Boskalis Terminates Low-End Transport Activities Amid Heavy Losses

The U.S. destroyer John S. McCain seen loaded aboard Boskalis’ heavy lift transport vessel MV Treasure in 2017. U.S. Navy Photo

Dutch marine services company Boskalis will be terminating its loss-making low-end transport activities.

The announcement came this week as Boskalis revealed a lower operating result in the first half of 2018 compared to the same period last year.

Boskalis reported a net operating profit of EUR 34.5 million in the first half of 2018, compared to net operating profit of EUR 75.1 million in the first half of 2017. Including extraordinary charges, the company reported a net loss of EUR 361.4 million.

“This decline was mainly due to a sharp drop in the result of the Offshore Energy division where the transport activities at the low end of the market in particular worsened further and are now heavily loss-making,” the company said in a statement.

The company cited overcapacity from Asia and less activity in the offshore oil and gas sector as the main reason for exiting the low-end transport sector.

“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. These developments have prompted Boskalis deciding to terminate these activities,” the company said.

In terminating these activities, Boskalis has taken its closed-stern heavy transport vessels out of service. 

As a result, Boskalis recognized an extraordinary charge of EUR 397.0 million in the first half of the year, consisting mainly of a goodwill impairment and a write-off of vessels.

Peter Berdowski, CEO of Boskalis, commented:

“There were two sides to the first half of the year. While the contracting activities at Dredging and Offshore Energy made a good contribution, developments at offshore services had a significant adverse effect on the result.

Dredging performed in line with expectations. We were able to increase revenue with a stable result and we were also successful in acquiring a number of large projects which considerably increased our work in hand.

The offshore contracting activities such as seabed intervention and cable-laying also made a good contribution to the result. The pain in the first half of the year was clearly felt on the services side of offshore, particularly the low end of the transport market. As previously announced, 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.

Looking ahead we are moderately optimistic. At Dredging we have a well-filled order book and see interesting and sizable projects across the market. In Offshore Energy we expect to see improved results at the contracting activities as well as at services as a result of the fleet reduction. 

We are also seeing an increase in tender activities in the offshore market for the medium term. In the coming period we will therefore continue to seek ways to strengthen the company and expand it in the offshore market. Following the successful acquisition of Gardline we are seeing more opportunities in the survey market. At the same time we are focused on further strengthening our position in the high-end transport and installation market.”

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