Boskalis announces 2016 towage and salvage results

Dutch marine service provider Boskalis has reported lower results in its Towage & Salvage division compared to 2015 partly as a result of the effects of towage deconsolidation and also a good but quiet year for salvage.

Boskalis is active in a broad range of marine service activities including towage and salvage with the Smit element of the company having a long and proud history in the world of salvage in particular. Since being taken over by Boskalis the segment has pursued a strategy of transferring all its harbour towage activities to joint ventures. Towage services of course also take place in for example the dredging and offshore energy sectors but it is ‘Towage and Salvage’ which we consider here, the towage element principally port and harbour towage.

In a trend within the industry reported elsewhere in T&T, the arrangement of establishing the joint venture with Kotug covering harbour towage operations in north-west Europe sees completion of this strategy for Boskalis. The next step is to expand further geographically with potential opportunities pursued through its joint ventures or (interestingly) by Boskalis direct.

Salvage reported ‘a quieter year after previous record years’ but a number of significant projects were completed including the salvaging of a car carrier in the Bay of Biscay and refloating of a large container ship aground on the River Elbe.

Important points to consider when studying the results include the influence on the harbour towage sector of trends within the global shipping industry affecting demand, the effects of deconsolidation and with salvage, the often long periods of time for operations to be completed and the financial results to filter through to the balance sheet.

Revenue within the segment declined to €121.4m compared to €294.9m in 2015 largely due to implementation of the towage strategy and JV transfer effects. Explaining further, the reports states: 'The joint venture with KOTUG, combining both partners’ European harbour towage activities, became effective at the start of April. Consequently, the European harbour towage activities were deconsolidated from the start of the second quarter and from that date our share in the net result of the new KOTUG SMIT Towage joint venture is recognized under results from joint ventures and associated companies.’

The net results from JVs and associates were €35.5m (2015 €36.3m) with operating results of €48.8m (2015 €79.1m). The order book fell slightly from €7.9m at the end of 2015 to €7.5m in 2016 and considering salvage the report states: ‘The Salvage result was positively impacted by the financial settlement of salvage projects that were executed in previous years. Such settlements are a common part of the salvage business, but size and timing of settlements are unpredictable.’