The market picture and developments in the first quarter at Royal Boskalis Westminster N.V. (Boskalis) are in line with expectations as outlined at the announcement of the 2020 annual results.
HIGHLIGHTS FIRST QUARTER 2021
- Revenue virtually stable compared to Q1 2020 with a higher result
- Effects of the COVID-19 pandemic continue to be felt throughout the operation
- Reasonable fleet utilization in both Dredging and Offshore Energy
- Further increase in order book to record level of EUR 5.6 billion
- Sustained strong financial position; net cash position of EUR 275 million and a directly available financial headroom of more than EUR 1 billion
When the 2020 annual results were announced, the expectation was that the first half of 2021 would be reasonably stable as a result of the COVID-19 related restrictions with a gradual improvement in the second half of the year. The first quarter developments were in line with this expectation.
Compared to the same period last year, revenue was almost stable with a higher result. The utilization of the large vessels (hopper fleet at Dredging and heavy marine transport vessels at Offshore Energy) was almost stable compared to the 2020 full year level. The order book position at the end of the quarter increased by approximately EUR 270 million compared to the record level at the end of 2020 to EUR 5.6 billion. The net cash position decreased in line with expectations but the financial position is still very solid.
Dredging & Inland Infra
Revenue at the Dredging & Inland Infra division decreased compared to the first quarter last year, mainly due to the timing of certain projects in the Netherlands and COVID-19 related operational disruptions.
Noteworthy projects in progress included LNG Canada, Pulau Tekong Polder and Tuas Terminal 2 (both in Singapore), Fehmarnbelt tunnel (between Denmark and Germany), Romanian Beaches and the sizable Markermeerdijken project from the Dutch national Flood Protection Program, as well as several other medium-sized projects in the Netherlands.
The utilization of the hopper fleet was at a similar level to the 2020 full year rate and therefore good given the circumstances. The two large cutter suction dredgers were idle in the first quarter in line with expectations with anticipated deployment as from the summer in the Philippines and Singapore respectively.
In the first quarter, the investment decision was taken to lengthen the trailing suction hopper dredger Oranje. This investment is part of the corporate business plan presented last year. For the extension, the Orange will be taken out of service for four months in the second half of 2021, after which the vessel will return to service in the first quarter of 2022 with approximately 33% percent more loading capacity with a hopper capacity of approximately 21,000 cubic meters.
The Dredging & Inland Infra order book increased slightly compared to the end of 2020. The largest project addition related to the Oosterweel link in Belgium, in addition to a variety of port and energy projects (both LNG and offshore wind). After the end of the quarter, the provisional award was received for the extensive Meanderende Maas dike reinforcement project, which is also part of the aforementioned Dutch Flood Protection Program.
The first quarter at Offshore Energy proceeded in line with expectations with a slightly higher revenue level compared to the first quarter 2020.
The contracting part of the division consists of Seabed Intervention, Heavy Lifting (including offshore wind foundations) and Subsea Cables. At Seabed Intervention, the main revenue contribution came from a Floating Storage and Regasification Unit project in El Salvador as well as the Yunlin offshore wind project in Taiwan. Subsea Cables had a relatively busy quarter with projects including Ostwind 2 and Morray East in progress. At Heavy Lifting, engineering preparations are in full swing for the Changfang & Xidao project that will enter its execution phase in Taiwan later this year.
The services part of the division consists of Marine Transport & Services, Subsea Services and Marine Survey. At Marine Transport, the BOKA Vanguard was fully utilized with the transport of the Argos Floating Production Unit. The utilization of the rest of the fleet showed a mixed picture, partly due to the rescheduling of a project into the second half of the year. On balance, the utilization of the heavy marine transport vessels was fractionally lower compared to 2020 full year. At Marine Survey, revenue decreased compared to early last year following an exceptionally busy first quarter 2020 in the Middle East. At Subsea Services, the acquisition of Rever Offshore at the end of 2020 and the associated fleet expansion contributed to a substantial growth in revenue. Significant steps were taken in the quarter with the integration of Rever Offshore contributing positively to earnings.
A number of vessels were recently added to the Offshore Energy fleet. In early January, this was the Boka Tiamat, a multi-purpose offshore construction vessel. This vessel will initially be used for offshore wind projects in Taiwan. In late March, the Lewek Fulmar was acquired, the sister vessel of the Boka Falcon that was added to the fleet in 2019. In early April, the large CSV Southern Ocean was acquired. The vessel can be deployed on a broad variety of projects throughout the division. At Marine Survey, the new geophysical survey vessel the Ocean Resolution was commissioned and has been in full operation since the first quarter. Furthermore, two vessels were recently purchased that will be converted in the coming months into respectively a geotechnical (Horizon Geodiscovery) and a geophysical (Ocean Geograph) survey vessel. Finally, the conversion of the Bokalift 2 crane vessel is progressing well. The vessel will be deployed on the Changfang & Xidao wind project immediately upon completion.
A wide variety of new projects were taken on in the quarter and the Offshore Energy order book increased by approximately 10 percent compared to the end of 2020. The share of offshore wind projects in the order book is approximately 50 percent.
Towage & Salvage
At Salvage the start of 2021 was marked by several challenging projects, including the salvage of the VLCC New Diamond, the refloating of the Ever Given in the Suez Canal and the salvage of the freighter Eemslift Hendrika. Salvage revenue was at a similar level compared to the first quarter of 2020. The contribution of the Towage joint ventures was higher than last year due to a combination of factors.
The exceptionally high net cash position of EUR 439 million at year-end 2020 decreased by almost EUR 165 million to EUR 275 million, largely due to capital expenditures, the share buyback program and a normalization of the working capital level. With the available cash and bank facilities Boskalis has a directly available financial headroom of more than EUR 1 billion. The company thereby comfortably meets its financial covenants.
Boskalis is in good shape with its historically high order book and strong financial position. As indicated at the publication of the 2020 annual results in early March, 2021 will be largely determined by the further course of the COVID-19 pandemic impacting the start-up of several large international projects in the second half of this year. Given these uncertainties and the project-based nature of a significant part of our activities, it is difficult to make quantitative statements about the 2021 annual result. However, with the developments in the first quarter and the well-filled order book, there is a solid basis to match the EBITDA of 2020 this year. Capital Expenditure in 2021 is expected to amount to approximately EUR 350 million including dry dockings, but excluding any acquisitions.