by Hans | March 17th, 2011
Royal Boskalis Westminster N.V. achieved a record result in 2010, with net profit rising 36% to an all-time high of € 310.5 million (2009: € 227.9 million). Revenue growth of 23% to € 2.7 billion represented another new record (2009: € 2.2 billion). This exceptional performance was partly attributable to a very strong operational year as well as the contribution from SMIT Internationale N.V. following the acquisition.
The operating result (EBIT) rose by 61% to € 401.9 million (2009: € 249.3 million). Our core Dredging & Earthmoving activities achieved an exceptionally strong result, partly due to the good quality of the projects in the order book, a successful operational year and the settlement of a number of projects. The result also included a pre-tax gain of € 33.6 million in connection with the settlement of a number of long-running insurance and other equipment-related claims. In addition, the operating result (EBIT) included a contribution from the SMIT business units of € 72.1 million, net of one-off acquisition-related expenses. The result from the SMIT activities was lower compared to the same period of last year.
The total order book, including the SMIT order book, stood at € 3,248 million at the end of 2010 (end-2009: 2,875 million).
Peter Berdowski, CEO:
“It is with some pride that we look back on a historic year. 2010 marked the Boskalis centenary and it was also the year in which we successfully joined up with SMIT. On top of that, 2010 was an exceptionally good year from a financial perspective.
Last year our dredging activities clearly reaped the benefits of our selective project-contracting policy that we pursued over the past few years, which enabled us to realize the highest ever margins on work from both the order book and from older projects that we settled. All this was achieved in deteriorated market conditions – the volume of work in the market stagnated whilst capacity increased. Nevertheless, market prospects for the medium term are favorable, mainly due to large-scale investment plans in the oil and gas industry and global developments in the ports sector.
The addition of SMIT is delivering a good contribution to the result. The enthusiasm and speed with which both organizations are now working together is also important. To provide the group with focus in its new composition and to set priorities with regard to our growth ambitions, we have drafted a new three-year business plan which we will be presenting in the near future. This plan lays the foundation for the further expansion of our great company.”
The markets in which Boskalis operates are driven by factors such as growth in world trade, energy consumption, an increase in global population and the effects of climate change.
Over the past few years we have been faced with stagnating demand as a result of the cyclical downturn at the end of 2008. At the same time we have seen new production capacity coming onto the market in the past few years. This puts pressure on both volumes and margins of new projects and in certain segments of the market. However, recent market studies confirmed yet again that structural growth factors for the medium term remain positive. In several regions of the world, clients in various market segments are developing numerous new initiatives for new and in many cases large maritime infrastructure projects. This applies in particular to energy and commodity-related projects in South America, West Africa and Australia. Many of these projects are expected to come to the market in the next two years.
The demand for harbour towage services is developing positively. Freight volumes are picking up after dropping off in 2009. The further growth of the terminal activities is related to the completion of new oil and LNG import and export terminals which are expected to come on stream from 2012. The development of the salvage market is difficult to predict, given the nature of the activities. Developments in Transport & Heavy Lift are in particular dependent on an upturn in especially the offshore spot market, which is not expected to occur before 2012.
The financial position of Boskalis remains very solid, even after the acquisition of SMIT. Capital expenditure in 2011 is expected to total around € 350 million and can be funded from our cash flow.
Given the current market conditions and the project-based nature of a large part of our activities we are unable to provide a specific forecast for the current year at this time. We do, however, anticipate that we will be unable to match the record result of 2010 in 2011. Based on current information we see 2011 as a year of transition, from challenging market conditions to more positive prospects in the medium term.
Dividend policy and proposal
The main principle of the Boskalis dividend policy is to distribute 40% to 50% of net profit from ordinary operations as dividend, whereby Boskalis aims to achieve a stable development of the dividend for the longer term. The choice of dividend form (in cash and/or entirely or partly in shares) takes into account the company’s desired balance sheet structure as well as the interests of shareholders.
In light of this, Boskalis will propose to the Annual General Meeting of Shareholders on 12 May 2011 that a dividend of € 1.24 per share be distributed in the form of ordinary shares, unless the shareholder opts to receive a cash dividend. The dividend will be payable from 8 June 2011.