Rotterdam, 20 March 2018
- Revenue: EUR 1.53 billion (2016: EUR 1.71 billion)
- EBITDA: EUR 290 million (2016: EUR 333 million)
- Net profit: EUR 78 million (2016: EUR 90 million)
- Order book: EUR 3.39 billion (2016: EUR 3.27 billion)
- Net debt: EUR 43 million (2016: EUR 79 million)
- Solvency ratio: 37% (2016: 34%)
Revenue and profit
In 2017, Van Oord recorded EUR 1.53 billion in revenue (2016: EUR 1.71 billion) with a net profit of EUR 78 million (2016: EUR 90 million). The revenue generated by our dredging division dropped to an historic low (EUR 923 million, 2016: EUR 1.18 billion). Offshore wind’s revenue came to EUR 403 million and was almost the same as the previous year (EUR 394 million). In spite of the poor market conditions, the Offshore oil & gas business unit’s revenue increased to EUR 204 million (2016: EUR 130 million) thanks to a number of major projects in our niche markets.
Net profit amounted to EUR 78 million (EUR 90 million in 2016). Most of this drop was due to less business activities of the company. The EBITDA in 2017 was EUR 290 million (2016: EUR 333 million).
Our order portfolio remained stable in 2017 at EUR 3.39 billion (2016: EUR 3.27 billion). We took on projects worth a total of EUR 1.65 billion in 2017. Our order portfolio is filled with projects of many different kinds.
The year 2017 was dominated by the difficult market conditions in the dredging and oil & gas sectors. The volume of work in offshore wind was stable, and the market dynamic in the offshore wind sector will generate a lot of opportunities for years to come. The transition to renewable energy is taking shape and the construction of offshore wind farms is a growing market in which we have an strong reputation.
Our financial position is sound, with equity capital amounting to EUR 943 million (2016: EUR 905 million) and net liabilities of EUR 43 million (2016: EUR 79 million). Our solvency ratio at year-end was 37% (2016: 34%).
The drop in our net debt position in 2017 was the result of the positive net cash flow in 2017, amounting to EUR 36 million. This was driven by a positive operational cash flow (EUR 178 million) combined with a low outflow in terms of investment (EUR 103 million net) and with an outflow of EUR 39 million in terms of financing activities, i.e. dividend.
The dredging market had a tough year in 2017. Clients took a long time to put projects out to tender and competitive pressure increased. Many countries are putting their efforts into stimulating their own economies and contracting their work to local parties.
The successful conclusion of the Prorva project in Kazakhstan was one of the highlights in our dredging division last year. We deployed four cutter suction dredgers here to dredge a 70-kilometre-long access channel at one of the most remote locations imaginable in the Caspian Sea.
Offshore oil & gas
As a whole, the market for our business unit Offshore oil & gas was unfavourable, mainly as a result of low oil prices. However, we are doing well in our niche markets, SRI (subsea rock installation) and OPI (offshore pipeline installation). Our niche activities took us to Egypt, where we worked on two major gas infrastructure projects in the Mediterranean Sea, and to other locations around the world.
Van Oord has led the market in subsea rock installation (SRI) for more than thirty years. Our focus on innovation gives us our winning hand here. We continue to develop innovative techniques and ultra-modern equipment, such as our brand-new flexible fallpipe vessel Bravenes, which will be commissioned in 2018.
Offshore wind’s revenue is stable. Its order book is almost full and we have started working on major new projects. There is a lot of innovation in this sector; turbines are getting bigger all the time, thereby reducing the payback period for wind farms. The new Dutch government is committed to the Paris carbon reduction targets. This means that the Netherlands will continue to build offshore wind farms in the North Sea over the next decade, with good prospects for our company.
Offshore Wind’s year was dominated by preparations for several major projects, Norther, East Anglia, Deutsche Bucht and Borssele III & IV, which will be executed in 2018, 2019 and 2020. We completed the Walney Extension and Arkona projects in 2017. Bilfinger’s offshore wind activities were incorporated into our own Offshore wind business unit in 2017, which now has two offices, in Gorinchem and Hamburg.
The world in which we operate is changing quickly and dramatically. Each of the markets in which we are active has its own dynamic. In all of them, however, clients increasingly want us to take a comprehensive approach to their projects. That means that a growing number of tenders cover the entire value chain: design, procurement, construction, financing and maintenance. That is where much of our added value for clients lies. Issues such as risk management and stakeholder management are also becoming more important in our contact with clients.
Last year there were sharp contrasts between our markets. Our dredging and oil & gas activities suffered as a result of the crisis in the maritime world. Although we tendered for a considerable number of projects, the number of contracts ultimately awarded was disappointing, in part because projects were put on hold or cancelled. Prices are also under pressure and the dredging market is experiencing overcapacity. Oil and gas companies cut investments by half between 2014 and 2017, and that has had a noticeable impact on the market. Nevertheless, our business unit Offshore oil & gas had a reasonable year, with good capacity utilisation for our flexible fallpipe vessels. The lower volume of work has put pressure on prices, however.
The market dynamic in the offshore wind sector is another story altogether. The growth of the world economy and population is driving the global demand for energy. Eventually, we will need renewable sources to satisfy that demand. Van Oord is making a major contribution to the transition to renewable energy by developing offshore wind farms. This is a rapidly changing market. Autumn 2017 saw the start of a major upgrade of our offshore installation vessel, the Aeolus, to equip it to handle the latest generation of offshore wind turbines. The fact that the Aeolus is being upgraded only three years after it was built (2014) indicates how rapidly offshore wind technology is advancing.
All in all, 2017 was a difficult year for Van Oord. We have been able to offset the lower capacity utilisation of our dredging fleet and the company’s smaller revenues without resorting to mass dismissals. Thanks to flexible employment contracts and natural attrition, we have been reasonably successful at compensating for the drop in activity. There have been reorganisations at our maintenance yards and in the stationary fleet, however. The total number of employees fell by almost 400 in 2017 to 4,454 (2016: 4,816).
To ensure that our organisation remains agile, we look critically at what we do and how we do it. In 2017 we introduced the internal ‘lean’ Value Creation programme to raise this critical awareness across the organisation. This new awareness is resulting in a substantial reduction in costs and – even more importantly – in a leaner, more agile company.
We ask everyone who works for us to be continuously aware of and proactive about promoting safety. Our safety statistics show continuous improvement. We once again lowered our LTIFR score in 2017. Our safety culture is now on a ‘pro-active’ level.
We are sensitive to our employees’ health and wellbeing. In 2017 we rolled out the StayFit programme across the organisation with the aim of promoting both physical and mental health. Being fit increases productivity and job satisfaction, and it also reduces sickness absence.
Sustainability is becoming an integral part of our projects. We promote sustainability by emphasising the value to society – the true value of a project – in project design and execution.
We are continuing to invest to ensure that our vessels are ready for the future. Two examples of our innovative drive are the new trailing suction hopper dredgers Vox Amalia and Vox Alexia. The shipyard where both vessels were built was granted a suspension of payments in 2017. This resulted in a delay in delivery and the renegotiation of the contracts. The contract for the Vox Amalia was then terminated to allow us to supervise the remaining work ourselves. Our unique flexible fallpipe vessel Bravenes will become operational in 2018. Crane ship Werkendam, our first fully LNG-powered vessel, will also become operational in 2018. Our offshore installation vessel Aeolus, recently equipped with a new 1,600-tonne crane, will start working on the Norther offshore wind farm this year.
We expect our revenues to improve again in 2018 thanks to more activity in our business unit Offshore wind. Our business tends to do better in a late-cycle market. We do not expect to see the dredging market recover yet, but we do anticipate moderate recovery in the offshore oil & gas sector. We expect to produce a large number of tenders in 2018, right across our business. We are working on major, complex tenders that are relevant to society: new ports, vast wind projects, and other large-scale energy infrastructure projects.
In early 2018, we have been successful on two new DBFM projects in the Netherlands. In March, Rijkswaterstaat awarded the Afsluitdijk project to the Van Oord-BAM-Rebel consortium. Rijkswaterstaat also announced the intention to award the A16 Rotterdam project. This DBFM project will be carried out by a consortium of contractors of Van Oord-Dura Vermeer-TBI-Besix.
2018 will be a special year for us: we will be celebrating our 150th anniversary. Our founder Govert van Oord started out as an independent entrepreneur in 1868 and laid the foundations for the Van Oord we see today. We will mark this jubilee year in the most appropriate way: by celebrating the christening of our new vessels and by showing our concern for society and future generations.
The figures of this press release are unaudited.
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