Boskalis 2016 operating result in line with expectationsNews // March 8, 2017
Announcing results for 2017, Peter Berdowski, CEO of Boskalis, said that, after the best two years in Boskalis’ history, the company found itself "increasingly faced with the reality of current market conditions, particularly in the offshore market."
"In that sense 2016 was a year of extreme transition for us," said Mr Berdowski, "from economic high tide to low tide.
"The analyses carried out for our new business plan point out that a rapid recovery in the offshore market is not expected. And so where necessary we are adapting the organization to this new reality with further improvements in efficiency and effectiveness.
"But we are also expressly looking at opportunities that a market such as this can offer us for strengthening the company for the medium term, when the offshore market will start picking up again. And so the period ahead presents us with a fascinating, challenging mix of sharpening up and expansion. A challenge that we are excellently placed for given our financial strength, experience and vigor.”
Boskalis said the outlook for the year ahead will be characterized by continued lower volumes of work and pressure on both utilization levels and margins.
"At Dredging & Inland Infra we see a reasonable volume of work in the market for the short term. For Boskalis the emphasis lies on maintaining utilization at a responsible level of project risk. The current size of the orderbook means that a good part of the fleet will be occupied for 2017, albeit at lower margins than in previous years," said the company.
"The outlook for 2017 is less favorable at Offshore Energy. Following the conclusion of a number of long-term contracts from previous years and the completion of several large offshore windfarm projects revenue will decline and be more dependent on the spot market (services), where margins remain under continued pressure. "
Boskalis said market conditions combined with the outlook described above gave rise in 2016 to a fleet rationalization project and resulted in the impairment of vessels and goodwill, particularly in the service-related part of the offshore oil and gas activities. A cost-reduction program has now also been launched, aimed at cutting head-office costs.
"The project-based nature of a significant part of our activities, in addition to uncertain market conditions, makes it difficult to give a specific quantitative forecast with regard to the 2017 full-year result early on in the year," said the company.
"It is, however, clear that the net result will be lower than the 2016 result adjusted for the impairment charges. Capital expenditure in 2017 is expected to be around Euros 250 million, excluding acquisitions, and will be financed from the company’s own cashflow."
Boskalis said it has a very sound financial position and the solvency ratio of 56 per cent. At the end of 2016 Boskalis was net debt-free and comfortably met its financial covenants.