Boskalis announce 2015 half-year results

Over the years Royal Boskalis Westminster N.V. have grown to become a major global player in maritime services. Their operating areas are dredging and inland infra, and offshore energy while through their Smit brand are also active in the towage and salvage sectors. Their diverse areas of operation can overlap each other allowing a sharing of assets, in turn providing flexibility and the ability to service projects from within the one group.

Headline figures for the whole group include a slight increase in revenue for first half of 2015 (€1,570.3m compared to €1,546.3m for first half of 2014) and net profit of €306.5m compared to €253m for the same 2014 period. The order book shows a decline from €3,146m at 30 June 2014 to €2,963m for the same period a year later. Revenue by segment for: dredging and inland infra; offshore energy, and towage and salvage are respectively €814m, €620m and €134m.

Of interest to this column is the performance of the towage and salvage segment. The company states that they can “look back on a busy first half of the year, especially with regard to the Salvage activities.” Revenue decline (€133.6m compared to €155.6m for first half of 2014) is wholly attributable to the falling away of revenue from harbour towage activities in Brazil, Mexico, Panama and Canada. Following transfer of these operations in mid-2014 to the SAAM SMIT Towage strategic joint venture, only Boskalis’ share was recognised in the net result.

Towage & Salvage closed the first half of 2015 with a slightly lower result and while the result of harbour towage activities was in line with expectations, Smit Lamnalco’s profits lagged behind. Salvage was reported as having a good first half with various wreck removal projects and a substantial contribution to the result from financial settlement from salvage projects executed in previous years.

Commenting on the fall in revenue in the Towage & Salvage segment, the report states the decline was entirely due to the further realisation of the towage strategy which aims to place harbour towage activities in joint ventures where possible. In mid-2014 Boskalis established two such JVs with SAAM S.A. of Chile to continue the company’s combined harbour towage operations in Brazil, Mexico, Panama and Canada under the name SAAM SMIT Towage. These activities were deconsolidated from the third quarter of 2014, since when the Boskalis share in the JV result is reported as “result from joint ventures and associated companies.” Adjusting for this deconsolidation, revenue rose by 23%, mainly as a result of higher salvage revenue.

A notable event was in mid-December 2014 with signing of a memorandum of understanding with KOTUG International B.V. to merge their European harbour towage operations in a 50/50 joint venture. The transaction is expected to be completed towards the end of 2015.

Operating under the name SMIT Towage Northwest Europe, Boskalis now provide towage services in Rotterdam and Liverpool as well as ports in Belgium. The level of activity in these ports was stable on balance, although Rotterdam lagged compared to last year, when there was a lot of extra activity from offshore related services.

SMIT Salvage started the year well with a number of smaller wreck removal projects, in addition, a lot of work was performed on projects to remove the sunken car carrier Baltic Ace from the North Sea and a jack-up rig off the coast of Angola.

The Towage & Salvage segment result includes the company’s share in net result of JVs and associated companies, particularly Keppel Smit Towage (KST), Smit Lamnalco and, SAAM SMIT Towage. The contribution from Smit Lamnalco was lower than expected due to tough competition in Australia and a weak market in Nigeria.

By Peter Barker