Dutch dredging and maritime company Royal Boskalis Westminster N.V. (Boskalis) plans to partially exit from its heavy lift business after it suffered huge financial losses in the first half of this year.
The company delivered a net loss of EUR 361.4 million (USD 412.1 million) in H1 2018, compared to a net profit of EUR 75.1 million seen in the corresponding period a year earlier.
EBITDA stood at EUR 167.2 million in the first half of 2018, compared to EUR 225.1 million posted in the same period of 2017.
The decline was attributed to a sharp drop in the result of Boskalis’ offshore energy division where the transport activities at the low end of the market in particular worsened further and are now heavily loss-making.
According to the company, this segment is rapidly becoming a commodity transport market, often not oil and gas-related, that is structurally confronted with (Asian) overcapacity. In addition, the commodity activities do not fit within Boskalis’ strategy aimed at a position higher up in the transport & installation market.
“Boskalis is able to set itself apart at the top end of the transport market where many opportunities still exist whereas the smaller, predominantly older transport vessels at the low end of the market are now loss-making. This part of the market is at the lower end of the S curve and is not strategically interesting for Boskalis,” the company said in a statement.
“Therefore, Boskalis has decided to exit this market segment and take the closed-stern heavy transport vessels (types IIb and III) out of service,” the company added.
Commenting on the decision, Peter Berdowski, CEO of Boskalis, said: “We have reviewed our position there and have decided to fully exit this loss-making market segment that offers no prospects for improvement. With the lower end of the transport fleet we are slipping down further in the market and we are unable to add sufficient value. This is in contrast to the upper end of the fleet where we are distinctive, especially in combination with our other vessels and activities – fully in line with our strategy.”
The move is expected to result in a structural improvement in the company’s operating result of more than EUR 25 million on an annual basis.
Reflecting on the performance of other segments, Boskalis said that salvage had a good first half with several smaller emergency response contracts as well as the successful salvage of the ultra-large container vessel Maersk Honam which had caught fire in the Arabian Sea. The volumes at towage are relatively stable, albeit that margins are under pressure in a number of ports, mainly due to price erosion in container shipping, according to Boskalis.
Additionally, revenue increased in the company’s dredging and inland segment, as did the utilization of the hopper fleet.