Trading update: Boskalis maintains 2017 profit forecast
November 10 2017 - 1:58AM
Papendrecht, 10 November 2017
HIGHLIGHTS THIRD QUARTER
-
Good revenue development during the quarter with
a lower result
-
Good utilization of trailing suction hopper
dredgers (Dredging)
-
Slightly lower utilization of heavy transport
vessels (Offshore Energy)
-
Slight decline in order book to EUR 3.1
billion
OUTLOOK
-
Persistently difficult market conditions
characterized by low work volumes and pressure on utilization rates
and margins
-
Profit outlook 2017: net profit in the second
half of the year comparable to the first half of the year,
excluding restructuring charges
Royal Boskalis Westminster N.V. (Boskalis) saw a
slight increase in revenue in the third quarter of 2017 compared to
the quarterly average reported for the first half the year, whilst
the result failed to keep pace.
Compared to the third quarter of last year both
revenue and the result were considerably lower, in line with
expectations. In 2016 Offshore Energy still had a good year,
boosted by a number of large offshore wind farm installation
projects in progress.
With regard to the 2017 full year Boskalis expects
net profit in the second half, excluding restructuring charges of
approximately EUR 15 million, to be comparable to the net profit of
EUR 75 million realized in the first half of the year.
Compared to end-June the order book declined by 4%
to EUR 3.1 billion. Approximately EUR 0.5 billion of new
worked was acquired in the third quarter. In addition two preferred
bidder agreements were signed for the installation of offshore wind
farm cables with a combined value of around EUR 160 million. These
contracts will be added to the order book at the financial close in
2018. Furthermore at the end of October Boskalis acquired the
Borssele Beta export cables installation contract (value: EUR 70
million) as well a multi-year Dredging maintenance contract with a
total value in excess of EUR 260 million.
Operational
developments
The third quarter at Dredging & Inland
Infra was busier than the first half of the year. Considering
conditions in the market there was good utilization of the hopper
fleet and quarterly revenue was slightly higher than the quarterly
average reported for the first half of the year. The results from
ongoing dredging projects were mediocre and there was a positive
contribution from projects technically completed
previously.
The projects acquired in the third quarter were mainly
port-related, in countries including the Netherlands, Sweden and
Panama. On balance, there was a slight decrease in the order book
at Dredging & Inland Infra compared to mid-2017.
At Offshore Energy the third
quarter was in line with expectations. Revenue and the segment
result were lower compared to the previous quarters, partly as a
result of the poor conditions in the oil and gas sector. Within the
division there is a difference in the picture between Services on
the one hand and the more project-related activities of
Installation & Intervention and offshore wind energy on the
other.
At Services margins were under pressure and utilization of the
heavy transport vessels declined compared to the first half of the
year. There was a good contribution from the Aasta Hansteen and
Mariner long-term transport contracts. The completion of these
projects will further increase dependence on the spot market.
Utilization levels remained stable at Subsea Services with vessels
also being deployed internally on offshore wind farm and unexploded
ordnance clearance projects.
At the more project-related activities VBMS and its cable-laying
activities can look back on another busy period in which they made
a substantial contribution to the division's result.
Notable contracts acquired in the third quarter include rock
placement work for Nordstream 2 (Baltic Sea), a transport contract
for West White Rose (Canada) and a logistical management contract
for a petrochemical plant in the Middle East. On balance there was
a slight increase in the order book at Offshore Energy compared to
mid-2017.
At the Towage & Salvage
segment revenue at Salvage picked up in the third quarter after a
very quiet first half with two medium-sized and numerous small
emergency response contracts contributing to the increase. The
absence of large wreck removal projects means that 2017 will be a
quiet year compared to the last few years. At the strategic Towage
partnerships (Smit Lamnalco, Keppel Smit Towage, Saam Smit Towage
and Kotug Smit Towage) there was no material change in the picture
compared to the first half of the year. The contribution to the
result was on balance slightly higher with a modest rise in the
contributions from Saam Smit Towage and Keppel Smit Towage.
Corporate Business Plan - Expanding Subsea
An important objective stated in the Corporate
Business Plan 2017-2019 presented by Boskalis at the start of the
year is to strengthen the group's market position in the area of
Subsea Services. In a persistently challenging market there tend to
be interesting opportunities for anti-cyclical investments in
companies or equipment that will result in Boskalis being
well-positioned when end-markets recover again. In mid-August
Boskalis took a first step in this direction with the acquisition
of subsea survey specialist Gardline. In addition, Boskalis
recently acquired the DSV Constructor for around
EUR 40 million. Boskalis recently exercised a purchase
option on this leased vessel, which had been part of the fleet for
some considerable time. Furthermore, Boskalis is in advanced stages
of negotiation for the purchase of an existing modern high-end SAT
DSV.
Share buyback
On 6 June 2017 Boskalis issued over 3.2 million
new shares to distribute as 2016 stock dividend. On 3 July Boskalis
launched a share buyback program in order to neutralize the
resulting dilution. As at 9 November Boskalis has repurchased over
2.3 million shares at an average purchase price of EUR 29.12 per
share.
Outlook
At the presentation of the half year results it
was stated that based on the fleet planning and work in the order
book, and barring unforeseen circumstances, expectations were that
net profit in the second half of 2017, excluding restructuring
charges, would be comparable to the net profit of EUR 75 million
achieved in the first half of the year. The Board of
Management maintains this forecast.
The implementation of the cost-reduction program
initiated at the beginning of the year will be largely completed
before the end of the year. The costs of around EUR 15 million
associated with the program will be recognized in the second half
of 2017.
Total capital expenditure in 2017 is expected to
be EUR 250 million, excluding the acquisition of Gardline and the
purchase of second-hand vessels such as the previously referred to
DSVs.
The net cash position has declined since the
middle of 2017 in part due to the share buyback program and the
acquisition of Gardline. The financial position of Boskalis is
unabated strong. Boskalis comfortably meets the covenants agreed
with its financiers.
2018 |
FINANCIAL CALENDAR |
8
March |
Publication of 2017 annual results |
9
May |
Q1 2018
trading update |
9
May |
Annual
General Meeting of Shareholders |
16
August |
Publication of 2018 half-year results |
9
November |
Q3 2018
trading update |
For further information
Investor relations:
Martijn L.D. Schuttevâer
ir@boskalis.com
Press:
Arno Schikker
press@boskalis.com
T +31 78 6969310
This is a
Boskalis press release on the grounds of article 17 paragraph 1 of
the European Market Abuse Regulation (596/2014).
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 harbor towage and terminal
services (Kotug Smit Towage, Keppel Smit Towage, Saam Smit Towage
and Smit Lamnalco). With a versatile fleet of more than 900 vessels
and floating equipment and 11,700 employees, including associated
companies, Boskalis operates in 90 countries across six
continents.
This press release can also be found on our
website www.boskalis.com.
pdf version 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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