Damen into the Red for the First Time in 15 Years
Damen Shipyards Group suffers a net loss of 17 million euros for 2018. It has been 15 years since the Dutch shipbuilder announced losses.
Damen says to experience problems in a number of maritime sectors while continued investments further weigh down the result.
Tough Trading in Offshore Oil and Gas and Harbour Towage
Despite rising oil prices, the offshore hydrocarbon sectors continue to present tough trading conditions. The harbour towage sector, a key market for Damen, is also underperforming as competition in the marketplace exerts downward pressure on prices and tug operators seek to consolidate their operations.
Losses for Verolme, Curaçao and Mangalia Romania
While project activity has increased recently for the group’s repair and conversion division, profit generated remains low as the group is absorbing operating losses at its acquired companies Verolme, Curaçao and Mangalia Romania.
Damen Schelde Misses Royal Netherlands Navy as Launching Customer
A further factor is the current lower than usual levels of activity at Damen Schelde Naval Shipbuilding. Group CEO Réne Berkvens says: 'Despite significant investment, over a sustained period, aimed at participation in various projects, for example the Dutch submarine and German MKS 180 programmes, awards have not yet been forthcoming. Defence & security projects are a critical factor, not only for the success of Damen, but also for the navy and for the maintenance of a domestic defence industry within the Netherlands. On numerous occasions historically, the Royal Netherlands Navy has showed a progressive and innovative approach, serving as the launching customer for naval technologies that have gone on to be used by navies throughout the world.'
Healthy Turnover, but Profit under Pressure
Despite the difficult market conditions, the shipyards group has continued to book a large amount of projects – worth in the region of 1.9 billion euros in 2018. Summing up, Mr Berkvens states: 'Turnover is generally healthy. The difficulty is that, despite high levels of activity, profit is under pressure from a combination of factors including vessel oversupply in some markets, fierce competition and increasing labour costs in certain regions.'
Damen hopes it will benefit from other maritime markets that do show signs of growth, such as the cruise, inland shipping, public transport, yachting and offshore renewables sector.
Investments Take a Heavy Toll
Damen's 2018 results are further weighed down by the company's investments in facilities, capabilities and personnel. This includes the group’s acquisition of a stake in the shipyard now known as Damen Shipyards Mangalia in Romania. With this and other investments, Damen has entered the cruise, RoPax and large offshore vessel construction markets and prepares itself further for participation in future large-scale defence & security contracts.
Retaining Access to Skills and Knowledge
'Damen, as a family business, holds a long-term view and continues to plan ahead in full confidence of better times in the future,' explains Mr Berkvens. 'In addition to preparing for this via a programme of continued acquisition and facilities development, we feel it is crucial that we continue to invest in our personnel and in maintaining employment opportunities. Only in this way can we be sure that, when the markets do eventually recover, both Damen and the Netherlands retain their access to the skills and knowledge necessary to maintain a successful shipbuilding industry.'
Picture: Although Damen's repair and conversion yards have seen more ships enter their docks, acquisitions of new facilities weigh down the result. Here, the dry docks of Damen Shipyards Rotterdam (©Raimond Spekking / CC BY-SA 4.0 (via Wikimedia Commons)).