The Netherlands: Van Oord Records Increased Turnover in Difficult Year

Van Oord’s turnover in 2011 was EUR 1,715 million (2010 EUR 1,578 million) and was evenly attributable to activities performed by Van Oord’s divisions and areas. The net profit for 2011 amounted to EUR 118 million (2010: EUR 165 million, including an extraordinary tax gain of EUR 40 million).

CEO Pieter van Oord: ‘Given the state of the market, the profits were somewhere between reasonable and good. A higher level of activities was achieved in 2011. A hard seawall was constructed as part of the Maasvlakte 2 Rotterdam port expansion project, with this construction being a milestone in one of the largest marine engineering projects ever executed in Europe. We used the E-crane that was developed to lay approximately 20,000 40-ton concrete blocks as part of that project. From an international perspective, winning contracts for a number of projects in Australia has strengthened our market position there.’

The net profit expressed as a percentage of turnover was 6.9% (2010: 7.9%, excluding an extraordinary tax gain). As at 31 December 2011, the order portfolio stood at EUR 1,694 million, lower than it was at the end of 2010 (EUR 1,856 million). The cutter suction dredger and trailing suction hopper dredger section of Van Oord’s fleet had a somewhat lower deployment rate than it did in 2010, while the deployment rate for flexible fallpipe vessels increased over that in 2010.

Financing

Van Oord is financially healthy. Cash at bank and in hand came to EUR 198 million at year-end 2011. The loans drawn amounted to EUR 426 million. Van Oord’s new investment programme, combined with decreasing credit arrangements, increased Van Oord’s need for additional financing possibilities. In 2011, Van Oord attracted new financing in the form of a US Private Placement obtained from American and British institutional investors, as well as a new credit facility from a consortium of international banks.

Strategy

Pieter van Oord: ‘In 2011, we continued implementing our strategy for 2011-2015 and the corresponding policy. In addition to strengthening our activities in the dredging market, particularly in the cutter suction dredging segment, this led to an expansion of our offshore activities. An important new activity in this division will be laying pipelines in shallow water. In addition, the position of our offshore wind organisation has been strengthened by an investment in a new transport and installation vessel and the additions to our staff complement. In the Netherlands, we are increasing our focus on upcoming large-scale infrastructure projects.’

Investments

Van Oord continues to invest in new vessels and other equipment. In 2011, the first self-propelled cutter suction dredger, Athena, and the new flexible fallpipe vessel, Stornes, were deployed. Currently, in addition to the installation vessel to be used in constructing offshore wind parks, Van Oord is having two other ships constructed: a second self-propelled cutter suction dredger and a ship for laying pipelines in connection with shallow-water offshore activities.

People

In 2011, Van Oord’s staff complement increased from approximately 4,400 to over 5,000 people. Pieter van Oord: ‘Recruiting and retaining highly qualified technical staff on the Dutch labour market remains a focus area. This led us to further expand the Van Oord Academy, our internal knowledge institution, in 2011. All of our internal and external training courses will be provided through this institution.’

Safety, sustainability and the environment

Van Oord’s safety performance in 2011 remained consistent, Van Oord is continuing long-standing trend of reducing the frequency of accidents. The number of days of absenteeism due to accidents has fallen by 65% over the last three years. This means that efforts over the years to develop a culture of safety throughout the company has resulted in substantially fewer accidents and reduced absenteeism. Van Oord has made several forward strides in the areas of sustainability and the environment in 2011. Van Oord continued monitoring and reducing its CO2 footprint in 2011.

Activities in 2011

The Netherlands

Most of Van Oord’s activities in the Netherlands were concentrated in coastal areas. One notable project that Van Oord has been involved in since 2009 is the construction of the Maasvlakte 2 Rotterdam port expansion project. In terms of scope, the work being carried out as a joint venture on this project is equivalent to the other projects Van Oord has completed in Dubai (Palm Jumeirah and The World), and it is one of the largest marine engineering projects that has ever been undertaken in Europe. One extraordinary achievement in 2011 was the construction of a hard seawall by using the E-crane to place some 20,000 40-ton concrete blocks.

Another important project was the Sand Motor (Deltaduin) project, in which Van Oord used an innovative coastal reinforcement method to put more than 21.5 million cubic metres of sand into the North Sea between Ter Heijde and Kijkduin.

Asia and Australia

Van Oord’s growth on the Australian market can be attributed to the construction of large infrastructure projects aimed at the export of coal, ore and gas. The work done for Rio Tinto in such locations as Cape Lambert, as well as the Gladstone joint venture project, further strengthened Van Oord’s Australian market position.

Offshore

Van Oord’s Offshore division operates worldwide in the oil and gas market. Van Oord is maintaining a high activity level, with our contracts for protecting oil and gas pipelines (SRI, Subsea Rock Installation) promising to increase this level still further thanks to our deployment of the new flexible fallpipe vessel Stornes. The Offshore division also maintains a high activity level in Russia. In addition to excavating and backfilling the pipeline trenches for the Arkutun Dagi Field Development project on Sakhalin island on behalf of Exxon Mobile, the Offshore division is also doing work to facilitate pipeline connections to the mainland.

Europe

No new activities were undertaken in countries such as France, the UK and Germany due to the unstable economic conditions in Europe. In contrast, the market for maintenance work in these countries remained level. Van Oord’s activities also remained level in the countries on the Baltic and Caspian Seas. Van Oord contracted the harbour expansion in Klaipeda, Luthuania and commenced work on the International Seaport Baku project in Azerbaijan.

Middle East, Mediterranean and Southwest Asia

The Middle Eastern market has shifted from large land reclamation projects to activities relating to the oil and gas industry. One of the larger projects in this region is the 200-hectare expansion of the existing oil and gas island of Das in Abu Dhabi. The economic conditions in the Mediterranean have resulted in few new projects. Van Oord did expand Bilbao harbour in Spain. The activity level in India was clearly lower in 2011 than it had been in previous years.

Americas and Africa

Work in the Americas and Africa increased sharply in 2011. The markets in these regions were largely driven by investments in the maritime and energy sectors. Van Oord was active throughout the Americas, from Costa Rica to Mexico and Brazil. In Africa, projects were carried out in Mozambique, Kenya and Nigeria.

Offshore Wind Projects

After successfully completing the Belwind park comprising 55 wind turbines at sea off the Belgian coast, the Offshore Wind Projects business unit’s activities largely consisted of accepting contracts for and preparing several new wind parks. Van Oord’s role primarily focuses on working as an EPC (Engineering, Procurement and Construction) contractor. A start was made on the Teesside Offshore Wind Farm for EDF Energy Renewables.

Wicks

The Wicks business unit focuses on soil-improvement projects around the world using vertical and horizontal drainage and soil compaction techniques. Wicks also performs underwater drilling and blasting work. In 2011, projects were carried out in the Netherlands, the Middle East, Australia and Brazil.

Prospects for 2012

Pieter van Oord: ‘The global economy will continue to be highly volatile in 2012. We do not expect it to be an easy year for our company. Specifically, we expect there to be lower employment rates on the dredging market for our vessels. The growth we expect will likely occur in the oil and gas market, as well as in the areas of constructing offshore wind parks and large infrastructure projects in the Netherlands. This summer we will move into our new head office at Nieuwe Maas in Rotterdam. The long-term development of our most important market drivers instils us with confidence for the future.’

The General Meeting of Shareholders will be held on 26 April 2012.

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Offshore WIND staff, March 09, 2012; Image: vanoord