Royal Boskalis Westminster N.V. realized a net profit of EUR 147.5 million in the first half of 2016 (H1 2015: EUR 306.5 million).
Revenue in the first half of the year fell 25% compared to the first half of last year to EUR 1.17 billion (H1 2015: EUR 1.57 billion).
Whereas the first half of 2015 was extremely busy, revenue declined in the first half of this year as a result of the deteriorated market conditions.
In the Dredging & Inland Infra segment revenue and the result declined as a result of weak market conditions and the completion of the Suez Canal project that made a substantial contribution last year.
Furthermore, fleet utilization was adversely affected by the suspension of work on the Pluit project in Indonesia. Results on projects in progress were reasonable to good.
At the end of the first half of the year, the order book excluding company’s share in the order book of joint ventures and associated companies stood at EUR 2,697 million (end-2015: EUR 2,490 million).
“At the start of the year we indicated that we are experiencing stormy conditions. Falling prices of oil, gas and commodities are the dark clouds on the horizon that ultimately also affect late-cyclical companies such as Boskalis. The volume of work in the market has dropped significantly and a decline in revenue and the result is therefore inevitable,” said Peter Berdowski, CEO Boskalis.
“We foresee that the current market environment may persist for several years. We have therefore taken the necessary steps to adjust the size and composition of the fleet to this new reality. As previously announced we will take 24 vessels out of service in the 2016-2018 period and consequently have to let go of a large number of employees. These are drastic measures that unfortunately need to be taken to ensure that Boskalis remains healthy going forward.”
The general market outlook for the coming period is expected to continue to be characterized by lower volumes of work and pressure on utilization rates and margins.
At Dredging & Inland Infra the emphasis is on safeguarding utilization rates at responsible levels of project risk.
The fleet rationalization program will be implemented in the next two years. This will involve vessels being taken out of service and the loss of 650 jobs. It will also involve taking a critical look at reducing costs of the global office network.
Based on the fleet planning and work in the order book, and subject to unforeseen circumstances, the Board of Management expects the level of operating net profit in the second half of 2016 to approach the level achieved in the first half of the year.
Capital expenditure is expected to be approximately EUR 200 million in 2016, excluding acquisitions, and will be financed from the company’s own cash flow.