Turnover rises to EUR 1,578 million, net profit EUR 165 million, company financially very healthy, order portfolio stands at EUR 1.9 billion, new investment programme of EUR 1 billion.
2010 turned out to be an excellent year for Van Oord. A solid level of capacity utilisation, both staff and equipment, and the extraordinary tax gain led to an outstanding profit of EUR 165 million. We continued our 2009 strategy and achieved a balanced geographical distribution of turnover. Our markets developed favourably in the second half of the year, as world trade recovered and larger volumes of cargo passed through the world’s biggest ports. This ultimately led to a higher tender volume than in 2009, although that volume remained well below 2008, our top year so far.
Turnover and profits
Van Oord’s turnover in 2010 was EUR 1,578 million (2009: EUR 1,424 million). Net profits, including an extraordinary tax gain of EUR 40 million, rose to EUR 165 million (2009: EUR 120 million). There was some pressure on margins in 2010, but that was offset by a solid level of staff and equipment capacity utilisation. On balance, this resulted in a profitability of 7.9% of turnover (2009: 8.4%), excluding extraordinary tax gains. At 31 December 2010, our order portfolio stood at EUR 1,856 million, an improvement on the previous year (EUR 1,777 million). Capacity utilisation figures were higher in our most important fleet segments – trailing suction hopper dredgers and cutter suction dredgers – but lower in the flexible fall pipe vessel segment compared with 2009.
Compared with the previous year, the volume of activity in the Dutch market was stable in 2010. Projects were increasingly awarded on the basis of the ‘most economically advantageous tender’. There is much momentum in the Dutch infrastructure market, but margins there remain under pressure. Van Oord is part (50% stake), of PUMA the consortium carrying out the Maasvlakte 2 port expansion project in Rotterdam. The project is making steady progress. By late 2010, some 180 million m3 of sand had been supplied and deposited (75% of the total) and more than 3 million tonnes of rock had been delivered (45% of the total). In December 2010, the Dutch Department of Public Works awarded the Sand Motor project to a consortium in which Van Oord has a 50% stake. The Sand Motor project involves depositing a huge quantity of sand off the coast of Delfland near the village of Ter Heijde. Wind, waves and ocean currents will gradually distribute the sand along the coast. Using the ‘building with nature’ principle makes it possible to protect the coast naturally against the sea.
Our activities in Europe suffered noticeably from the effects of the financial crisis that began in 2008. The United Kingdom, Ireland, France and Germany struggled with cuts in government spending and are facing further economy measures in the years ahead. The crisis also affected the Baltic States. There was no decline in activity in south eastern Europe and the region around the Black Sea and Caspian Sea, however.
Middle East and Mediterranean
There was relatively little activity in the Middle East in 2010. The nature of our work shifted from land reclamation to port development and energy-related projects. The recent award of a number of large-scale projects may indicate that the Middle Eastern market will recover in 2011. Nakheel in Dubai halted all projects in 2010, but we are working for other clients there. Dravo SA, a joint venture between Van Oord and the Spanish firm Dragados, had an excellent year in 2010, with projects in Spain and surrounding countries.
America and Africa
Van Oord was very busy in the America and Africa regions in 2010. Turnover was at a particularly high level in Nigeria and Brazil. Our company was closely involved in many projects carried out under a government-run port-expansion programme in Brazil.
Asia and Australia
Business continued to be relatively quiet in Singapore. Beyond Singapore, we carried out projects in Vietnam, Malaysia and Indonesia. India is the centre of our activities in South-West Asia. Much of our work there involved large port development projects carried out for private clients. The growing volume of raw material exports led to an upturn in the market in Australia.
Our Offshore Division operates worldwide in the oil and gas market. Van Oord was once again very busy in this market in 2010. We undertook a number of important projects in Russia and the United Arab Emirates. We maintained our position in the market for rock installation projects in the North Sea. In Brazil we took on deep water rock installation projects to protect oil and gas pipelines.
Offshore Wind Projects
After commencing in the autumn of 2009, we continued work on the Belwind phase 1 wind farm project, which began operating officially in December 2010. This 165 Mw wind farm, located off the Belgian coast, was built in the record time of fifteen months. The project was carried out entirely under our management, based on an EPC (Engineering Procurement & Construction) contract.
The Wicks business unit specialises in underwater drilling and blasting, soil compaction, and vertical drainage. In 2010, we took on more underwater drilling and blasting projects. We undertook projects in Australia and Sweden, among other places. Outside the Netherlands, Wicks carried out vertical drainage projects in Portugal, Latvia, Malaysia, Singapore, Mozambique and other countries.
Investments in equipment
Many of the new build investment projects launched in the 2006-2009 period were completed in 2010. The final three of a total of six sand carriers, four self-propelled split barges, and a gigantic backhoe were delivered in 2010. We also purchased four tugboats for the sand carriers. The newest and biggest flexible fall pipe vessel in the Van Oord fleet, the Stornes, was launched in August 2010 in China. It will be operational in mid- 2011. Construction of a large self-propelled cutter suction dredger Athena is right on schedule. The cutter was launched to enthusiastic applause on 12 February 2011 at the IHC Dredgers B.V. yard in Kinderdijk, Netherlands. The Athena will be operational by the autumn of 2011. Van Oord has decided on another extensive investment programme worth approximately EUR 1 billion. The company ordered a sister vessel for the Athena in December 2010. It will be named Artemis and will be operational by spring 2013. The decision to build a second large self-propelled cutter suction dredger demonstrates our confidence in the growing world market for port development. Van Oord placed a further order in December 2010 with Sietas in Hamburg, Germany, for a jack-up transport and installation vessel, used to construct offshore wind farms. The vessel will be completed in autumn 2012. Our long-term investment programme also includes other additions to our fleet, including trailing suction hopper dredgers and offshore equipment.
After staff reductions in 2009, the number of employees grew considerably in 2010 thanks to the recovering market and our busy schedule. Most of the staff increase took place at our branches outside the Netherlands.
Our company is financially very healthy. With solvency standing at 34.5% and our capital base at 37% of total assets, the company’s financial basis is sound. At year-end, net cash in bank and at hand stood at EUR 200 million. The sum taken out in loans was EUR 216 million. The new investment programme will require extra financing capacity. In addition, many of the available lines of credit are due in the next two years and subject to refinancing. The necessary arrangements will be completed in the first half of 2011.
The increasing world population, the growing world economy, the rising volume of world trade and the growing demand for energy are all having a positive influence on the development of our markets and activities. Countering these positive trends is the fact that governments in Western Europe are being forced to economise, and will do so in part by limiting their spending on infrastructure projects. Because the emerging economies beyond Europe are much larger than the markets in Western Europe we remain positive about the future.
The General Meeting of Shareholders will take place on 21 April 2011.
Source: vanoord, March 4, 2011