In announcing its half-year results, Royal Boskalis Westminster cited “operational and contractual issues on a limited number of offshore projects” as a key reason behind the drop in its six-month core earnings.
The company reported a net profit of EUR1.3 million (USD1.44 million) in the first half 2019; in the same period of 2018 Boskalis posted a loss of EUR361.4 million.
Revenue in the first half of 2019 increased 8.6 percent year on year compared to the first half of 2018 to EUR1.27 billion (USD1.41 billion).
At EUR135.7 million (USD150.4 million), the company’s earnings before interest, tax, depreciation and amortisation (EBITDA) represented an 18.8 percent drop from last year’s results, which totalled EUR167.2 million (USD185.4 million) for the same period.
A driving factor behind this decline, according to Boskalis, is the changing landscape of the offshore wind energy market as a consequence of the move to zero subsidy projects and increased competition.
“This has resulted in a recent and unexpected change in the attitude of clients, which is reflected in a sharp increase in the number of disputes and protracted claim negotiations,” said Boskalis.
Peter Berdowski, ceo of Boskalis, added: “Over the past six years we have built up a strong leading position in the offshore cable market in Northwest Europe. These activities contributed well to the result in that period. We have successfully completed many projects in close and constructive cooperation with clients.
“Recently, however, we are being confronted with a drastically changed attitude of many of these clients. Under pressure from the disappearance of subsidies on wind farms, clients are keenly looking for ways to reduce costs. This has resulted in a considerably more tense situation in the execution of projects and an accumulation of disputes on projects and lengthy claim procedures.”
Following a thorough review of the company’s activities in the offshore wind sector, provisions of slightly more than EUR100 million (USD110.8 million) have been made on a limited number of onerous contracts.
Berdowski remained confident that the company will be able to recover a large proportion of the outstanding claims in the future.