April/May 2017 – DR/INT

ROYAL BOSKALIS ISSUES 2016 ANNUAL REPORT; CUT 10 DREDGES FROM FLEET

Royal Boskalis Westminster N.V. (Boskalis) a leading dredging and marine expert issued both its Annual Report and its Corporate Social Responsibility (CSR) Report for 2016 in early March 2017. According to Boskalis Chairman Peter Berdowski “2016 marked the transition from a period of growth and prosperity to one of stagnation and rationalization. Early 2016 we saw dark clouds gather on the horizon but looking back at the year the storm is more extreme than we expected. Right now it is fair to say that we are in the midst of it.”

For the total company Boskalis reported a net profit adjusted for taxes of 840 million euros for impairment taxes of 276 million euros. It also reported a drop in revenue from 3.24 million euros ($3.43 million USD) in 2105 to 2.596 million euros ($2.75 million USD) in 2016 even while the order book increased from 2.49 million euros ($2.64 million USD) in 2015 to 2.924 million euros ($3.1 million USD) in 2016.

Boskalis divides its work into three core activities Dredging & Inland Infra Offshore Energy and Towage & Salvage and reports on each individually. In the Dredging & Inland Infra sector after a number of active years the market was rather quiet caused by unforeseen delays in tenders projects and start-up dates which resulted in the lowest utilization rate of the dredging fleet in many years. On the other hand Boskalis successfully acquired some new projects particularly in the Netherlands as well as in Brazil at Porto Açu and for the Fehmarnbelt tunnel between Germany and Denmark. At the start of 2017 a letter of intent was signed for the very sizable Duqm Port development in Oman.

The largest market drop experienced in 2016 was at Offshore Energy where the market and order intake progressively dried up although there were still projects in the order book. On the plus side the acquisition of the VolkerWessels offshore activities was finalized at the start of July. Furthermore the Offshore Energy division was able to secure new offshore wind projects. At Towage the European harbor towage joint venture between SMIT and KOTUG was established in the first half of the year. The 50/50 joint venture operates 64 tugs in eleven ports in four countries. At Salvage it was a quieter year after the previous record years with the exception of a few very impressive projects one of which averted a major environmental disaster in the Bay of Biscay (Spain).

Considering future prospects a decision was reached to align the size of the fleet with the market by taking 24 vessels out of service: 10 at Dredging and 14 at Offshore Energy. This demanded close consultation with the Works Council to agree on a fair social plan for 650 employees.

Despite a slow 2016 looking forward Boskalis reports that they are entering the 2017-2019 business plan period on a solid basis with a net debtfree balance sheet and over 900 million euros in cash at end-2016.

Boskalis Publishes Corporate Social Responsibility (CSR) Report

Boskalis’ “Corporate Social Responsibility Report” published simultaneously with the Annual Report has as its theme the company’s impact on local communities. Many dredging projects intervene in an existing environment. Although the construction period for infrastructure or land reclamation is relatively brief many projects have a lasting impact. Therefore Boskalis is seeking to avoid adverse impacts from these activities and services and trying to mitigate or remedy impacts.

Increasingly Boskalis is trying to incorporate innovative solutions for protecting biodiversity and preserving natural environments. Its Building with Nature program which adopts the natural system as a basic design principle has proven successful. Climate change and the consequences of it such as rising sea levels are also important topics for the maritime sector and for society. Boskalis’ core business enables it to provide innovative adaptive and mitigating solutions to combat the impact of climate change.

Safety and Quality play a prominent role in the company’s policies. Since the launch of the No Injuries No Accidents (NINA) safety program in 2010 Boskalis’ Lost Time Injury Frequency (LTIF) has fallen significantly from 0.67 in 2010 to 0.08 in 2016. In addition the Mooring and Safe Mind workboxes containing practical training methods and tools were introduced. Great strides were made with the development of a new quality system the “Boskalis Way of Working”. Aimed at harmonizing various business processes and support systems the Boskalis Way of Working quality system will be introduced in the course of 2017.

Both the Annual Report and CSR Report are downloadable at the Boskalis website.

VAN OORD’S 2016 YEAR-END REPORT SHOWS DECLINING PROFITS GROWING ORDER BOOK

Van Oord an international contractor specializing in dredging marine engineering and offshore oil gas and wind projects with its head office located in the Netherlands recently published its year-end financial report. The report recognized that difficult dredging offshore oil and gas markets made the year 2016 a challenging one for the dredging industry market and for Van Oord. By exception opportunities for growth in offshore wind were present.

According to Pieter van Oord CEO of Van Oord “After two years of explosive growth 2016 was a year of dwindling revenue and declining profits. Worsening conditions in the dredging and offshore oil and gas markets put revenue and margins under pressure. The downward trend has many different causes: the completion of major projects the low oil price slower growth in world trade and overcapacity of dredging and offshore equipment. Market conditions in the maritime sector were extremely difficult in 2016.”

Revenue decreased to 1.71 billion euros from 2.58 billion euros in 2015 and net profits declined to 90 million euros compared to 169 million euros in 2015. This decrease in net profit to 90 million euro was driven largely by lower revenues and pressure on project margins. The 2016 order book however showed increases over 2015. On the other hand since most of these projects will be executed in 2018 and later positive effects on Van Oord’s financial results will not show until then and 2017 will be a challenging year.

In the dredging division specifically revenue was down to 1.189 million euros in 2016 as compared with 1.622 million euros in 2015. The downward trend was most obvious in Europe and the Middle East and West Asia (Suez Canal). Deteriorated market conditions were tangible in the offshore oil & gas division with revenue standing at 130 million euros considerably lower than in 2015 when they were 242 million euros. Offshore wind projects generated 394 million euros in revenue compared with 715 million euros in 2015. Profit for 2016 also comprised an impairment of 17 million euro on the Stingray a shallow water pipelay barge active in the offshore oil and gas division which reflects revised expectations in terms of the vessel’s utilization rate over its lifetime.

The growth in the order portfolio in 2016 was largely the result of offshore wind projects in the Netherlands and Belgium and major dredging projects such as Marginal da Corimba project in Angola. In 2016 Van Oord acquired new projects valued at 2.635 million euros compared to 1.706 million euros in 2015. Because many of these new projects will only be executed in 2018 or later they will not contribute to Van Oord’s revenue in the short term. The order portfolio is however robust and stood at 3.271 million euro at year-end compared to 2.349 million in 2015.

In the offshore oil and gas sector in 2016 Van Oord frequently deployed its flexible fallpipe vessels on Subsea Rock Installation (SRI) projects for pipeline protection in the United Kingdom Egypt and Norway.

On the positive side the market for offshore wind installations achieved a breakthrough in 2016. Thanks in part to governments’ ambitious tailed energy transition plans the offshore wind market has matured rapidly. This led to a fierce reduction in the cost of offshore wind farm construction. In addition Van Oord’s participations in wind farms has been active. Since 2014 Van Oord has had a 10 percent stake in the Gemini offshore wind project and since late in 2016 Van Oord also owns a stake in the Borssele III & IV project in the Netherlands.

The demand for all-round solutions continues to grow with clients inviting tenders for Engineering Procurement and Construction (EPC) contracts. Solid value chain management the integration of disciplines and strong project management are indispensable in such contexts.

Looking at investments and divestments Van Oord expanded its fleet and replaced various vessels. Two new cutter suction dredges were launched in 2016 as well as a small trailing suction hopper dredge aimed at the Mediterranean market with its shallow waters and small harbors.

The company also continued supervising the construction of the Vox Amalia and the Vox Alexia two mid-sized trailing suction hopper dredgers with Van Oord itself defining and designing the technology i.e. the mission equipment. On March 30 the Vox Amalia was launched. These modern efficient vessels can produce more output at a lower unit price and require less maintenance. They  

consume less fuel making it easier to achieve carbon emission reduction targets. These investments have lowered the total cost of ownership of the fleet.

Another policy development is Van Oord’s pursuit of a proactive safety culture and a company-wide safety program. “Say YES to Safety” has made safety targets clearer to employees and in many cases to subcontractors and suppliers. In 2016 there were fewer lost-time injuries and an even lower accident rate than in previous years.

UKRAINIAN DREDGING DAY HELD FEBRUARY 2017 IN KIEV

The State Enterprise “Ukrainian Sea Ports Authority” (USPA) hosted a business event aimed at informing both leading Ukrainian and international dredging companies regarding the implementation of a number of strategic infrastructure projects in the field of water area and canal dredging in the seaports of Ukraine. On February 3 a large group assembled at the American Chamber of Commerce in Kiev. Ukraine has a very powerful port potential among the countries of the Black-Azov Sea basin.

Present at the meeting were representatives from a broad group of Russian ports consultants and infrastructure companies as well as representatives from international dredging contractors Royal Boskalis Westminster NV DEME nv Rohde Nielsen a/s Van Oord Dredging and marine contractors B.V. and the European Bank for Reconstruction and Development.

The meeting was opened with a welcome word from the International Association of Dredging Companies explaining the importance of the newly updated contract for maintenance dredging contracts issued by International Federation of Consulting Engineers (FIDIC). Other speakers included Volodymyr Omelyan Minister of Infrastructure of Ukraine who spoke on the Ukrainian dredging market and strategic infrastructure projects in the seaports of Ukraine Raivis Veckgans Acting CEO of SE “USPA” and Maksym Shyrokov Head Yuzhny Branch of SE “USPA.”

There are 13 seaports in the Black and Azov Seas. The total capacity of Ukrainian seaports is 232 million tons. The overall number of canals is 17 the total length of which is 239.6 kilometers including four of the largest ones with total length of 162.8 kilometers. The planned volume of dredging in Ukraine in the coming time is 8.7 million cubic meters in operational dredging and 10.9 million cubic meters in capital dredging.

FIDIC BLUE BOOK OF DREDGING CONTRACTS HIGHLIGHTED AT THE FOURTH INTERNATIONAL FORUM OF DREDGING COMPANIES IN MOSCOW

The Fourth International Forum of Dredging Companies was held on February 15 at the Radisson Ukraine Hotel in Moscow under the auspices of the Russian Ministry of Transport and the Federal Agency for Maritime and River Transport of Russia (Rosmorrechflot). The Forum was organized by Media-Group PortNews and sponsored by Damen Shipyards and partnered by Rosmorport and the International Association of Dredging Companies. Two Belgium dredging companies also participated with DEME hosting the Business Luncheon and Jan De Nul Group hosting the evening reception.

A series of speakers spoke on shipbuilding and ship technology including Olivier Marcus product director Damen Dredging Equipment Damen Shipyards in Gorinchem the Netherlands; Building of dredging vessels in Russia by Sergei Italyantsev chief of direktorate for River-Sea Vessels Program USC; the latest developments in dredging technology for the Russian region by Evgeny Leonov sales manager Royal IHC; small and large multi-purpose dredges by Aleksei Shifman naval architect Dredge Yard; and the multifunctional pontoon as a comprehensive solution for underwater engineering operations in water areas of seaports and at inland waterways by Evgenii Eremin general director GTNS. In the afternoon session there were a number of “projects and technologies” described primarily focusing on ports and waterways in Russia.

At the request of the organizers a presentation was provided covering the contractual aspects of project management. The focus was on the FIDIC Dredging Contract known as “the Blue Book” an international dredging contract. Rene Kolman secretary general International Association of Dredging Companies explained the history of the FIDIC Blue Book which was first published in 2006 by FIDIC as a standard contract targeted at dredging and reclamation activities officially titled the FIDIC Form of Contract for Dredging and Reclamation Works. FIDIC is the International Federation of Consulting Engineers headquartered in Switzerland. Kolman described how and why after many years of negotiations and discussions the second edition of this book on contract guidance for the dredging industry was released in 2016 10 years after the original edition with updates that better reflect actual practice. He also went into detail about some of the significant changes in the contract that include “Increased Dredging Quantities” and “Fitness for Purpose” and how these updates can help stakeholders finalize a dredging contract.

Afterwards Kolman presented a Russian translation of the FIDIC Blue Book (Second Edition) to Vyacheslav Tyunin Sabetta project manager from USK MOST. This new edition of the FIDIC Blue Book is also being translated into five other languages – Spanish Portuguese French Italian and German and will be available soon on the website www.fidic.org.

5TH CHINA INTERNATIONAL CONFERENCE ON DREDGING TECHNOLOGY DEVELOPMENT ANNOUNCED

Faced with global economic structural adjustment and new technological revolution impact China and the world’s dredging industry need to promote comprehensive changes and innovations focusing on the major themes of market demand changes sustainable development and building a new ecosystem. This is the common interest and goal of the dredging industry.

To promote communication and technological innovation of the dredging industry the China Dredging Association with the support of the Eastern Dredging Association is scheduled to hold the 5th China International Dredging Technology Development (Exhibition) Conference from September 25 to 27 in Tianjin one of China’s municipalities directly under the central government and an important economic and port city in northern China.

The theme of the conference is “Ecology Dredging Sustainability” highlighting the following subjects: how the dredging industry must innovate upon the common mission of the ecological environment protection; how does big data technology and intelligent technology promote the dredging industry to improve efficiency save energy and reduce emissions; what are the dredging industry’s future development trends; what are the prospects of using new energy in dredging equipment to solve the obstacles; how can dredging technologies be more environmentally friendly and more efficient.

The conference will include summit forums keynote speeches technical academic paper exchanges and seminars as well as a visit to the Port of Tianjin China’s largest artificial deepwater port and also one of China’s major dredging achievements.

Papers were provided by experts scholars engineers and technicians of the dredging industry and products and technology exhibitions by the dredging industry-related business organizations.

IADC PUBLISHES NEW ADDITION TO DREDGING RELATED SERIES

The International Association of Dredging Companies (IADC) published “Facts About Building with Nature” as part of a series on dredging related subjects. The new publication explains a unique design philosophy that uses natural processes (ecosystem services) to realize maritime infrastructure and to create benefits for society and nature at the same time. The brochure outlines the origins and the principles of Building with Nature; how where and when to apply these principles; and why Building with Nature offers a significant alternative which can be applied to coastal zone management and dredging projects. It also points out the advantages that Building with Nature can have in informing stakeholders because of its emphasis on sustainability.

The ongoing need for maritime infrastructure development is evident be it for port expansion waterfront development and/or remediation and flood control but these large-scale infrastructure projects are often met with reluctance by the public causing uncertainties and delays. Co-operation with the relevant authorities at governmental levels and with non-governmental organizations and citizen groups is crucial to achieving integrated multi-functional and sustainable development. Using Building with Nature as the backbone of a project can help promote the necessary trust and cooperation among stakeholders client and contractor.

The new publication and other of “Facts About” dredging related subjects are available at the IADC website at www.iadc-dredging.com.