Boskalis Announces Increase in Revenue and Result

[By: Boskalis]

Royal Boskalis Westminster N.V. (Boskalis) concluded 2021 with a strong increase in revenue and earnings and with a well-filled order book, despite COVID-19-related restrictions.

Revenue increased by 17.1% compared to last year to EUR 2.96 billion (2020: EUR 2.52 billion). Adjusted for (de)consolidation and currency effects, revenue growth was 13.9%.

EBITDA increased by 14.3% to EUR 462 million (2020: EUR 404 million) and the operating result increased by 42.0% to EUR 199 million (2020: EUR 140 million).

Net profit was EUR 151 million, where a year ago there was a net loss of EUR 97 million. There were no exceptional gains or losses in 2021.

In the Dredging & Inland Infra segment, revenue increased by over 20% and the operating result by 57% compared to last year. These strong growth figures came about despite COVID-19-related travel restrictions and quarantine measures resulting in operational inefficiencies, most prevalent in Southeast Asia. The utilization of the trailing suction hopper dredgers was strong in the second half of the year, after a relatively quiet first half due to early maintenance on the mid- to large-sized vessels. The largest revenue contribution came from projects in the Philippines, Singapore, Denmark and from the domestic Dutch market.

At Offshore Energy, revenue increased by 19% on a 52% higher operating result. The revenue growth was almost entirely attributable to the services part of the division. Both Marine Transport & Services and Marine Survey contributed to the growth, but the largest increase came from Subsea Services, in part due to the addition of Rever Offshore acquired late 2020. Across the board, the various contracting and services activities contributed to the good divisional result. In 2021, revenue from offshore wind activities continued to increase, accounting for 46% of division revenue.

The Towage & Salvage division had a good year, both in harbor towage activities and salvage. For many, the combination of Salvage and 2021 will be associated with the refloating of the Ever Given in the Suez Canal, but there were also dozens of other successful salvage assignments in which vessels were saved or where an environmental disaster was averted. Nevertheless, following a number of exceptionally busy years, 2021 was relatively quiet in terms of revenue for Salvage. The harbor towage activities contributed well with a substantial increase in earnings.

The customary holding and non-allocated group costs are returning to normal historic levels following a period during which cost were temporarily lowered as part of the COVID-19 measures.

Boskalis’ financial position remains strong with a net cash position of EUR 203 million, including EUR 148 million of IFRS 16 lease liabilities. Substantial capital investments were made in 2021, following a year in which investments were postponed under the influence of COVID-19. Furthermore, the share buyback program was completed and an all-cash dividend was paid. The exceptionally high negative working capital position remained stable in 2021. With the available cash and bank facilities Boskalis has a direct financing capacity in excess of EUR 1.1 billion. Solvency remains high at 48% and Boskalis comfortably meets its financial covenants.

The order book increased modestly to EUR 5.41 billion (year-end 2020: EUR 5.31 billion). The increase was fully attributable to Offshore Energy, partly as a result of acquiring a substantial offshore wind project in the United States. With the projects in the order book a significant part of the 2022 revenue has been secured and there is a solid basis for the years thereafter.

Peter Berdowski, CEO Boskalis:

“Looking back at 2021, we have delivered an excellent performance. Despite the still restrictive COVID-19 measures, we managed to execute our projects well and also in financial terms we can speak of a successful year. Our EBITDA has increased significantly and we have also acquired a large number of impressive projects. In addition, our financial position remained rock-solid.

In Dredging, fleet utilization continued to increase during the year, in part thanks to our activities in the Philippines. With the projects in hand, the prospects for the coming years are also good. In the Netherlands, major dike reinforcement projects such as the Markermeer dikes, the protection of the North Sea coastline and river related projects from the Dutch Flood Protection Program contributed well to the result. And our work on the construction of the Fehmarnbelt tunnel between Denmark and Germany is progressing well.

In Offshore Energy, our biggest project currently in execution is in Taiwan, where we are constructing two offshore wind farms. Our newest crane vessel, the Bokalift 2, will start working there in the coming months and she is lined up to continue work on subsequent offshore wind projects thereafter. This illustrates the considerable size and opportunities the offshore wind market holds for Boskalis, as long as we continue to be selective. The activities acquired from Rever Offshore at the end of 2020 have been fully integrated into our Subsea organization and made an excellent contribution to the result. Last year we saw that Survey, Seabed Intervention and Marine Transport are in an excellent position to increasingly serve the offshore wind market in addition to our traditional offshowre clients. With the award of a sizable offshore wind installation project off the east coast of the United States, the share of offshore wind projects is expected to increase further in the coming years.

2021 will go down in history for Salvage as the year of the Ever Given, the container ship that blocked the Suez Canal for just under a week. The salvage operation lasted six memorable days, which we even documented in a book afterwards. In the end, our colleagues, aided by the forces of nature with a spring tide, succeeded in refloating the vessel thereby unblocking the canal.

We look back with pride, but above all we look forward with confidence. Over the coming decades, Boskalis’ broad range of services will allow us to make a significant contribution to some of the major societal challenges of our time, including facilitating the energy transition, providing protection against the consequences of climate change, the construction of critical infrastructure and preventing environmental disasters at sea. For the medium term, the market outlook is favorable. And for the short term, too, there are many positive signs in terms of the market and our order book, although it is difficult to assess the impact of the current geopolitical developments in Eastern Europe for Boskalis.

All in all, Boskalis is well positioned for the future and as a sign of confidence we will be starting a new share buyback program shortly.”

Market developments

Demand for Boskalis’ services is largely determined by a number of macro trends. Following a comprehensive analysis of these trends, we are convinced that these trends will have a positive impact on our business in the medium and long term. Continued growth of the world’s population combined with rising levels of prosperity are two overarching macro trends that fuel continued urbanization in coastal areas, growth in demand for raw materials and energy and growth in global trade. Related to this is the threat of further climate change that can be mitigated with substantial investments in renewable energy sources. Nevertheless, the harmful effects of climate change will continue to increase in the coming decades and immense investments in climate adaptive measures, including coastal and shoreline protection, will be necessary. Collectively, these macro trends are driving demand for innovative maritime infrastructure propelling the sustainable growth of our business.

The strategy section in the Annual Report 2021 looks at the development of the macro trends and the markets in which Boskalis operates in greater detail.

Outlook

Boskalis is in good shape as a company with its well-filled order book and strong financial position. The market looks favorable for the medium term as well as for the short term, although the consequences of the recent geopolitical events in Eastern Europe are still difficult to assess.

In Dredging & Inland Infra, the order book for the coming year is well filled. With the projects in hand, the fleet utilization is expected to increase. In 2022, amongst others, projects in the Philippines, Singapore, Denmark and the Netherlands will make a significant revenue contribution.

In Offshore Energy, the portfolio is also well filled for the coming years. In contracting, the Bokalift 2, once completed, will start work on the Changfang & Xidao offshore wind project in Taiwan. At Cables, the Ostwind 2 project will be the largest project in 2022. At Marine Transport & Services, a large number of transports are in the pipeline, partly due to delayed 2021 cargoes, but also due to an improving market. In Survey, in addition to the traditional markets, the strongly emerging offshore wind market is expected to contribute further. Finally, the now integrated activities of Rever Offshore at Subsea Services are expected to make another positive contribution to the annual result. The consequences of geopolitical events for the energy markets are of specific relevance for Offshore Energy.

At Towage & Salvage, the Singaporean towage activities are considered as assets held for sale and therefore no longer contribute to the segment result. A stable year is expected for the terminals activities of Smit Lamnalco. The annual result of Salvage will strongly depend on the inherently unpredictable flow of projects and settlement results on previously executed projects.

In view of the project-based nature of a significant part of our business, it is difficult at this early stage in the year to make a concrete quantitative statement about the annual result for 2022. However, the well-filled order book does provide a solid basis for expressing the expectation that the EBITDA for 2022 will equal that of 2021.

For 2022, capital expenditures of approximately EUR 450 million are expected, excluding possible acquisitions. This amount is in line with the expected investment level for the next three years. The largest investments for the coming year concern the completion of the Bokalift 2 crane vessel, the construction of a fallpipe vessel, the lengthening of two large trailing suction hopper dredgers and the start of the construction of a new jumbo trailing suction hopper dredger.

Share buyback program

Boskalis announces a new share buyback program and intends to use EUR 100 million to buy back its own shares. At a share price of EUR 25, this represents 4 million shares or 3.1 percent of the currently outstanding number of shares. The actual start and details of the program will be announced in due course via a press release.

Dividend policy and dividend proposal

The main principle underlying the Boskalis dividend policy is to distribute 40% to 50% of net profit from ordinary operations as dividend, while pursuing a stable long-term development of dividend. The choice of dividend form (in cash and/or fully or partly in shares) takes into account the company’s desired balance sheet structure as well as the interests and wishes of the shareholders.

Given this policy and the solid balance sheet position, the proposal is to pay a cash dividend of EUR 0.50 per share, equal to 43% of the net profit and stable compared to 2021. This proposal will be submitted to the Annual General Meeting of Shareholders for approval on 12 May 2022. The dividend will be payable from 24 May 2022.