Higher turnover (EUR 1,896 million), 16% increase in net profits (EUR 190 million), lower turnover and profits forecast for 2009, financially healthy company, good order portfolio.
Turnover, profits and order portfolio
Van Oord's turnover rose to EUR 1,896 million in 2008 (2007: 1,652 million). Net profits were EUR 190 million (2007: EUR 164 million), a 16% increase. Expressed as a percentage of turnover, profitability remained stable at 10% of turnover. Our price levels were healthy in virtually every region, with employees and equipment working to full capacity throughout most of the year. We began to see signs of trouble in Dubai/Middle East region in the second half of 2008. By year-end, activities there had been cut back significantly. At 31 December 2008, our order portfolio stood at a healthy EUR 3,640 million (2007: EUR 3,725 million). The order portfolio includes EUR 1,877 million worth of projects slowed down by our client in Dubai.
New governance model
We made significant changes to our organisational structure in 2008. After Jac. G. van Oord stepped down as chairman of the Executive Board in November 2008, director J. van Herwijnen also resigned his operational tasks at the start of 2009, prior to his retirement on 1 May 2009. As of that date, the Executive Board will have three executive directors. We have also appointed a Management Committee, whose task is to take key operational and commercial decisions. The Management Committee consists of the three members of the Executive Board, six Area Directors and four Staff Directors.
New business units
In 2008, we successfully completed our work on the Princess Amalia Wind Park in the Dutch North Sea. We also concluded a cooperation contract with Dutch Econcern to build four offshore wind farms in the North Sea. In mid-2008, we concentrated our knowledge and experience in this sector into a new business unit: Offshore Wind Projects (OWP). OWP will serve as a management contractor for wind farm construction projects.
In late 2008, we merged our soil improvement activities in the Netherlands (Wicks bv) with our international vibrocompaction, vertical drainage, and drilling and blasting activities into a new business unit, Wicks. Wicks operates independently in the internal and external market.
Our regions and projects in 2008
Netherlands (EUR 186 million turnover)
Van Oord was involved in a wide range of projects in its domestic market. These are clustered around 4 themes: coastal protection, river management, port expansion and infrastructure facilities. The Dutch market is increasingly working with Design & Construct and Performance contracts. In February 2008, the Rotterdam Port Authority awarded the Maasvlakte 2 port expansion project to a consortium in which Van Oord has a 50% stake. The project is now well under way. Other major projects were the cable link in the Westerscheldt, shore suppletion near Den Helder, deepening and widening the Meuse, constructing subterranean stations for the North/South Metro Line in Amsterdam, maintenance dredging in the North Sea Canal, and port expansion work at Autrichehaven in Flushing. Our subsidiaries were active in a number of specific market segments, such as small-scale dredging (Paans) and the sand and gravel trade (Mijnster). On 1 January 2009, our office in Belgium became part of Area Netherlands. The budgets available in the Belgian market are limited. The most important project there involved dredging the Ghent-Terneuzen Canal.
Europe (EUR 205 million turnover)
Our priorities in this region were the markets where we have permanent offices: the United Kingdom, Germany and North East Europe. The emphasis in the United Kingdom was on coastal protection, for example Lincshore, Happisburgh to Winterton, and Felixstowe. Another special project, the construction of a tunnel, was undertaken in Limerick, Ireland. Our subsidiary Brewaba was firmly positioned in the north German market for port and waterway maintenance, for example the Elbe, Cuxhaven and Wischhafen, and the construction of a fourth container terminal in Bremen. We managed our activities in Russia from our office in St Petersburg. In Kazakhstan, we were involved in constructing the port at Kuryk, and in Turkmenistan in dredging a canal.
America, Mediterranean & Africa (EUR 135 million turnover)
Our activities were widely distributed across the region. We have key branches in France, Spain, Italy, Nigeria and Brazil. We were involved in deepening the port of La Rochelle in France. In the Mediterranean we were involved in maintaining the ports of Huelva and Algeciras in Spain and Sfax and Gabes in Tunisia and are involved in beach replenishment in Tarragona and Cadiz in Spain. The Adagbakuja land reclamation project in Nigeria was completed. In Latin America, we carried out maintenance projects in Cuba and the Dominican Republic. In Venezuela, we worked on the access channel to Lake Maracaibo and on the Rio Orinoco. In Brazil, we carried out maintenance dredging work in various ports.
Middle East (EUR 848 million turnover)
We expanded our activities in this region to include vibrocompaction, the construction of quay walls, and drilling and blasting work. We worked on ten projects in Dubai in 2008, including the construction of Palm Deira, Dubai Promenade, Dubai Maritime City Ferry Terminal and the Arabian Canal. By the end of the year, the global economic crisis had impacted the Dubai projects, all of which were slowed down by our clients. The dip in activity has led us to cut down considerably on our organisation in Dubai. We were able to transfer our internationally deployable employees to projects elsewhere. Many of the local employees were made redundant. We were able to deploy most of the vessels elsewhere in the world. Our activities in the Middle East were not restricted to Dubai. The prestigious Sohar port development project in Oman was completed in late 2008 and the port will become operational in early 2009. We were involved in constructing a new port at Ras Laffan in Qatar. We also dredged salt reefs in the Dead Sea along the Jordanian coast and we are working on a new access channel there.
Asia & Australia (EUR 281 million turnover)
Our main branches are in India, Singapore, China and Australia. The growth of the maritime transport sector has played a significant role in expanding the market for marine engineering projects. Our activities in 2008 were concentrated mainly in India (maintenance dredging in the ports of Mumbai and Hazira and port construction in Dighi), Thailand (construction of an LNG terminal in Map Ta Phut) and Vietnam (construction of a large jetty at Dung Quat). The difference of opinion between Singapore and its neighbours about the supply of sand has still not been resolved. As a result little progress was made on our projects in Singapore. Local competitors were very active in China and Korea, but we were nevertheless involved in maintenance work in Lian Yun Gang (China) and the construction of loading and unloading buoys in Ulsan (Korea). In Australia, we worked on port expansion projects in Dampier and Brisbane and delivered industrial sand to Cockburn Cement in the northwest.
Offshore (EUR 229 million turnover)
Business was brisk for Van Oord in every relevant segment of the offshore industry in 2008. The volume of flexible fallpipe work was stable. We worked on Phase 2 of the Ormen Lange Field project, which involves installing a system of pipeline supports in the Norwegian territorial waters. We built an offshore SBM system in Constanta, Romania. We boosted our position in growth markets by undertaking a pipeline protection project in the sea bed at Varenday and by dredging a trench in Baydaratskaya Bay, both in Russia. In Australia, we dredged a trench and created a landfall for the Pluto pipeline in Dampier. In Korea, we dredged a trench for a pipeline in Ulsan.
Offshore Wind Projects (EUR 12 million turnover)
In 2008, we concluded an agreement with Dutch energy supplier Evelop, part of Econcern, to build four wind farms along the Belgian and German coasts. Van Oord will act as the management contractor for these projects. The contract covers the foundations and the electricity supply from the wind turbines. Altogether, the wind farms will generate a maximum output of 1,500 megawatts, enough to supply 1.5 million households with clean energy.
International Ground Treatment (Wicks)
In late 2008, we concentrated our worldwide vibrocompaction, vertical drainage and drilling and blasting activities into a new business unit, Wicks. Wicks will operate as an independent organisation and offer services to the other business units of Van Oord and external parties. This clustering of activities, knowledge and experience will enable us to expand our worldwide market position successfully.
We undertook a EUR 1 billion investment programme in recent years. Of this budget, EUR 840 million has already been allocated to new equipment projects. A minor part of these projects has been completed. New equipment is being built in the Netherlands, Brazil and China.
- Trailing suction hopper dredger Vox Máxima is under construction at the IHC Dredgers yard in Kinderdijk. The vessel's hopper capacity will be 31,200 m3.
- The backacters Goliath and Simson are under construction at De Donge yard in Flushing. Both will be among the biggest vessels of their kind. The two backacters will be delivered in 2009.
- Flexible fallpipe vessel Stornes, which has a capacity of 27,000 tonnes, is under construction at the Raffles yard in Yantai, China. The Stornes is scheduled for completion in late 2009.
- The renovation of the HAM 318, which involved adding a mid-section block, was completed in 2008. The work was carried out at the Cosco yard in Dalian, China. The HAM 318 now has a 37,500 m3 hopper capacity, making it the largest operational trailing suction hopper dredger in the world. It has been deployed in Dubai since the summer of 2008.
- We also have six sand transport barges under construction in Dalian, with a hopper capacity of 10,000 m3 each. They will be delivered some time in 2009.
- Four self-propelled split barges, named after famous Dutch maritime engineers Jan Blanken, Jan Leeghwater, Pieter Caland and Cornelis Lely, are under construction at a yard in Dalian, China. The vessels, which will have a hopper capacity of 2,850 m3, will be commissioned in 2009.
- We had two water-injection vessels under construction in Brazil in 2008. One of these, the Draga Tocatins, has been commissioned. The Draga Rio Madeira will follow in mid-2009.
- In September 2008, we placed an order for a large, self-propelled cutter suction dredger. The new vessel will be one of the largest cutter suction dredgers in the world. It will be constructed at IHC Dredgers in Kinderdijk and is scheduled for completion in the autumn of 2011.
The available lines of credit come to a total of EUR 453 million with a remaining term to maturity ranging from three to eight years. The total sum taken out in loans is EUR 213 million. The interest rate risk on the available credit lines has been covered on the futures market, based on the anticipated drawdown periods in the years ahead. Cash at bank and in hand came to EUR 166 million at year-end. Our company is financially healthy. The credit lines are more than sufficient to cover the current investment programme. With solvency standing at 35% and our capital base at 38% of total assets, the company's financial basis is sound.
The world economy is in a deep recession. At this point, it is impossible to make reliable forecasts about the year ahead. We expect lower turnover and profits in 2009. It will be a challenge to deploy the people and equipment no longer needed in Dubai on projects elsewhere in the world. In addition to our sound financial structure, we have a flexible organisation made up of individuals who are used to dealing creatively and efficiently with changing market circumstances. More than anything else, this makes us feel confident about the future.
The General Meeting of Shareholders will take place on 14 May 2009.
Contact Media Relations
Robert de Bruin
31 88 8268234
31 6 53440890
Robert de Bruin deals with all media enquiries relating to Van Oord's corporate and international activities. For non press related questions we kindly redirect you to our contact form.
Attachments can be used copyright free.