8
March |
Publication of 2016 annual results |
10
May |
Trading
update on first quarter of 2017 |
10
May |
Annual
General Meeting of Shareholders |
17
August |
Publication of 2017 half-year results |
10
November |
Trading
update on third quarter of 2017 |
For further information
Investor relations:
Martijn L.D. Schuttevâer
ir@boskalis.com
Press:
Arno Schikker
press@boskalis.com
T +31 78 6969310
This is an
English translation of the Dutch press release. In the event of any
disparity between the Dutch original and this translation, the
Dutch text will prevail.
Royal Boskalis
Westminster N.V. is a leading global services provider operating in
the dredging, maritime infrastructure and maritime services
sectors. The company provides creative and innovative all-round
solutions to infrastructural challenges in the maritime, coastal
and delta regions of the world with services including the
construction and maintenance of ports and waterways, land
reclamation, coastal defense and riverbank protection. In addition,
Boskalis offers a wide variety of marine services and contracting
for the oil and gas sector and offshore wind industry as well as
salvage solutions (SMIT Salvage). Furthermore, Boskalis has a
number of strategic partnerships in harbour towage and terminal
services (KOTUG SMIT Towage, Keppel Smit Towage, Saam Smit Towage
and Smit Lamnalco). With a versatile fleet of 1,000 units Boskalis
operates in around 75 countries across six continents. Boskalis has
over 8,200 employees, excluding its share in
partnerships.
This press release can also be found on our
website www.boskalis.com.
PDF version of this
press-release
This
announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: Koninklijke Boskalis Westminster N.V. via
Globenewswire
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