The Netherlands: Boskalis Reports Record Revenue for 2011
Royal Boskalis Westminster N.V. achieved a record revenue of EUR 2.8 billion in 2011 (2010: EUR 2.7 billion). Net profit declined to EUR 254 million (2010: EUR 311 million), though it should be noted that the 2010 result included exceptional pre-tax gains of EUR 33.6 million. In spite of the decline in net profit Boskalis proposes to maintain the dividend at EUR 1.24 per share.
Due to the increased uncertainties in the international markets there is continued hesitance amongst clients with regard to investment decisions, and this is putting pressure on both margins and equipment utilization levels. As a result EBITDA declined to EUR 591 million (2010: EUR 622 million) and the operating result (EBIT) to EUR 354 million (2010: EUR 402 million). The lower result in the core segment Dredging & Earthmoving was positively impacted by the financial settlement from previously completed projects. The remaining activities realized a stable or slightly higher operating result, partly as a result of the full consolidation of SMIT.
The order book increased to EUR 3,489 million as per end-2011 (end-2010: EUR 3,248 million). Compared to the 2011 mid-year level and adjusted for consolidation and deconsolidation effects, the order book was slightly higher at the end of the year.
Peter Berdowski, CEO Boskalis:
“We look back on a turbulent year, with continued pressure on margins and volume. To keep the vessels utilized requires more effort and tendering for new projects has become more competitive.
Despite the challenging market conditions we once again ended the year strong, posting record revenue and a fine result. We were aided in this by the quality of the order book and the favorable settlement of projects.
In addition we were able to make important strides in strengthening and expanding the company within the framework of our strategic plan. The activities of SMIT Terminals were merged with Lamnalco, creating a global market leader in Terminal Services. At the end of the year we completed the acquisition of MNO Vervat, thus considerably strengthening our national and international position in the infra market. We made important progress with harbor towage, in the global consolidation process we aim for, with the acquisition of Rebras in Brazil as well as the agreement in principle that we reached with SAAM regarding the combination of our Latin American towage activities.
Market conditions are expected to remain challenging in 2012. The medium term presents a mixed picture for the markets in which we operate. On the one hand we see – especially in Europe – continued reservations about investing on the part of governments. On the other hand we are positive with regard to the market developments in South America, West Africa and Australasia. We feel particularly positive about the offshore market, where we expect a great deal of work as from 2013. We will be able to benefit from this thanks to our broadened market positioning with activities such as Terminals, Transport, Heavy Lift and Subsea.”
The markets in which Boskalis operates are driven in the long term by growth in global trade, growing energy consumption, growth in world population and the consequences of climate change. In the short term there is stagnation of demand and an influx of new production capacity in a number of our markets, translating into pressure on volume and margins. However, what Boskalis is seeing in various regions around the world and in different market segments is clients who are developing all kinds of initiatives for new and in many cases sizeable maritime infrastructure projects. This applies in particular to energy and minerals-related projects in South America, West Africa and Australasia.
The market developments in the offshore market are relevant to a substantial part of the business. Following on from the demand for and construction of new oil and LNG import and export terminals, Boskalis expects to see growth for the terminal activities (Smit Lamnalco). Furthermore the developments at Transport, Heavy Lift and Subsea are largely dependent on a recovery in demand from the energy markets, in particular those of the offshore markets of North-West Europe, Brazil and Southeast Asia.
The financial position of Boskalis is very solid. The capital expenditure for the period 2012-13 is estimated to total around EUR 600-700 million. The expectation is that this can be funded from the cash flow.
Given the current market conditions Boskalis also expects that 2012 will be affected by a slow down on the positive drivers that underpin strategy. This situation, combined with the project-based nature of a significant part of Boskalis’ activities means that it currently unable to provide quantitative guidance for the 2012 annual result. Bohowever anticipates that Boskalis will not be able to match the 2011 result. Based on current insights Boskalis do not foresee a materially different market environment in 2012 relative to 2011, but prospects for the medium term are more positive.
Dividend policy and proposal
The main principle underlying the Boskalis dividend policy is to distribute 40% to 50% of the net profit from ordinary operations as dividend, whereby Boskalis aims to achieve a stable development of the dividend for the longer term. The choice of dividend form (in cash and/or entirely or partly in shares) takes into account the company’s desired balance sheet structure as well as the interests and wishes of the shareholders.
In light of this, Boskalis will propose to the Annual General Meeting of Shareholders on 10 May 2012 that a dividend of EUR 1.24 per share, unchanged from 2010, be distributed in the form of ordinary shares, unless the shareholder opts to receive a cash dividend. The dividend will be payable from 6 June 2012.
Dredging Today Staff, March 15, 2012