Damen Reports First Annual Loss in 15 Years

Damen shiprepair brest
Norwegian Breakaway undergoes repairs at Damen Shiprepair Brest in 2018. Photo: Damen

Damen Shipyards Group reported a net loss of 17 million euro in 2018, marking the first that the privately owned Dutch shipbuilder has reported a loss in the last 15 years.

Damen says the net loss was due to “a sustained period of difficulty” in a number of key maritime sectors, acquisitions and investments in future programs that should benefit the company.

“Notably, despite rising oil prices, the offshore hydrocarbon sectors continue to present tough trading conditions,” Damen explained in its announcement. “The harbour towage sector, a key market for Damen, is also underperforming as competition in the marketplace exerts downward pressure on prices and tug operators seek to consolidate their operations. And, while project activity has increased recently for the group’s repair and conversion division, profit generated remains low as the group is absorbing operating losses at its acquired companies Verolme, Curaçao and Mangalia Romania.”

Damen said an additional factor is the current lower than usual activity levels at Damen Schelde Naval Shipbuilding.

The group’s CEO, Réne Berkvens comments, “Despite significant investment, over a sustained period, aimed at participation in various projects, for example the Dutch submarine and German MKS 180 programmes, awards have not yet been forthcoming. Defence & security projects are a critical factor, not only for the success of Damen, but also for the navy and for the maintenance of a domestic defence industry within the Netherlands. On numerous occasions historically, the Royal Netherlands Navy has showed a progressive and innovative approach, serving as the launching customer for naval technologies that have gone on to be used by navies throughout the world. Because of this, we have at Damen and within our research institutes and universities, a wealth of knowledge that it is a vital element of our economy and an asset to the country.”

Despite the difficult market conditions, the Damen says it has continued to book a large amount of projects worth around 1.9 billion euro in 2018. The group also noted that it sees signs of improvement in a number of maritime sectors, including cruise, inland shipping, public transport, yachting and offshore renewables.

Summing up the year-end financial results, Berkvens stated: “Turnover is generally healthy. The difficulty is that, despite high levels of activity, profit is under pressure from a combination of factors including vessel oversupply in some markets, fierce competition and increasing labour costs in certain regions.”

Additional factors affecting Damen’s annual result include the shipyard group’s continued investment in facilities, capabilities and personnel. Amongst other things, this includes the group’s acquisition of a stake in the shipyard now known as Damen Shipyards Mangalia in Romania. Damen has also entered the cruise, RoPax and large offshore vessel construction markets and prepares itself further for participation in future large-scale defense and security contracts.

“It’s a sign of the strength of our company that it continues to invest during these difficult times,” explains Berkvens. “Damen, as a family business, holds a long-term view and continues to plan ahead in full confidence of better times in the future. In addition to preparing for this via a programme of continued acquisition and facilities development, we feel it is crucial that we continue to invest in our personnel and in maintaining employment opportunities. Only in this way can we be sure that, when the markets do eventually recover, both Damen and the Netherlands retain their access to the skills and knowledge necessary to maintain a successful shipbuilding industry.”