Boskalis: operationally strong 2020, record order book and very solid financial position

Papendrecht, 4 March 2021
‎HIGHLIGHTS 2020Revenue: EUR 2.5 billionEBITDA: EUR 404 millionOperating result: EUR 140 millionNet operating profit: EUR 90 millionExceptional charges: EUR 195 millionRecord order book: EUR 5.3 billionPositive net cash position of EUR 439 millionDividend proposal: EUR 0.50 per share all cashOUTLOOKVery well-filled order book provides solid foundation for 2021Dredging: gradual improvement in the course of 2021Offshore Energy: continuation of strong 2020 pictureImproved medium-term outlookRoyal Boskalis Westminster N.V. (Boskalis) has exceeded expectations in what has proven to be a very turbulent and challenging 2020 with an EBITDA of EUR 404 million. Net operating profit amounted to EUR 90 million. Furthermore, despite COVID-19 restrictions, many new projects were acquired resulting in a record high order book of EUR 5.3 billion. Tightened financial management further strengthened the balance sheet and improved the net cash position to EUR 439 million.Nevertheless, the COVID-19 pandemic has had far-reaching consequences for Boskalis. The prolonged disruptions for international air travel and stringent quarantine measures affected projects outside Europe, particularly in the Dredging division. In the Offshore Energy division mainly the services activities suffered from the unexpected sharp fall in the oil price, resulting in a drop in demand in parts of the offshore market.In light of the COVID-19 pandemic and the sharp drop in the oil price, Boskalis once again undertook a critical review of the valuation of vessels and balance sheet assets across the board. This resulted in a virtually exclusively non-cash exceptional charge of EUR 195 million of which three quarters had already been recorded in the first half of the year. This charge consist mainly of an impairment on goodwill and vessels in two joint ventures as well as of a limited number of own assets and an impairment on brand names.Compared to last year, revenue decreased by 4.5% to EUR 2.525 billion (2019: EUR 2.645 billion). Adjusted for (de)consolidation and currency effects, revenue was 6.9% lower.EBITDA totaled EUR 404 million and the Operating result amounted to EUR 140 million, both excluding exceptional charges. In 2019, EBITDA amounted to EUR 376 million and the Operating result to EUR 28 million.In 2020, a net operating profit of EUR 90 million was realized. Including exceptional charges, a net loss of EUR 97 million remains (2019: net profit EUR 75 million).In both 2020 and 2019, the result was affected by a number of exceptional items. In 2020, this concerned the previously mentioned almost entirely non-cash charge of EUR 195 million, which is largely recognized at group level. In 2019, this concerned book gains of EUR 82 million from various sales transactions.In the Dredging & Inland Infra segment, revenue decreased by 13% at a lower profit margin. This development is largely attributable to COVID-19. The pandemic caused delays in some major projects and, in addition, global travel restrictions and quarantine measures led to operational inefficiencies. The largest revenue contribution came from projects in Southeast Asia, the Indian subcontinent, the Middle East, Canada and the Dutch market.Revenue from Offshore Energy increased by more than 4%. Contracting revenue was virtually stable with a busy year at Seabed Intervention. In Services, the consolidation of the survey activities of Horizon as of early 2020 resulted in a net increase in the revenue. Over the past year, Services was impacted most by the strong decline in the oil price. The divisional operating result improved significantly, with good project results at Seabed Intervention and Subsea Cables, a positive contribution from Marine Transport Services and the consolidation of Horizon.In the Towage & Salvage segment, Salvage had an excellent year with substantially higher revenues and good results on projects in the Indian and Atlantic Ocean and in the Arctic near Spitsbergen. The contribution from the Towage joint ventures was lower but this was more than offset by Salvage’s good result.The customary holding and non-allocated group costs were reduced thanks to a wide range of cost-cutting measures taken in response to the COVID-19 outbreak.The financial position of Boskalis remains strong and improved further in the second half of the year. At year-end Boskalis was net debt free with a cash position of EUR 439 million, compared to a net cash position of EUR 26 million at the start of 2020. Solvency remains high at 50.5% and Boskalis comfortably meets its financial covenants.The order book increased by over 12% to a record EUR 5.306 billion (year-end 2019: EUR 4.722 billion). In the fourth quarter Boskalis successfully acquired the Dredging project for the new airport in Manila. With an estimated value of EUR 1.5 billion, this concerns the largest project ever taken on by Boskalis.Peter Berdowski, CEO of Boskalis:
“Exactly twelve months ago, we confidently presented our new three-year business plan. A couple of days later, we sailed into the thick corona fog and many certainties fell away. We immediately drew up a crisis plan in which the safety of our colleagues was paramount.Besides the health of our colleagues, business continuity was a key priority. Projects had to continue as much as possible, vessels had to keep running and cash flows had to be maximized. We managed to provide relief to the projects and vessels through various creative solutions. We set up our own test facilities and, where necessary, organized our own chartered flights allowing us to move thousands of colleagues around the world. We have provided support to homeworkers and are doing all we can to make mandatory quarantine periods bearable. Looking back on all these challenges, it is all the more impressive what we achieved together in 2020.With an EBITDA of EUR 404 million, we even exceeded our 2019 performance. Thanks to our tight cash management, we significantly improved our net cash position to EUR 439 million. And despite the COVID-19 constraints, we managed to win many compelling new projects, bringing our order backlog to a record EUR 5.3 billion.Offshore Energy had an extra challenging year with the combination of COVID-19 and the strong oil price decline. Nevertheless, the division’s result improved significantly compared to the previous year. The BOKA Vanguard broke records with the transport of the heaviest (91,000 ton weighing FPSO) and largest cargo ever (385 meters long fish farm). A lot of work was also executed in offshore wind – ranging from survey work on the east coast of the United States, transporting and installing cables and foundations in Europe to rock installation for scour protection in Taiwan. The transport and installation of the Kincardine floating offshore wind farm also demonstrates the potential of Boskalis’ unique range of equipment and expertise in this new floating wind market.The salvage business had an exceptionally busy and successful year. On two major contracts in the Indian Ocean we prevented enormous quantities of oil from ending up in the ocean, and through the removal of a wreck in Spitsbergen, the sea has been cleaned up.Finally, just before the end of the year, Dredging succeeded in winning a EUR 1.5 billion contract for the land development of the new Manila airport in the Philippines, making this the largest project win in our 110-year history. This contract provides visibility for the utilization of the large hoppers for the coming years.I am proud and grateful of the fantastic performance that we as a team achieved in this extraordinary year of extreme challenges which was made possible by the enormous commitment and flexibility of all Boskalis colleagues.”Market developments