Boskalis jaarverslagen 2011

Chairman's statement

Dear shareholders, 

On a global scale 2011 was one of the most turbulent years of the last few decades. 
All over the world we were faced with unexpected events which had a major impact on our business – some in a positive sense, most in a negative. Despite this, in 2011 we managed to achieve our second-best result in our 101-year history.

Record revenue in difficult market conditions

Geopolitical tensions - particularly in the Arab world - various natural disasters, the euro crisis and the turbulent global financial situation all affected our activities. 
In Australia the launch of our new harbour towage service in Gladstone was delayed by the widespread flooding in Queensland. In Libya Archirodon was forced to halt work on the breakwater in Tripoli and repatriate its people due to the political unrest and subsequent civil war in the country. The serious tsunami damage to the nuclear power plant at Fukushima in Japan sparked a broad and in-depth discussion about the role of nuclear energy in that country. This was followed by a comparable discussion in Germany. The reluctance with regard to nuclear energy is fuelling the interest in natural gas, which has lent extra support to planned investments in projects involving liquefied natural gas (LNG) - an unexpected positive consequence of a devastating natural disaster. But without a doubt it is the global financial crisis that has had the greatest impact on our business. Whereas in early 2011 we were counting on a cautious recovery, from the summer onwards we were faced with growing reluctance from our clients as a result of the increasing uncertainty surrounding the global financial situation. This put greater pressure on volumes and prices in our markets.

At the beginning of the year we had a well-filled order book worth EUR 3.2 billion. Thanks to this well-filled order book we were able to realize strong revenue despite the weak economic climate. Aided by the consolidation of SMIT, revenue surpassed the historical record high of EUR 2.7 billion in 2010 to reach EUR 2.8 billion. Net profit came in at EUR 254 million (2010: EUR 311 million).

Our greatest challenge is and will continue to be the acquisition of new, high-quality orders. As we said before, prices and volumes are under pressure. This is reflected in the order book and the utilization levels of the fleet. For this reason we continued with the further implementation of the fleet rationalization program launched in 2009 and once again took several ships out of service.

Focus on growth markets

We continue to concentrate on those markets which offer structural long-term growth: Energy, Ports and Infra. Our Corporate Business Plan sets out the key focal points for targeted growth with our activities in our selected regions and market segments.

Energy

The oil and gas market is traditionally a market in which we are well represented and in which we want to achieve further growth. The growing demand for LNG, in particular as well as our proven track record for this type of project, such as the Gorgon project in Australia, mean we are well placed to secure attractive contracts. In 2011 our work in this segment included two challenging contracts: the construction of the LNG import terminal at Cuyutlán in Mexico and the expansion of the Soyo LNG port in Angola.
Last year we also reached agreement on the transfer of SMIT Terminals to Lamnalco. Smit Lamnalco will be a leading player in the terminal services segment. At present we are working intensively on the new integrated organization, which should be operational by the end of 2012.
We also see good opportunities in the fast-growing segment of renewable energy, where the focus for Boskalis lies on the foundations, construction and cabling of offshore wind parks. In 2011, we took on several cable-laying projects and were involved in transporting parts for offshore wind parks. We also decommissioned a number of oil and gas platforms in the North Sea.

In addition to this, we made important strides in the area of commodities extraction (both onshore and on the seabed). We use proven techniques combined with innovative, ground-breaking methods for seabed mining of rock phosphates in deep water in New Zealand. 

We have also taken on an interesting mining project in Suriname, where our responsibilities range from excavation of bauxite up to and including its delivery to the refinery.

Ports

Work on the expansion of the Port of Rotterdam, the Maasvlakte 2 project, is progressing above expectations. This massive project should reach completion next year. In Brazil we are to construct a new port at Superporto do Açu, the country’s biggest industrial port complex - an interesting contract that we won in the face of stiff competition. In the Harbour Towage segment, activities in most ports exceeded 2010 levels. In Zeebrugge we won a new, seven-year concession for the provision of these services. At the end of the year we reached an agreement in principle with Sudamericana Agencias Aereas y Maritimas S.A. (SAAM) in Chile regarding a combined towage operation with SMIT’s services in North and South America. With 150 vessels in nine countries, the joint operation between SMIT and SAAM would create a leading player in the region.

Infra

In Coastal Defense there was plenty of work on sand replenishment projects in the Netherlands, for example the ‘Sand Motor’ off the coast of the province of Zuid-Holland. In Panama we started construction work on Punta Pacifica, the first artificial island in South America. Moreover, in December we completed the acquisition of MNO Vervat, which will henceforth be part of the Dutch Boskalis organization. With MNO Vervat we strengthen our position on the Dutch Infra market, which is developing towards larger, multidisciplinary works. In addition we gradually want to start using MNO Vervat for support on international projects with a civil engineering component.

Safety

Over the past year our safety program NINA (No Injuries, No Accidents) has become a household name across our organization. People’s well-being and safety are top priority within our traditionally more technology and production-oriented organization. This is reflected in our safety performance: in 2011 the LTIF figure for Boskalis showed a further decline, from 0.7 (in 2010) to 0.3 per 200,000 hours worked. Whilst we are positive about this development, we are still not satisfied. Despite our efforts, a number of our colleagues still experienced serious personal accidents – something we want to prevent. It is our ambition to prevent incidents by creating a culture in which we all take responsibility for our own safety as well as that of our colleagues and our environment.

Integration of SMIT

Within the framework of the Corporate Business Plan of early 2011 we have given further shape to the integration with SMIT. In many areas the cooperation is already working well. We act in concert in the market when opportunities present themselves, we leverage our joint purchasing power and we have combined our staff departments. The first stage of the integration was completed after the summer. At the end of 2011 we started preparing for the next stage, during which we want to establish the best possible organization to enable us to cater to all segments and clients with maximum efficiency and effectiveness. As a first step, the shore-based staff and office staff of SMIT Netherlands joined Boskalis with effect from 1 January 2012 and became members of the Boskalis pension fund. Stage 2 of the integration will be completed in 2012.

The combination of activities within Boskalis offers us excellent opportunities for further growth and expansion. In-depth market analyses have allowed us to build a good picture of the most important developments in the markets relevant to us, and how we can be even more successful in these markets. This is what our attention is constantly focused on. We have the qualities, talent and drive to put our company even more firmly on the map and expand it.

On behalf of the Board of Management I want to thank all the colleagues for their efforts. I also thank our clients, partners and shareholders for putting their trust in us.

dr. P.A.M. Berdowski

Added to My report add to My report Source: Annual review 2011, Chairman’s statement, page 4